THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW. 


•  / 


-ff.K^   7^'/^^ 


THE  LAW 


OP 


NEGOTIABLE 
INSTRUMENTS 


INCLUDING 

PROMISSORY  NOTES,  BILLS  OF  EXCHANGE,  BANK 
CHECKS  AND  OTHER  COMMERCIAL  PAPER 

WITH 

THE  NEGOTIABLE  INSTRUMENTS 
LAW  ANNOTATED 

AND 

FORMS  OF  PLEADING,  TRIAL  EVIDENCE  AND  COM- 
PARATIVE TABLES  ARRANGED  ALPHABETICALLY 
BY  STATES 


BY 

JAMES  MATLOCK  OGDEN,  LL.B.,  HARVARD 

OF  THE  INDIANAPOLIS  BAR 


SECOND  EDITION 


CHICAGO 

CALLAGHAN  &  COMPANY 

1922 


COPYRIGHT  192a 

BY 

CALLAGHAN  &  COMPANY 


T 


PREFACE  TO  FIRST  EDITION 

The  importance  of  the  Law  of  Negotiable  Instruments,  or  the 
Law  of  Bills,  Notes  and  Checks,  will  be  realized  when  it  is  con- 
sidered that  over  ninety  per  cent,  of  the  work  of  paying  for  and 
effecting  the  exchange  of  interstate  commerce  is  carried  on  today 
by  means  of  commercial  paper. 

It  has  been  the  endeavor  of  the  author  to  furnish  the  prac- 
titioner and  the  student  of  the  law  such  a  practical  presentation 
of  the  elementary  principles  of  negotiable  instruments  as  may 
serve,  with  the  aid  of  its  references  to  judicial  decision,  as  a 
complete  and  convenient  guide  in  this  important  subject  of  the 
law. 

The  law  herein  set  out  is  the  law  settled  by  the  authorities 
rather  than  the  writer's  own  views.  The  object  has  been  to 
enable  one  readily  to  find  the  law  of  bills,  notes  and  checks  in 
any  state  or  territory  in  the  United  States.  The  peculiarities 
of  the  law  in  those  states  which  have  adopted  the  Negotiable 
Instruments  Law  are  set  forth  and  all  modifications  are  pointed 
out.  The  peculiarities  of  the  law  in  those  states  which  have 
not  adopted  the  Negotiable  Instruments  Law  are  collected  and 
arranged  alphabetically  by  states. 

Thus  the  writer  has  endeavored  to  cover  the  entire  field  of 
the  law  of  negotiable  instruments,  citing  cases  from  every  juris- 
diction. 

In  the  text  discussing  the  elementary  principles,  the  Nego- 
tiable Instruments  Law  is  interwoven,  distinguished  by  being 
printed  in  italics;  the  text  of  the  law  as  printed  is  that  of  the 
New  York  Act.  A  table,  however,  is  inserted  to  facilitate  the 
finding  of  parallel  sections  of  the  acts  or  laws  enacted  by  all 
other  jurisdictions.  All  decisions  construing  the  Negotiable  In- 
struments Law  since  its  adoption  by  the  first  state  up  to  July 
1st  of  the  present  year  are  cited ;  also  all  decisions  of  the  English 
law  courts  which  affect  corresponding  provisions  of  the  Bills 
of  Exchange  Act  of  1882. 

That  part  of  the  text  relating  to  the  Negotiable  Instruments 
Law  will  be  found  valuable  in  those  jurisdictions  which  have 
not  adopted  that  law,  since  most  of  its  concise  statements  of 
rules  are  of  application  in  all  jurisdictions,  whether  the  law  has 
been  adopted  or  not. 

With  the  hope  that  herein  the  principles  of  negotiable  instru- 
ments, have  been  made  clearer,  the  writer  submits  this  work  and 
asks  indulgence  for  any  oversights. 

James  Matlock  Ogden. 

Indianapolis,  Indiana,  August  25,  1909. 


618537 


PREFACE  TO  SECOND  EDITION 

More  than  twelve  years  have  passed  since  the  last  edition  of 
this  book  was  printed,  although  in  the  meantime  there  have 
been  a  number  of  reprints.  The  writer  takes  this  opportunity 
to  show  his  appreciation  for  the  wonderful  cordiality  the  other 
edition  received  and  for  the  many  requests  for  a  revised  edition. 

In  1909,  at  the  time  the  other  edition  was  published,  the 
Negotiable  Instruments  Law  had  been  adopted  in  thirty-eight 
states  and  territories  while  now  it  has  been  adopted  in  all  juris- 
dictions of  the  United  States  except  Georgia  and  Porto  Rico, 
making  a  total  of  fifty-one  of  our  jurisdictions. 

The  writer  showed  his  confidence  in  the  ultimate  adoption  of 
the  Negotiable  Instruments  Law  in  all  jurisdictions  of  the  United 
States  by  making  the  Law  a  part  of  the  text  and  placing  it  in 
italics.    This  helpful  plan  has  been  continued  in  this  edition. 

Since  1909  there  have  been  some  new  phases  of  the  law  of 
negotiable  instruments  which  have  come  to  the  front,  such  as 
trade  acceptances,  traveler's  checks,  liberty  bonds  and  certain  cases 
of  illegality.  These  have  all  been  added  to  the  text  and  treated 
under  the  proper  heading.  Chapters  have  also  been  added  on 
collateral  security,  on  parties  to  suits,  lost  and  destroyed  nego- 
tiable instruments  and  sections  have  been  added  in  various  chap- 
ters throughout  the  book. 

Many  citations  have  been  add^d  to  the  text  and  an  endeavor 
has  been  made  to  bring  the  citations  as  to  the  Negotiable  Instru- 
ments Law  down  to  date,  particularly  in  Part  III. 

The  text  of  this  book  is  confined  to  negotiable  instruments. 
Like  the  Negotiable  Instruments  Law  no  attempt  has  been  made 
in  it  to  deal  with  instruments  which  are  non-negotiable  as  they 
are  not  governed  by  the  Law. 

The  writer  trusts  that  the  treatise  may  continue  to  be  helpful 
to  the  student  and  the  practitioner. 

James  Matlock  Ogden. 

Indianapolis,  Indiana,  April  1,  1922. 


TABLE  OF  CONTENTS 


PART  I 


ELEMENTARY    PRINCIPLES— BILLS,    NOTES 
AND  CHECKS. 


CHAPTER  I. 


GENERAL     CHARACTERISTICS     AND     GENERAL     FORM     OF 
BILLS,  NOTES  AND  CHECKS. 

SECTION.  PAGE. 

1.  Introtiuctory    1 

2.  Form    of    Promissory    Note 1 

3.  General    Characteristics    of    Promissory    Note 2 

3a.  Other    Clauses   Added    in    Different   Jurisdictions 5 

4.  Form    of    Bill    of    Exchange 11 

5.  General    Characteristics    of   Bill   of    Exchange 11 

6.  Form  of   Check   11 

7.  General    Characteristics    of    Check 11 

7a.  Origin  and  Development  of  Negotiable  Instruments 11 


CHAPTER  II. 
LAW  MERCHANT. 

8.  Meaning   Term    13 

9.  Origin    14 

10.  Origin  of  Bill  of  Exchange  under  Law  Merchant 15 

11.  Origin  of  Promissory  Note  under  Law  Merchant 15 

12.  Law  Merchant  Codified 15 


CHAPTER  III. 

NEGOTIABILITY. 

13.  Meaning  of    Term   17 

14.  Origin  of  Negotiability  18 

15.  Distinction    Between    Assignability    and    Negotiability 18 

16.  Purpose  of   Negotiability  20 

17.  Payment  by  Negotiable  Instrument , 20 

vii 


viii  TABLE  OF  CONTENTS. 

CHAPTER  IV. 
GENERAL  DOCTRINE. 

SECTION.  PAGE, 

18.  Negotiable   Instruments  Similar  to   Money— 22 

19.  Bona  Fide   Holder   22 

20.  Equities    23 

21.  Circulation  when  Parties  not  Immetiiate 25 


CHAPTER  V. 
PARTIES  AND  THEIR  CAPACITY. 

22.  Parties    and    Their    Capacity— In    General 27 

23.  Parties   Partially  or  Wholly  Incapacitated— In   General 28 

24.  Same— Persons   Lacking  Mental   Capacity— Infants 28 

25.  Same— Persons    Lacking    Mental    Capacity— Lunatics    and    Im- 

beciles         "^O 

26.  Same— Persons     Lacking     Mental     Capacity— Drunkards     and 

Spendthrifts  21 

27.  Same— Persons   Lacking  Legal  Capacity  Other   than   Mental— i 

Married  Women   32 

28."    Same— Persons  Lacking  Legal   Capacity   Other  than   Mental— 

The  Bankrupt  or  Insolvent  Payee 33 

29.  Same— Persons   Lacking  Legal   Capacity  Other  than   Mental- 

Alien   Enemies 33 

30.  Parties  Not  Incapacitated — In  General 33 

31.  Same— Persons   Acting  in   Fiduciary   Capacity— Executors    and 

Administrators    34 

32.  Same— Persons    Acting    in    Fiduciary    Capacity— Trustees    and 

Guardians  35 

33.  Same— Persons   Acting   in   Representative    Capacity— Agent 35 

34.  Same— Persons  Acting  in   Representative  Capacity— Partners..    38 

35.  Same— Persons     Acting    in     Representative     Capacity— Private 

Corporations 40 

36.  Same— Persons    Acting   in    Representative    Capacity— Municipal 

or  Public  Corporations 41 

37.  Same — Persons     Acting     in     Representative     Capacity — Public 

Officers    42 


CHAPTER  VI. 
FORMAL  AND  ESSENTIAL  REQUISITES. 

38.  Definition  of  Promissory  Note 43 

39.  Definition    of    Bill    of    Exchange 43 

40.  Formal  and  Essential   Requisites   in   General 44 

41.  Must  be   in  Writing   45 

42.  As  to   Style  and   Material 46 

43.  The  Date  46 

44.  The   Signature   47 

45.  Must  be  Promise  or  Order  to  Pay 49 

46.  Must  be  Payable  to  Ortier  or  Bearer 50 

47.  Must  be  Certain  as  to  Promise  or  Order  to  Pay_____- „-,.  51 


TABLE  OF  CONTENTS.  ix 

SECTION'.  PAGE. 

48.  Must  be  Certain  as  to  Amount 52 

49.  Must  be  Certain  as  to  Time  of  Payment 54 

50.  As  to  Place  of  Payment , 55 

51.  Must  be  Payable  in  Money 56 

52.  Must  be   Necessary   Parties   60 

53.  The   Delivery   61 

54.  Value    Received 64 

55.  As    to    Agreements    Controlling    the    Operation 64 

56.  Days   of   Grace   66 

56a.  As  to  Payable  at  a  Bank 66 

57.  As   to    Stamps   67 

58.  As   to    Blanks    67 

59.  As  to  Instruments  Bearing  a  Seal 68 

60.  The  Several  Parts  of  a  Foreign  Bill  Called  a  Set- —  69 


CHAPTER  VII. 
CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

61.  Meaning  of  Term   72 

62.  Consideration  in  General   72 

63.  Necessity  of  Consideration   77 

64.  Presumption    of    Consideration    78 

65.  Sufficiency   of    Consideration    79 

66.  Inadequacy   of   Consideration   79 

67.  Illegal,   Immoral,   and   Fraudulent    Considerations 80 

68.  Want  or  Failure  of  Consideration 8l 

69.  Between  Whom  Questions  of  Consideration  May  Be  Raised—  82 

70.  As  to  Accommodation    Paper   83 


CHAPTER  VIII. 
SUBDIVISION  A— ACCEPTANCE   OF   BILLS. 

71.  Meaning    of    Term 85 

72.  Object   of   Acceptance 86 

73.  Form  of  Acceptance  87 

74.  Nature  and   Effect  of   Acceptance 89 

75.  According   to    Tenor    of    Bill 90 

76.  Delivery    91 

77.  Acceptance  of  Incomplete  Bill  91 

78.  Varieties  of  Acceptance — In  General 91 

79.  Varieties  of  Acceptance— lAs  to  Terms— General  Acceptance—  92 

80.  Varieties  of  Acceptance — As  to  Terms — Qualified  Acceptance—  92 

81.  Varieties  of  Acceptance — As  to  Form — In  General 92 

82.  Varieties  of  Acceptance — As  to  Form — Written 93 

83.  Varieties  of  Acceptance — As  to  Form — Parol 95 

84.  Varieties  of  Acceptance — As  to  Mode  of  Proof — Express 96 

85.  Varieties  of  Acceptance — As  to  Mode  Proof — Implied 96 

86.  Acceptance  of  Bills  Drawn  in   Sets 97 

87.  Revocation  of  Acceptance   97 

88.  What  Bills  Must  be  Presented  for  Acceptance 97 

89.  By  and  to  Whom  Presentment  Should  be  Made™ 98 


X  TABLE  OF  CONTENTS. 

SECTION.  PAGE. 

90.  Time  of   Presentment   99 

91.  Place  of   Presentment  100 

92.  Presentment    Excused   100 

93.  Acceptance  for  Honor,  or  Supra  Protest 101 

SUBDIVISION  B— TRADE  ACCEPTANCES. 

93a.  Meaning   of    Term 104 

93b.  Trade  Acceptances   Distinguished   from    Ordinary   Bill   of   Ex- 
change      104 

93c.  Trade  Acceptances  Distinguished  from  Promissory  Note 105 

93d.  Nature  of  Transaction  in  which  Tratie  Acceptance  Used 105 

93e.  Where  Payable 105 

93f.  By   Whom    Presented    for    Discount   105 

93g.  Inducements  by  Federal  Reserve  System 106 

93h.  Effect  on  Other  Negotiable  Instruments 106 

93i.    Origin   106 

93j.  Extent  of  Use  107 

93k.  Decisions    107 


CHAPTER   IX. 
NEGOTIATION— BY  INDORSEMENT. 

94.  Meaning  of  Term  Negotiation 108 

95.  Who  May  Negotiate 109 

96.  Methods  of  Transfer 109 

97.  Meaning  of  Indorsement   110 

98.  Who    Indorse    112 

99.  Nature    of    Indorsement    113 

100.  Requisite    of    Indorsement 114 

101.  Varieties    of    Indorsement 115 

102.  Indorsement  in  Full  or  Special  Indorsement 116 

103.  Indorsement  in   Blank 117 

104.  Absolute   and    Conditional    Indorsements 117 

105.  Restrictive  Indorsement 119 

106.  Indorsement  Without  Recourse 121 

107.  Joint  Indorsement 122 

108.  Successive  Indorsements , 123 

109.  Irregular  or   Anomalous   Indorsement 123 

110.  Presumptions  as  to  Indorsement 125 

110a.  Effect  of  Transfer  without  Necessary  Indorsement 126 

110b.  Indorsement  Stricken  Out 126 

110c.  Negotiable    Character    Continued 127 

llOd.  Negotiation  by  Prior  Party 127 


CHAPTER  X. 
TRANSFER— BY  DELIVERY  AND  BY  OPERATION  OF  LAW. 

111.  In  General 128 

112.  By  Delivery 128 

113.  By  Operation  of  Law , ,_  130 


TABLE  OF  CONTENTS.  xi 

CHAPTER  XI. 
TRANSFER— BY  ASSIGNMENT. 

SECTION.  PAGE. 

114.  Assignment  in   General 131 

115.  Assignment  by  a  Separate  Writing 132 

116.  Liability  of  Assignor  of  Bills  and  Notes 133 

117.  Rights   of    Parties 134 

118.  Transfer  by  Legal  Process 135 

118a.  Some  Differences  as  to  Liability  of  Different  Transferrers 136 

118b.  Several  Indorsements  in  Blank,  also  Combination  of  in  Blank 

and    Special    Indorsements 137 


CHAPTER  Xn. 
OF  THE  NATURE  OF  THE  LIABILITIES  OF  THE  PARTIES. 

119.  In   General 139 

120.  Maker   139 

121.  Drawer  140 

122.  Acceptor 141 

123.  Indorser  142 

124.  Accommodation  and  Accommodated  Parties 144 

125.  Agent    148 


CHAPTER  Xni. 

NATURE  AND  RIGHTS  OF  A  BONA  FIDE  HOLDER  OR  A  PUR- 
CHASER FOR  VALUE  WITHOUT  NOTICE. 

126.  Bona  Fide  Holder  for  Value  Without  Notice— In  General 149 

127.  Good  Faith  or  Bona  Fide 150 

128.  Holder  for  Value 150 

129.  Holder   Without    Notice 153 


CHAPTER  XIV. 
REAL  OR  ABSOLUTE  DEFENSES. 

130.  Defenses  in  General 158 

131.  Real   Defenses — In   General 160 

132.  Incapacity  to  Contract — Infancy 160 

133.  Incapacity  to   Contract — Coverture 162 

134.  Incapacity  to  Contract — Where  Corporation   Prohibited 162 

135.  Incapacity  to   Contract — Insanity 163 

136.  Incapacity   to    Contract — ^Drunkenness 163 

137.  Illegality  of  Contract — Gaming,  Usurious   and  Sunday  Notes—  164 

138.  Forgery    169 

139.  Duress  When  Amounting  to  Forgery 170 

140.  Statute  of  Limitations J*- 171 

141.  Failure  to  Stamp 171 


xii  TABLE  OF  CONTENTS. 

CHAPTER  XV. 
PERSONAL  DEFENSES  OR  EQUITIES. 

SECTION.  PAGE. 

142.     In  General 173 

1^3.    Fraud 175 

144     Alteration 176 

145.  Duress  17*5 

146.  Want  or  Defect  of  Consideration 179 

147.  Illegality  of  Consideration 180 

148.  Payment  182 


CHAPTER  XVI. 
PRESENTMENT,  NOTICE  OF  DISHONOR  AND  PROTEST. 

149.  Meaning  of  Terms 183 

150.  In   General 184 

151.  Presentment  for  Acceptance— When  Essential 185 

152.  Presentment   for   Acceptance— Benefit 185 

153.  Presentment   for  Acceptance— Time 185 

154.  When  Instrument  Dishonored  by  Non-Acceptance 186 

155.  Presentment  for  Payment— In    General 187 

156.  Presentment  for  Payment — When    Essential 188 

157.  Presentment  for  Payment— When    Dispensed   With 189 

158.  Presentment  for  Payment— What    Sufficient 189 

159.  Presentment  for  Payment — Date   190 

160.  Presentment  for  Payment— When   Delay   Excused 191 

161.  Presentment  for  Payment — Place   192 

162.  Presentment  for  Payment — To    Whom 193 

163.  Presentment  for  Payment — Effect   of  Failure   to    Present 193 

164.  When  Instrument  Dishonored  by  Non-Payment 194 

165.  Notice  of  Dishonor — In  General 194 

166.  Notice  of  Dishonor — Contents    194 

167.  Notice  of  Dishonor — By  Whom  Given  and  When  to  be  Given__  195 

168.  Notice  of  Dishonor — To  Whom  Given 196 

169.  Notice  of  Dishonor — Time    198 

170.  Notice  of  Dishonor — Place    of    Sending 199 

171.  Notice  of  Dishonor — Notice    through    Postoffice 200 

172.  Notice  of  Dishonor — When  Notice  Unnecessary 200 

173.  Notice  of  Dishonor — lExcuse  for  Failure 201 

174.  Notice  of  Dishonor — Effect  of  Notice  as  to  Prior  and   Subse- 

quent Parties  203 

175.  Protest— Method   of 204 

176.  Protest— Purpose 207 

177.  Protest— Notice    208 

178.  Protest— What  Should  be  Protested  and  What  Not  Necessary.  210 

179.  Protest— Waiver 211 

180.  Protest — Miscellaneous  Matters 211 


CHAPTER  XVn. 
DISCHARGE  OF  NEGOTIABLE  INSTRUMENTS. 

181.  In  General 214 

182.  By    Payment 215 


TABLE  OF  CONTENTS.  xin 

SECTION.  PAGE. 

183.  By  Payment  for  Honor 219 

184.  By  Cancellation  and  Surrender 220 

185.  By  Covenant  Not  to  Sue 221 

186.  By  Accord  and  Satisfaction 221 

187.  By  Substitution  of  Another  Obligation 222 

188.  By  Alteration 223 

189.  By  the  Principal  Debtor  Becoming  the  Holder  in  Due  Course—  223 

190.  By  Operation  of  Law 224 

191.  By  Renunciation  of  Holder 225 

192.  When  a  Person  Secondarily  Liable,  Discharged 225 

CHAPTER  XVIII. 
CONFLICT  OF  LAWS,  OR  WHAT  LAW  GOVERNS. 

193.  In  General 227 

194.  As  to  Validity,  Interpretation  and  Effect 228 

194a.  As  to  Capacity  and  Effect 229 

195.  As  to  Liability  of  Alaker,  Drawer  and  Acceptor 230 

196.  As  to  Payment,  Interest  and  Damages 230 

197.  As  to  Liability  of  Indorsers 231 

198.  As  to  Presentment,  Protest  and  Notice 232 

199.  Rule  in  Federal  Courts 232 

199a.  Damages   upon   Dishonor    of   Foreign   Bill 233 

199b.  Date  at  Which  Rate  of  Exchange  Should  be  Applied 233 

CHAPTER  XIX. 

SUBDIVISION  A— CHECKS. 

200.  Check  Defined  and  Distinguished  from  Bill  of  Exchange 234 

201.  The  Formalities   of   a   Check 236 

202.  Presentment  of  a  Check  for  Payment 236 

203.  Certification  of  Check 238 

204.  Forgery  and  Alteration  of  Check 241 

205.  Memorandum  Check 242 

206.  Stale  Check 243 

206a.  Cashier's   Check 243 

206b.  Paid  or  Cancelled  Check 244 

206c.  Crossed   Check 244 

206d.  Fraudulent   Check 244 

206e.  Stolen  Checks  or  Stolen  Negotiable  Securities 245 

206f.  Check  as    Payment 246 

206g.  Stopping    Payment 246 

207.  Checkholder's  Right  to  Sue  the  Bank 248 

208.  The  Depositor's  Right  to  Draw  on  the  Bank 249 

209.  Failure  of  Bank  to  Honor  Check , 250 

SUBDIVISION  B— TRAVELERS'  CHECKS. 

209a.  Meaning  of  Term  and  Object 251 

209b.  Provisions    251 

209c.  Rights   and   Liabilities ^^ 252 

209d.  Advantages    252 

209e.  Forgery  of  Travelers'  Checks 252 


xiv  TABLE  OF  CONTENTS. 

CHAPTER  XIX— A. 
LOST  AND  DESTROYED  NEGOTIABLE  INSTRUMENTS. 

SECTION.  PAGE. 

209f.  In    General 253 

209g.  Diligence  of  Owner 253 

209h.  No  Title  in  Finder 253 

209i.    When    Party  Liable   not   Discharged 254 

209j.  Rule   as   to    Indemnity 254 

209k.  Form  of  Bond  of  Indemnity  for  Paying  Lost  Note 254 

2091.    Copy  Admissible   in   Evidence 255 

209m.  Burden  of  Proof 256 

209n.  Suit  at  Law  or  in  Equity 256 

209o.  Demand,  Protest  and  Notice  as  to  Lost  Instrument 257 


CHAPTER  XX. 

SOME  OTHER  KINDS  OF  COMMERCIAL  PAPER. 

210.    In  General 258 

2n.     Bill   of  Latiing 258 

212.  Certificate   of    Deposit 260 

213.  Certificate  of  Stock 261 

214.  Coupon    Bonds 262 

214a.  Liberty  Bonds 263 

215.  Draft  264 

216.  Due   Bill 264 

217.  Letters  of  Credit 265 

218.  Paper  Money 265 

219.  Warehouse    Receipt 266 

219a,  Miscellaneous   266 


CHAPTER  XXL 

SURETYSHIP  AND  GUARANTY. 

220.  Terms   Defined   and   Distinguished 267 

220a.  Who  are  Principals  and  Who   Sureties 269 

221.  Consideration  as   to   Guaranties 269 

222.  Guaranty  as  Affected  by   Statute   of   Frauds 270 

222a.  Conditional    Guaranties 271 

223.  Negotiability  of  Guaranties 271 

224.  Notice   to   Guarantor  of   Default  of   Principal   When   Demand 

is   Made 272 

225.  Liability  of  Concealed  Sureties  on  Accommodation  Paper 272 

226.  Remedies    of    Guarantors 273 

226a.  Limit   of   Surety's    Recovery 273 

226b.  Trial   of   Suretyship 273 

227.  Discharge  of  Guarantors  and  Sureties 274 

227a.  Contribution    Between    Sureties , 276 


TABLE  OF  CONTENTS.  xv 

CHAPTER  XXI— A. 
NEGOTIABLE  INSTRUMENTS  WITH  COLLATERAL  SECURITY. 

SECTION.  PAGE. 

227b.  Meaning  of  Term  Collateral  Security 278 

227c.  Form   of    Promissory   Note   with    Collateral    Security 280 

227ti.  Holder  of  Collateral  Security  a  Holder  for  Value — When  Trans- 
fer  is    for   Debt    Created   at   Time   of   Transfer 281 

227e.  Holder  of  Collateral  Security  a  Holder  for  Value — When  Trans- 
fer is  for  a  Pre-existing  Debt 281 

227f.  Holder  of  Collateral  Security  a  Holder  for  Value — When  Trans- 
fer is  as  Collateral  for  a  Debt  Not  Yet  Due 281 

227g.  Presumption  as  to  Ownership 282 

227h.  Whether  or  Not  Note  Secured  by  Collateral  is  Negotiable 282 

227i.    Whether  or  Not  Collateral  Note  or  Bill  is  Negotiable 283 

227J.  Effect  of  Agreement  for  Delay 284 

227k.  Provision  for  Deposit  of  Additional  Collateral 285 

2271.    Proviso  in  Note  Authorizing  Sale  of  Collaterals 285 

227m.  What  Amounts  to  Payment 285 

227n.  In  Some  Jurisdictions  by  Statute,  the  Surrender  of  Collateral 

Discharges    Indorser 286 

227o.  Holder   Receiving   Collateral    not    Required    to    Proceed    upon 

Same   Before   Suing  Indorser 286 

227p.  Collateral    Security   Must   Be    Exhibited 286 

227q.  Right  of  Maker  to  Claim  a  Defense  Because  Holder  has  Col- 
lateral   Security   286 

227r.  Amount  of  Recovery  on  Collateral  Security 287 

227s.  Rights  of  Indorsee  as  to  Stipulations  in  Collateral  Note 287 

227t.  Whether  Surrender  of  Collateral  Discharges  Surety 287 

227u.  Whether    Surrender   of  Collateral   Discharges    Guarantor 287 

TlTw.  Effect  upon  Necessity  of  Presentment,  Protest,  and  Notice  as  to 
Drawer    or    Indorser    When    They   are    in    Possession    of 

Security 288 

227w.  Accommodation  Paper  as  Collateral  Security 289 

227x.  Collateral   Released  or  Lost 289 

227y.  Miscellaneous    289 

227z.  Form  of  Guaranty  of  Collateral   Note 291 

227aa.  Form  of  Note  with  Transfer  of  Account 291 


CHAPTER  XXI— B. 

WHO  MAY   SUE— WHO   MAY   BE   SUED. 

227bb.    In  General 292 

227cc.     Party  in  Interest 292 

227dd.     Holder  May  Sue  When  Another  is  Entitled  to  Proceeds 293 

227ee.     Instruments  Payable  to  Bearer  or  Indorsed  in  Blank 294 

227ff.     Acceptor    _ 295 

227gg.     Drawee  295 

227hh.     Payee    295 

227ii.       Drawer     295 

227jj.     Agent    296 

227kk.     Public  Officials . 297 


xvi  TABLE  OF  CONTENTS. 

SECTION.  PAGE. 

22711.      Holder  of  Instrument  for  Collection ___  297 

227mm.  Who  May  Sue— Miscellaneous 298 

227nn.     Parties   to   Actions — Defendants 300 


PART  II 

PLEADINGS,  EVIDENCE  AND  TRIAL  PROCEDURE  AS 
TO  BILLS,  NOTES  AND  CHECKS. 


CHAPTER  XXII. 
PLEADINGS— IN  GENERAL. 

228.  Meaning  of  Term 303 

229.  Classes  antl  Order  of  Pleadings 303 

230.  The    Complaint    or    Declaration 304 

231.  Pleadings   After   Complaint   or  Declaration 304 


CHAPTER  XXIII. 
FORMS  OF  COMMON  LAW  PLEADING. 

232.  Forms  of  Common  Law  Pleading — In  General 306 

DECLARATIONS— NOTE,  BILL  AND  CHECK. 

233.  Payee  Against  Maker 306 

234.  Indorsee  Against  Maker 307 

235.  Indorsee  Against  Payee  or   Other   Indorsers 307 

236.  Declaration  on  Bill  of  Exchange  by  Drawer  Against  Acceptor.  308 

237.  Payee   Against   Drawer    for   Non-Acceptance 308 

238.  Indorsee  Against  Indorser  for  Non-Acceptance 309 

ANSWERS NOTE,  BILL  AND  CHECK. 

239.  Plea 309 

240.  Plea  and  Affidavit  of  Merits 310 

241.  Affidavit  Denying  Execution  of  Instrument 310 

242.  Plea  of   Payment   by   Services 310 

243.  Averment  of  Set-off'. 311 

244.  Statute  of  Limitations 311 

245.  Averment  of  Arbitration  and  Award 311 


CHAPTER  XXIV. 

FORMS  OF  CODE  PLEADING. 

246.    Forms  of  Codei  pleading— In  ^General 313 


TABLE  OF  CONTENTS.  xvii 

COMPLAINTS— PROMISSORY  NOTE. 

SECTION.  PAGE. 

247.  Complaint  on  Promissory  Note  by  Payee  Against  Maker 313 

248.  Same For    Interest   Due 314 

249.  Same — Note  Providing  for  Attorney's  Fee 314 

250.  Same — "Whole  Amount  Due  on  Failure  to  Pay  Part 314 

251.  Same — Payable  After   Sight,   Demand   or   Notice 315 

252.  Same Excuse  for  Not  Setting  Out  Copy  of  Note 315 

253.  Same — Lost  Note 315 

254.  Complaint  on  Promissory  Note  by  Executor  of  Payee  Against 

Maker    316 

255.  Complaint   on    Promissory   Note — Indorsee   Against    Maker 316 

256.  Same — Assignee  by  Delivery  Against  Maker  and  Assignor 316 

257.  Same — Indorsee  Against  Maker  and  Indorsers 317 

258.  Same — Indorsee  Against  Indorser — Payable  in  Another  State — ■ 

Negotiable  by  Foreign  Statute 317 

COMPLAINTS— BILLS  OF  EXCHANGE. 

259.  Complaint    on    Bill    of   Exchange — Payee    Against   Drawer    on 

Non-Acceptance    318 

260.  Same — Payee  Against  Acceptor  on  Non-Payment 318 

261.  Same — Drawer  Against  Acceptor  on  Non-Payment 319 

262.  Same — Indorsee  Against  Drawer  on  Non-Acceptance 319 

263.  Same — Indorsee  Against  Acceptor  on  Non-Payment 320 

264.  Same — Indorsee  Against  Acceptor — 'Payable  at  Particular  Place  320 

265.  Same — Indorsee   Against    Drawer — Indorsers   and   Acceptor   on 

Inland  Bill  of  Exchange 320 

266.  Same — Indorsee  Against  Drawer  When   Payable   at  a   Certain 

Place 321 

267.  Same — Indorsee  Against  Drawer — No  Funds  in  Drawer's  Hands 

— Failure  to  Notify  Drawer 321 

268.  Same — Indorsee  Against  Drawer — Excuse  for  Non-Presentment 

--No  Effects... 322 

269.  Same — Indorsee  Against  Drawer — Demand  and  Notice  Waived.  322 

270.  Same — Indorsee  Against  Indorser — Non-Payment  by  Acceptor 323 

COMPLAINTS— BANK  CHECK. 

271.  Complaint  on  Bank  Check — Payee  Against  Drawer 323 

272.  Same — Payee  Against  Drawee 324 

273.  Same — Drawer  Against  Drawee 324 

274.  Same — Indorsee    Against    Indorsor 324 

ANSWERSHNOTE,  BILL  AND  CHECK. 

275.  Answer  to    Complaint   on   Promissory   Note,    Bill  of   Exchange 

or  Check — General  Denial 325 

276.  Same — Denial   of    Execution    of    Instrument 325 

277.  Same — Want  of  Consideration 325 

278.  Same — Partial  Want  of  Consideration 325 

279.  Same — Without   Consideration    as   to   Indorsee 325 

280.  Same — Illegal  Consideration 326 

281.  Same — Failure  of   Consideration 326 

282.  Same — False    Representations; 327 


XVIU 


TABLE  OF  CONTENTS. 


SECTION.  ^^51^- 

283.  Same— Payment   ^_^' 

284.  Same— Alteration ■327 

285.  Same— That  Acceptance  was  for  Accommodation 328 

CHAPTER  XXV. 
EVIDENCE— IN  GENERAL. 

286.  In  General ^29 

287.  Presumptions  in  General 329 

288.  Burden   of   Proof   in   General 330 

289.  Competency  of  Parties  to  Negotiable  Instruments  as  Witnesses  330 

290.  Declarations  and  Admissions 331 

CHAPTER  XXVI. 
EVIDENCE   AS   TO    PARTICULAR   CHARACTERISTICS. 

291.  As  to  Time  332 

292.  As  to  the  Date 333 

293.  As  to  Amount  Payable 334 

294.  As  to  Place  of  Payment 335 

295.  As  to  Mode  of  Payment 335 

296.  As  to  Interest 336 

297.  As  to  Consideration 336 

298.  As  to    Parties '^'^'^ 

299.  As  to  Ambiguous  or  Omitted  Stipulations 338 

300.  As  to  Execution  and   Delivery 339 

301.  As  to  Acceptance  of  Bills •339 

302.  As   to    Transfer 340 

303.  As  to  Conditions 341 

304.  As  to  Mistake 342 

305.  As  to  Fraud  and  Duress 342 

306.  As  to  Usury 343 

307.  As  to  Payment  and  Discharge 343 

308.  As  to  Presentment  and  Demand 343 

309.  As  to  Protest  and  Notice 344 

310.  Bills  and  Notes  as  Evidences 344 

311.  As  to  Meaning  of  Certain  Terms 345 

CHAPTER  XXVn. 
TRIAL  PROCEDURE  ON  BILL,  NOTE  OR  CHECK. 

312.  Essentials  of  Procedure 346 

313.  Common  Law  Procedure 347 

314.  Code   Procedure 347 

315.  Steps  in  a  Jury  Trial 347 

316.  Impaneling  the  Jury 347 

317.  Opening  Statements  348 

318.  Evidence  of  Plaintiff 348 

319.  Evidence  of   Defendant 351 

320.  The  Argument  352 

321.  The  Charge,  VerMict  and  Judgment 352 


PART  III 


THE   NEGOTIABLE   INSTRUMENTS   LAW 

ANNOTATED. 

Pages 

Introduction    353-357 

List  of  States  and  Territories  where  Negotiable  Instruments  Law 

Enacted    358-359 

Table    Showing    the    Corresponding    Sections    of    the    Statutes    as 

Adopted  in  the  Different  States  and  Territories 360-367 

The  Negotiable  Instruments  Law 368-706 


ARTICLE.  PAGE. 

I.  Form  and  Interpretation  of  Negotiable  Instruments— 369-426 

n.     Consideration    427-454 

in.     Negotiation 455-480 

IV.     Rights  of  Holder 481-537 

V.     Liabilities    of    Parties 538-562 

VI.     Presentment   for  Payment 563-585 

VIL     Notice  of  Dishonor 586-614 

Vin.     Discharge  of  Negotiable  Instruments 615-639 

IX.     Bills   of   Exchange — Form   and    Interpretation 640-645 

X.     Acceptance  of  Bills  of  Exchange 646-656 

XI.     Presentment    for    Acceptance 657-661 

XII.     Protest    662-666 

XIII.  Acceptance   for   Honor 667-670 

XIV.  Payment    for   Honor 671-672 

XV.     Bills  in  a  Set 673-675 

XVI.     Promissory   Notes    and   Checks 676-691 

XVII.     General    Provisions    692-704 

XVIII.  Notes  Given  for  a  Patent  Right  and  for  a  Speculative 

Consideration     705-706 


APPENDIX  A. 

Tabulated  Laws  of  the   States   and  Territories. 


.707-713 


APPENDIX  B. 

Digest  of  Law  in  Georgia  Where  Negotiable  Instruments  Law  Not 

Adopted   714-718 


PART  I 

NEGOTIABLE   INSTRUMENTS 


CHAPTER  I. 


GENERAL  CHARACTERISTICS  AND  GENERAL  FORM  OF  BILLS. 
NOTES  AND  CHECKS. 


§  L  Introductory. 

2.  Form  of  promissory  note. 

3.  General        characteristics        of 

promissory  note. 
3a.  Other    clauses    added    in    dif- 
ferent jurisdictions. 

4.  Form  of  bill  of  exchange. 


§  5.  General    characteristics    of   bill 
of  exchange. 

6.  Form  of  check. 

7.  General     characteristics     of 

check. 
7a.  Origin  and  development  of  ne- 
gotiable inatrurnents. 


§  1.  Introductory.  The  most  common  forms  of  commer- 
cial paper  used  today  in  commercial  transactions  are  promis- 
sory notes,  bills  of  exchange  and  bank  checks.  At  present 
these  constitute  the  medium  of  exchange  for  about  ninety  per 
cent  of  all  commercial  transactions.  In  this  treatise  these  three 
instruments  will  be  considered  and  it  is  essential  in  the  begin- 
ning that  a  clear  idea  should  be  had  in  a  general  way  of  the 
characteristics  and  form  of  such  instruments. 

§  2.  Form  of  promissory  note.  The  following  is  a  simple 
form  of  a  promissory  note : 


$200.00 

New  York  City,  New  York, 

December  1,  1921. 

Six  months after  date  I 

Tpi'omise  to  pay  to  the  order  of  William  Redding 

Tivo  Hundred Dollars 

at  the  First  National  Bank. 
Value  received. 

No Due JOHN  MORRIS. 


2  NEGOTIABLE    INSTRUMENTS.  §3 

The  following  is  a  form  of  a  promissory  note  which  is  com- 
mon in  some  jurisdictions : 


$200.00        Indianapolis,  Ind.,  December  1,  1921. 

Six  months after  date  I  promise 

to  pay  to  the  order  of  William  Redding 

at  The  Eagle  National  Bank,  of  Indianapolis,  Ind., 
Tzvo  Hundred - Dollars 

With  five  per  cent  Attorney's  f6«s,  upon  the  principal  of  this 
note.  Value  received,  without  any  relief  w^hatever  from  Valua- 
tion or  Appraisement  laws  of  the  State  of  Indiana.  With  in- 
terest at  the  rate  of  eight  per  cent  per  annum  after  maturity 
until  paid.  The  drawers  and  endorsers  severally  waive  present- 
ment for  payment,  protest,  notice  of  protest,  and  notice  of  non- 
payment of  this  note. 

JOHN  MORRIS. 


§  3.  General  characteristics  of  promissory  note.  Let  us  ex- 
amine the  parts  of  the  above  instrument  in  a  general  way,  com- 
mencing with  the  upper  left  corner  of  the  instrument,  (a)  We 
note  first  the  figures,  "$200.00."  This  is  to  indicate  the  amount 
of  the  note  and  being  in  figures  is  more  quickly  grasped  than  if 
in  writing.  If  there  is  a  conflict  between  the  figures  and  the 
writing  below  on  the  instrument,  the  writing  will  control, 
(b)  The  place,  "Indianapolis,  Ind.,"  shows  the  place  where 
this  contract  to  pay  is  entered  into,  and  as  the  laws  of  the 
various  states  differ  as  to  the  requisites  of  such  a  contract  and 
as  to  the  enforcement  of  the  same  it  is  generally  essential  that 
the  place  of  entering  into  the  agreement  should  be  set  out 
so  that  it  may  be  clear  just  what  law  governs  as  to  the  contract 
or  instrument,  (c)  The  date,  "December  1,  1921,"  is  likewise 
essential  so  as  to  determine  when  the  note  is  due  and  from 
what  time  interest  is  to  be  charged  and  whether  or  not  the 
collection  of  the  instrument  is  barred  by  the  statute  of  limita- 
tions, (d)  The  time,  "Six  months  after  date,"  indicates  the 
period  of  time  for  which  the  instrument  is  to  run  or  indicates 
when  the  promise  on  the  instrument  should  be  fulfilled, 
(e)  The  promise,  "T  promise  to  pay,"  is  an  absolute  promise 
to  do  something,  that  is,  to  pay ;  it  does  not  read,  if  so  and  so 
happens  or  does  not  happen  I  promise  to  pay,  but  it  is  con- 
nected with  no  conditions  of  any  nature.^    (f)    The  words  "to 

iGrinnison   v.    Russell,   14   Neb.  Am.  St.  Rep.  166,  11  L.  R.  A.  559; 

521,    16   N.   W.   819,   14  Am.    Rep.  Neg.  Inst.   Law,   §§  1  and  4;  Bills 

126;   Iron  City  Nat.   Bank  v.  Mc-  Exch,  Act,  §  3. 
Cord,  139  Pa.  St.  52,  21  At).  143,  23 


§  3  GENERAL  FORM  OF  BILLS  AND  NOTES.  3 

the  order  of,"  signify  a  promise  to  pay  it  to  the  order  of  any 
who  may  be  designated.  We  shall  consider  in  a  subsequent 
chapter  whether  such  words  are  absolutely  necessary  and 
whether  they  should  always  be  in  the  form  indicated,  (g)  The 
name,  "William  Redding,"  is  the  person  to  whose  order  some- 
thing is  to  be  paid  and  he  is  known  as  the  payee,  (h)  Then 
follow  these  words,  "at  the  Eagle  National  Bank  of  Indianapo- 
lis, Indiana,"  indicating  where  the  note  is  to  be  paid ;  however, 
it  may  be  paid  at  any  other  place  agreed  upon  by  the  inter- 
ested parties,  (i)  The  amount  "Two  Hundred  Dollars,"  indi- 
cates, as  the  figures  did,  the  sum  promised  to  be  paid.  The 
same  being  in  writing  cannot  be  so  easily  altered  and  since  it 
takes  longer  to  write  the  words  than  the  figures  the  words  are 
more  likely  to  be  accurate,  (j)  The  phrase,  "with  five  per 
cent  Attorney's  Fees,"  indicates  that  if  William  Redding,  the 
payee,  or  any  one  to  whose  order  he  should  make  it  payable, 
shall  find  it  necessary  to  employ  an  attorney  to  collect  the 
amount,  five  per  cent  additional  will  be  paid  by  the  party  to 
the  instrument  who  makes  it  necessary  that  an  attorney  should 
be  employed,  (k)  The  words  "value  received,"  indicate  that 
a  consideration  was  given  for  the  note  but  most  jurisdictions 
hold  that  these  words  are  not  necessary  since  a  consideration 
is  presumed.  (1)  The  phrase,  "without  any  relief  whatever 
from  Valuation  or  Appraisement  Laws,"  shows  that  if  the 
note  is  not  paid  when  it  should  be  and  suit  is  brought  and 
judgment  recovered,  then  the  one  against  whom  judgment  has 
been  recovered  waives  any  rights  that  he  may  have  as  to 
requiring  that  the  property  taken  to  satisfy  the  judgment,  shall 
be  valued  or  appraised  by  persons  appointed  for  that  pur- 
pose, and  the  property  taken  may  be  sold  at  any  price.  Thus 
the  delay  for  a  valuation  and  appraisement  is  avoided,  (m) 
The  words,  "with  interest  at  the  rate  of  eight  per  cent  per 
annum  after  maturity  until  paid,"  show  what  interest  is  to 
be  paid  by  the  maker  in  addition  to  the  two  hundred  dollars 
if  not  paid  when  due.  This  interest  will  be  calculated  from 
June  1,  1922,  the  date  of  maturity,  up  to  the  time  the  note  is 
paid.  The  per  cent  set  out  is  eight  per  cent  and  we  shall  see 
in  a  later  part  of  this  work  that  different  states  have  different 
laws  governing  the  rate  of  interest  which  may  be  charged, 
(n)  By  the  words  "the  drawers  and  endorsers  severally  waive 
presentment  for  payment,  protest  and  notice  of  protest  and  non- 
payment of  this  note"  is  meant  that  the  drawers  (or  persons  who 
make  the  note)  and  the  endorsers  (or  persons  through  whose 
hands  the  note  passes  and  who  write  ther  names  on  the  back  of  it) 
waive  any  rights  that  they  may  be  entitled  to  because  the  instru- 


4  NEGOTIABLE    INSTRUMENTS.  §  3 

ment  when  due  was  not  properly  presented  for  payment  and  the 
proper  notice  was  not  given  to  other  parties  who  should  have 
notice  of  the  non-payment  and  other  facts  in  connection  therewith. 

Thus  if  such  rights  were  not  waived  and  William  Redding 
should  indorse  the  note,  that  is,  write  on  the  back  of  the  note 
an  order  that  it  be  paid  to  John  Graham  and  John  Graham  in 
turn  should  indorse  it,  that  is,  order  it  to  be  paid  to  James 
Spencer,  and  on  June  1,  1922,  when  the  note  became  due 
John  Morris,  the  maker,  refused  to  pay  James  Spencer,  the 
holder,  then,  in  order  for  James  Spencer  to  recover  from  John 
Graham  on  the  note  it  would  be  necessary  for  him  to  present  the 
note  to  John  Morris  for  payment  and  then  notify  John  Graham 
of  the  refusal  of  John  Morris  to  pay  and  notify  him  that  he, 
James  Spencer,  expected  to  look  to  him  for  the  payment  of  the 
note.  In  other  words  it  would  be  necessary  to  present  the  note 
to  John  Morris  for  payment  unless  the  indorsers  waived  pre- 
sentment for  payment  and  it  would  be  necessary  to  notify  the 
indorsers  of  the  non-payment  unless  notice  of  non-payment  of 
the  note  was  waived.  The  contract  of  John  Graham  is  that  he 
will  pay  the  note  provided  it  is  presented  to  the  maker,  John 
Morris,  and  in  case  John  Morris  does  not  pay  it  and  he,  John 
Graham,  is  notified  of  that  fact,  then  he,  John  Graham,  will 
pay  it. 

In  case  the  law  should  require  the  note  to  be  protested  in  order 
to  bind  the  drawers  and  indorsers,  it  would  be  necessary  for  a 
notary  public  to  take  the  instrument  to  John  Morris  and  John 
Morris  would  state  to  the  notary  public  that  he  refused  to  pay  it ; 
the  notary  would  make  out  a  paper  stating  that  the  instrument 
had  been  dishonored,  and  that  he  had  protested  it  for  non-pay- 
ment and  to  this  statement  he  would  attach  his  seal.*  This  is 
the  protest,  it  is  not  the  notice  of  the  protest.  The  protest  then 
is  a  solemn  declaration  in  writing  made  by  the  notary  public  that 
the  instrument  has  been  dishonored  by  a  refusal  to  pay  it.^ 

At  the  trial  this  statement  of  the  protest  by  the  notary  would 
be  good  proof  that  the  instrument  had  been  protested  and  the 
notice  had  been  given  to  John  Graham.  After  the  instrument 
is  protested  as  above  set  out,  the  notary  would  send  notice  to  all 
those  parties  on  the  instrument  whom  the  owner  desired  to  hold 
responsible,  which  notice  would  state  that  the  instrument  had 
been  presented  for  payment,  that  payment  had  been  refused, 
and  that  the  instrument  had  been  protested  for  non-payment. 

SiTevis  V.  Randall,  6  Cal.  632,  65  3  Townsend    v.    Lorain    Bank.    2 

Am.  Dec.  547;  Shields  v.  Farmers  Ohio  St.  345;  Swayze  v.  Britton, 
Bank,  5  W.  Va.  254.  17  Kan.  625. 


§  3a  GENERAL  FORM  OF  BILLS  AND  NOTES.  5 

The  stipulation  in  this  instrument  waiving  protest  and  notice 
of  protest  waives  these  rights,  otherwise  it  would  be  necessary 
for  James  Spencer,  the  holder,  to  take  these  steps  in  order  to  re- 
cover from  John  Graham,  an  indorser,  in  case  the  instrument  was 
one  which  the  law  required  to  be  protested.  The  contract  of  the 
indorser  under  such  circumstances  is  that  he  will  pay  the  instru- 
ment provided  the  maker  refuses  to  pay  it  and  the  owner  of  the 
instrument  protests  it  and  gives  notice  of  that  fact. 

(0)  "John  Morris"  is  the  maker  or  drawer  of  this  note.  He 
is  the  one  who  promises  to  pay  it  in  the  first  instance.  The  note 
may  be  signed  by  more  than  one  as  we  shall  consider  more  fully, 
in  another  part  of  this  work. 

§  3a.  Other  clauses  added  in  different  jurisdictions.  In 
some  jurisdictions  by  statute  or  by  court  decision  certain  clauses 
may  be  added  to  promissory  notes  which  do  not  render  such 
notes  invalid  or  non-negotiable  in  those  jurisdictions.  The  holder 
of  the  instrument  should  consult  the  law  of  the  particular  jurisdic- 
tion to  see  whether  or  not  such  clauses  affect  the  negotiability  of 
the  instrument  in  that  jurisdiction.  Among  these  clauses  the  fol- 
lowing are  the  most  common : 

(1)  "For  value  received,  negotiable  and  payable  without 
defalcation  or  discount." 

(2)  "We  also  agree  to  waive  protest,  notice  thereof  and  dili- 
gence in  collecting." 

(2)     "With  interest  thereon    from until  paid, 

at  the  rate  of per  cent,  per  annum  payable  monthly,  both 

principal  and  interest  payable  in  the  like  Gold  Coin." 

(4)  "If  this  note  is  not  paid  when  due,  and  if  placed  in  the 
hands  of  a  attorney  for  collection,  we  agree  to  pay  an  attorney's 
fee  of  five  per  cent  of  the  face  of  this  note." 

(5)  "Without   defalcation,   negotiable   and   payable  at   their 

office  in ,  for  value  received,  and  they  are 

hereby  directed  to  place  the  proceeds  to  the  credit  of " 

(6)  "This  note  and  the  consideration  thereof,  are  for  the 
benefit  of  my  sole,  separate  and  individual  estate,  which  estate 
I  expressly  hereby  charge  with  the  payment  thereof.  (Married 
woman's  negotiable  note)." 

(7)  "To  be  discounted  at  the  rate  of  eight  per  cent,  per 
annum;  and  if  not  paid  at  maturity,  to  bear  interest  thereafter 
at  eight  per  cent,  per  annum,  with  all  costs  of  collection  and  10 
per  cent,  attorney's  fees." 

(8)  "We  the  endorsers,  guarantors,  assignors  and  sureties, 
severally  waive  presentment  for  payment,  protest  and  notice  of 
protest  for  non-payment  of  this  note  and   all   defense  on  the 


6  NEGOTIABLE    INSTRUMENTS.  §  3a 

ground  of  any  extension  of  time  of  its  payment  that  may  be 
given  by  its  holder  or  holders  to  the  maker  or  makers  thereof." 

(9)  "Value  received.    The  drawer  and  endorser  of  this  note 

hereby  waive  the  benefit  of homestead  exemption  as  to 

this  debt." 

(10)  "No  extension  of  the  time  of  payment,  with  or  with- 
out our  knowledge,  by  receipt  of  interest  or  otherwise,  shall 
release  us,  or  either  of  us,  from  the  obligations  of  payment.  I 
sign  this  note  intending  hereby  to  charge  my  separate  estate  with 
the  payment  of  same." 

(11)  "Also  reasonable  attorney's  fee  in  any  action  brought 
on  this  note." 

(12)  "The  drawers  and  endorsers  severally  waive  present- 
ment for  payment,  protest  and  notice  of  protest  and  non-payment 
of  this  note,  and  all  defenses  on  the  ground  of  any  extension  of 
the  time  of  its  payment  that  may  be  given  by  the  holder  or  hold- 
ers to  them  or  either  of  them.    Witness  our  hands  and  seals." 

(13)  "And  if  this  note  is  placed  in  the  hands  of  an  attorney 
for  collection  or  has  to  be  sued  on,  we,  the  makers  and  all  en- 
dorsers, agree  to  pay  ten  per  cent  attorney's  fees,  and  all  ex- 
penses incurred  in  its  collection,  in  addition  to  the  principal  and 
interest,  same  to  be  taxed  up  in  judgment." 

(14)  "And  if  interest  is  not  paid  annually,  to  become  as  prin- 
cipal and  bear  the  same  rate  of  interest.  Makers  and  endorsers 
hereby  waive  presentment  and  notice  and  protest." 

(15)  "All  the  signers  of  this  note  agree  to  be  holden  for  its 
payment,  although  the  time  of  payment  for  the  whole  or  any  part 
of  this  sum  should  be  extended  from  time  to  time ;  such  exten- 
sion not  to  exceed  in  the  aggregate  six  years." 

(16)  "If  this  note  is  not  paid  when  due,  or  is  collected  by 
attorney  or  legal  proceedings,  we  promise  to  pay  an  additional 
sum  of  ten  per  cent,  of  the  amount  of  this  note  as  attorney's 
fees.  We  waive  protest  and  notice  of  non-payment  and  all  ex- 
emption laws  and  rights  thereunder." 

(17)  "In  case  of  the  insolvency  of  the  undersigned  any  in- 
debtedness due  from  the  legal  holder  hereof  to  the  undersigned 
may  be  appropriated  and  applied  hereon  at  any  time,  as  well 
before  as  after  the  maturity  hereof." 

(18)  "We,  and  each  of  us,  hereby  empower  any  attorney  at 
any  time  hereafter  to  appear  for  us,  either  or  any  of  us,  in  any 
court,  in  term  time  or  vacation,  and  confess  judgment  against 
us,  each  or  any  of  us,  without  process  on  the  above  note  in  favor 
of  any  legal  holder  for  said  sum,  interest,  costs  and  $ 


§  3a  GENERAL  FORM  OF  BILLS  AND  NOTES.  7 

attorney's  fees,  and  to  release  all  errors  and  consent  to  imme- 
diate execution." 

(19)  "Now,  should  it  become  necessary  to  collect  this  note 
through  an  attorney,  either  of  us,  whether  maker,  security,  or 
endorser  on  this  note,  hereby  agrees  to  pay  all  costs  of  such  col- 
lection, including  a  reasonable  attorney's  fee. 

The  drawers  and  endorsers  severally  waive  presentment  for 
payment,  protest  and  notice  of  protest  and  non-payment  of  this 
note." 

(20)  "We  agree  that  after  maturity  this  note  may  be  ex- 
tended from  time  to  time,  by  any  one  or  more  of  us  without 
the  knowledge  or  consent  of  any  of  the  others  of  us,  and  after 
such  extension  the  liability  of  all  parties  shall  remain  as  if  no 
such  extension  had  been  made." 

(21)  "We,  the  endorsers,  guarantors  and  sureties,  severally 
waive  presentment  for  payment,  protest  and  notice  of  protest 
for  non-payment  of  this  note,  and  all  defense  on  the  ground  of 
extension  of  time  of  its  payment  that  may  be  given  by  its  holder 
or  holders  to  the  maker  or  makers  thereof.  If  this  note  is  not 
paid  at  maturity  and  is  placed  in  the  hands  of  an  attorney  for 
collection,  or  suit  is  brought  hereon,  ten  per  cent,  of  the  entire 
amount  shall  be  paid  as  attorney's  fee  and  costs  of  collection." 

(22)  "And  if  not  so  paid,  the  whole  sum  of  principal  and 
interest  to  become  immediately  due  and  collectible  at  the  option 
of  the  holder  of  this  note.    And  in  case  suit  or  action  is  instituted 

to  collect  this  note,  or  any  portion  thereof promise  and 

agree  to  pay,  in  addition  to  the  costs  and  disbursements  pro- 
vided by  statute Dollars  in  like  Gold  Coin 

for  attorney's  fees  in  said  suit  or  action." 

-  (23)  "Giving  said  Bank  the  right  of  collecting  this  note  at 
any  time,  notwithstanding  the  payment  of  interest  in  advance, 
or  of  extending  from  time  to  time,  by  the  reception  of  interest 
in  advance  or  otherwise,  the  payment  of  the  whole  or  any  part 
thereof,  as  may  be  convenient  or  agreeable  to  the  Bank." 

(24)  "And  further  agree  that  in  case  of  default  in  the  pay- 
ment of  this  note,  principal  or  interest,  to  pay  all  costs  and  ex- 
penses of  collecting  same,  including  reasonable  attorney's  fees, 
to  be  fixed  and  determined  by  the  court.  Each  of  the  makers 
hereof  and  the  endorsers  hereon,  waive  demand,  protest  and 
notice  of  non-payment." 

(25)  "Appraisement  and  all  legal  exemptions  waived.  In- 
terest to  be  paid annually,  and  if.  not  so  paid  to 

become  as  principal  and  draw  interest  at  the  rate  of  ten  per 
cent,  per  annum  until  paid." 


8  NEGOTIABLE   INSTRUMENTS.  §  3a 

(26)  "The  makers  and  endorsers  of  this  note  hereby  express- 
ly waive  all  right  to  claim  exemption  allowed  by  the  Constitution 
and  Laws  of  this  or  any  other  State,  and  agree  to  pay  cost  of 
collecting  this  note,  including  a  reasonable  attorney's  fee,  for  all 
services  rendered  in  any  way,  in  any  suit  against  any  maker  or 
endorser,  or  in  collecting  or  attempting  to  collect,  or  in  secur- 
ing or  attempting  to  secure,  this  debt,  if  this  note  is  not  paid  at 
maturity.  Notice  and  protest  on  the  non-payment  of  this  note 
is  hereby  waived  by  each  maker  and  endorser." 

(27)  "And  if  default  be  made  in  the  payment  of  the  prin- 
cipal at  maturity,  or  of  interest  when  due,  this  note  shall  be  im- 
mediately due  and  payable  and  the  interest  unpaid  shall  become 
part  of  the  principal  and  both  shall  bear  interest  at  the  rate  of 
ten  per  cent,  per  annum  from  the  date  of  such  default,  both 
before  and  after  judgment,  and  if  this  note,  or  any  part  thereof, 
is  collected  by  an  attorney,  with  or  without  suit,  ten  per  cent, 
additional  for  attorney's  fees. 

The  makers  and  endorsers  hereof  each  expressly  waive  de- 
mand, protest,  notice  of  non-payment  and  suit  against  the  maker ; 
and  also  agree  that  date  of  payment  may  be  extended,  in  whole 
or  in  part,  without  our  consent. 

(28)  "With  interest  from  date  at  the  rate  of  ten  per  cent, 
per  annum  until  paid.  Interest  payable  quarterly.  Principal  and 
interest  payable  in  U.  S.  Gold  Coin  of  the  present  standard  of 
weight  and  fineness;  and  in  case  suit  or  action  be  instituted  to 
collect  this  note,  or  any  portion  thereof,  I  promise  to  pay  such 
additional  lawful  sum  as  the  Court  may  adjudge  reasonable  as 
attorney's  fees." 

(29)  "In  case  of  the  failure  to  pay  any  part  of  the  principal 
or  interest  when  and  where  due,  the  legal  holder  hereof  may  de- 
clare the  full  amount  of  this  note  then  remaining  unpaid  as  im- 
mediately due,  and  proceed  to  collect  the  same  at  once.  If  this 
note  is  collected  by  an  attorney,  either  with  or  without  suit,  or 
if  legal  proceedings  be  begun  for  the  collection  of  any  amount  due 

hereunder agree  to  pay  a  reasonable  attorney's  fee  and 

all  other  costs  and  expenses  of  collection.  The  makers  and  en- 
dorsers of  this  note  each  expressly  waive  demand,  notice  of  non- 
payment and  protest,  and  also  agree  that  this  note  may  be  ex- 
tended in  whole  or  in  part  without  their  consent." 

(30)  "For  value   received,   negotiable  and  payable  without 

defalcation  or  discount,  with  interest  from at 

the  rate  of _• per  cent,  per  annum,  payable 

until  paid. 

We,  the  endorsers,  guarantors  and  sureties,  severally  waive 
presentment  for  payment,  protest  and  notice  of  protest  for  non- 


§  3a  GENERAL  FORM  OF  BILLS  AND  NOTES.  9 

payment  of  this  note,  and  all  defense  on  the  ground  of  extension 
of  time  of  its  payment  that  may  be  given  by  its  holder  or  holders 
to  the  maker  or  makers  thereof." 

(31)  ("If  not  so  paid  to  become  a  part  of  the  principal,  and 
bear  the  same  rate  of  interest  as  above  specified,)  both  principal 
and  interest  payable  in  Gold  Coin  in  the  present  standard  of 
weight  and  fineness,  and  in  the  event  of  suit  for  the  collection 
hereof,  counsel  fees." 

(32)  "And do  hereby  authorize , 

Attorney  at  Law,  to  appear  for in  an  action  on  the  above 

note,  at  any  time  after  said  note  becomes  due,  in  any  Court  of 

Record,  in  or  of  the  State  of ,  to  waive  the 

issuing   and   service   of   process    against 

and  confess  a  judgment  in  favor  of  the  legal  holder  of  the  above 

against for  the  amount  that  may  then 

be  due  thereon,  with  interest  at  the  rate  therein  mentioned,  and 
costs  of  suit;  and  to  waive  and  release  all  errors  in  said  pro- 
ceedings, petitions  in  error,  and  the  right  of  appeal  from  the 
judgment  rendered.     Witness  our  hands  and  seals." 

(33>  "And  if  not  so  paid  the  whole  sum  of  both  principal 
and  interest  to  become  immediately  due  and  collectible.  In  case 
suit  is  instituted  to  collect  this  note,  or  any  portion  thereof,  I, 
we,  or  either  of  us  promise  to  pay,  besides  cost  and  disburse- 
ments allowed  by  law,  such  additional  sum  as  the  Court  may  ad- 
judge reasonable  as  attorney's  fees  in  said  suit." 

(34)  "And  we,  and  each  of  us,  do  hereby  authorize  any  at- 
torney of  any  Court  of  Record  in ,  to  appear 

for  us,  either  or  any  of  us,  in  any  such  court,  at  the  suit  of  the 
holder  of  this  obligation  upon  the  same,  at  any  time  after  the 
maturity  thereof,  and  waive  the  issuing  and  serving  of  the  pro- 
cess, and  confess  judgment  against  us,  either  or  any  of  us,  and  in 
favor  of  such  holder,  for  the  amount  then  appearing  due  there- 
on, and  for  costs  of  suit,  and  release  all  errors.  We  and  each 
of  us  hereby  agree  that  the  holder  of  this  note  may,  for  any 
valuable  consideration,  extend  the  time  of  payment  thereof,  with- 
out notifying  us,  and  that  we  will  remain  as  sureties  thereon 
thereafter.  Witness  our  hands  and  seals  the  day  and  year  above 
written." 

(35)  "The  parties  to  this  instrument,  whether  maker,  en- 
dorser, surety  or  guarantor,  each  for  himself  hereby  severally 
agrees  to  pay  this  note  and  waives  as  to  this  debt,  all  right  of 

exemption  under  the  Constitution  and  Laws  of 

or  any  other  State,  and  they  each  severally  agree  to  pay  all  costs 
of  collecting  or  securing,  or  attempting  to  collect  or  secure  this 


10  NEGOTIABLE    INSTRUMENTS.  §  3a 

note,  including  a  reasonable  attorney's  fee  whether  the  same  be 
collected  or  secured  by  suit  or  otherwise.  And  the  maker,  en- 
dorser, surety  or  guarantor  of  this  note  severally  waives  de- 
mand, presentment,  protest,  notice  of  protest,  suit  and  all  other 
requirements  necessary  to  hold  them." 

(36)  "With  interest  payable  semi-annually  at  the  rate  of  eight 
per  cent,  per  annum  from  due.  Delinquent  interest  and  principal 
after  maturity  shall  draw  interest  at  eight  per  cent,  per  annum 
until  paid.  In  case  of  suit  thereon  we  agree  to  pay  an  attorney's 
fee.  Makers,  payees,  endorsers,  sureties  and  guarantors  waive  de- 
mand for  payment,  protest  and  notice  of  protest  of  this  note  and 
consent  that  any  Justice  of  the  Peace  may  have  jurisdiction 
hereon  to  any  amount  not  over  $300,  and  that  time  of  payment 
may  be  extended  from  time  to  time  without  notice  thereof.  Pay- 
able at " 

(37)  "Said  interest,  if  not  paid  as  it  becomes  due,  to  be 
added  to  the  principal  and  become  a  part  thereof,  and  there- 
after bear  interest  at  the  same  rate  as  the  principal,  with  ten  per 
cent,  on  the  entire  amount  unpaid  if  placed  in  the  hands  of  an 
attorney  for  collection.  We  agree  that  after  maturity  the  time 
of  payment  may  be  extended  from  time  to  time,  by  any  one  or 
more  of  us,  without  the  consent  of  the  other,  and  after  such  ex- 
tension the  liability  of  all  parties  shall  remain  as  if  no  such 
extension  had  been  made." 

(38)  "And  we,  the  makers,  sureties,  endorsers  and  guaran- 
tors and  each  of  us,  do  hereby  authorize  and  empower  any  At- 
torney of  any  Court  of  Record,  at  any  time  after  interest  or 
principal  in  this  obligation  becomes  due,  to  appear  for  us  or 
either  of  us  in  any  action  or  suit  on  this  note  in  any  such  Court 

in ,  or  elsewhere,  and  waive  the  issue 

and  ser-vice  of  summons  and  confess  judgment  against  us  or  any 
of  us  in  favor  of  the  payee  or  any  holder  of  this  note  for  the 
sum  appearing  to  be  due  thereon,  including  interest  and  costs 
and  ten  per  cent  additional  on  the  amount  unpaid  as  attorney's 
fees,  and  thereupon  to  release  all  errors  in  said  action  and  hereby 
agree  that  any  extension  of  time  shall  not  afYect  our  liability." 

(39)  "For  value  received,  negotiable  and  payable,  without 

defalcation  or  discount,  at  the Bank  of 

with  interest  from  maturity  at  the  rate  of  ten  per  cent,  per  an- 
num. The  makers,  signers  and  endorsers  of  this  note  severally 
waive  demand  notice  and  protest,  and  agree  to  all  extensions 
and  partial  payments,  before  or  after  maturity,  without  prejudice 
to  the  holder,  and  if  this  note  is  placed  in  the  hands  of  an  at- 
torney for  collection,  an  additional  ten  per  cent,  for  attorney's 
fees." 


§§  4-7a  GENERAL   FORM   OF  BILLS  AND   NOTES.  11 

§  4.     Form  of  bill  of  exchange.     The  following  is  the  ordi- 
nar>'  form  of  an  inland  bill  of  exchange : 


$120.00  Chicago,  III,  December  1,  1921. 

Thirty  days  after  date 

Pay  to  the  order  of  John  Matlock 

One  Hundred   and   Twenty Dollars. 

Value  received,  and  charge  the  same  to  account  of 
To  Irving  Dean, 
Jamestown,  N.  Y. 

HENRY  HAMILTON. 


§  5.  General  characteristics  of  bill  of  exchange.  Let  us  ex- 
amine this  instrument,  considering,  however,  only  those  formal 
and  essential  parts  which  are  not  found  in  the  promissory  note. 
There  are  three  parties  to  this  instrument ;  John  Matlock  is  the 
payee,  Henry  Hamilton  is  the  drawer  and  Irving  Dean  the 
drawee.  Irving  Dean,  the  drawee,  becomes  Irving  Dean,  the 
acceptor,  by  writing  "accepted"  and  his  name,  or  words  of  sim- 
ilar import,  across  the  face  of  the  instrument. 

§  6.  Form  of  a  check.  The  following  is  the  common  form  of 
a  check 


Detroit,  Mich.,  December  1,  1921.    No.  15 
The  Eagle  National  Bank. 

Pay  to  the  order  of  Albert  Carter $200.00 

Two   Hundred Dollars. 

JOHN  MARSH. 


§  7.  General  characteristics  of  check.  A  check  is  the  most 
common  instrument  and  in  explaining  the  other  two  instruments 
all  parts  of  this  instrument  have  been  explained.  Albert  Carter 
is  the  payee  and  John  Marsh  is  the  maker  or  drawer  and  the 
Eagle  National  Bank  is  the  drawee. 

§  7a.  Origin  and  development  of  negotiable  instruments. 
It  is  interesting  that  we  should  look  into  the  origin  and  develop- 


12  NEGOTIABLE   INSTRUMENTS.  §  7a 

ment  of  these  instruments  whose  form  and  general  characteris- 
tics we  have  been  considering.  In  general  we  may  say  that  this 
development  has  been  through  three  stages, 

The  first  stage  we  may  call  the  barter  stage,  for  at  that  early 
time  money  as  the  term  is  understood  and  used  today  was  not 
known.  At  this  stage  the  evidence  of  value  was  grain  or  skins 
or  cattle.  In  agricultural  communities  grain  served  this  purpose ; 
among  fishing  people  the  products  of  the  sea;  and  in  hunting 
races  the  skins  of  animals.  This  early  stage  was  clearly  a  stage 
of  barter. 

The  second  stage  we  may  call  the  metal  stage,  when  metal 
took  the  place  of  grain  and  skins  and  cattle,  for  these  latter  when 
used  for  purchasing  purposes  Vvcre  open  to  many  objections  as 
can  be  readily  understood.  It  was  seen  that  it  was  necessary  to 
adopt  a  token  to  represent  value  v/hich  would  be  sufficiently  port- 
able and  durable  to  fulfill  its  purpose.  Iron  and  the  other  com- 
moner metals  in  turn  served  their  day,  and  finally  of  all  metals 
gold  and  silver  showed  themselves  to  be  the  most  suitable  as 
evidences  of  value.  The  gold  coin  was  not  successfully  intro- 
duced into  England  until  the  reign  of  Edward  III.  ; 

The  third  and  last  stage  we  may  call  the  commercial  paper  or 
negotiable  instruments  stage.  This  is  the  present  stage  when 
credit  as  evidenced  by  negotiable  instruments  is  able  to  pass  from 
hand  to  hand  as  the  representative  of  value  or  of  money.  These 
instruments  are  valuable  or  worthless  dependent  on  the  financial 
ability  of  the  parties  to  these  instruments. 

It  would  be  impossible  to  transact  business  of  any  magnitude 
today  if  cash  payments  were  required.  We  see  the  truth  of  this 
when  we  consider  that  more  than  90%  of  all  commercial  trans- 
actions are  estimated  to  be  carried  on  today  by  the  medium  of 
commercial  paper  or  negotiable  instruments.  Were  it  possible 
to  estimate  accurately  the  total  sums  for  which  checks,  promis- 
sory notes  and  bills  of  exchange  are  annually  drawn,  the  result 
would  be  so  enormous  as  to  be  beyond  intelligent  comprehension. 
The  only  source  of  information  which  we  have  in  this  matter  is 
concerning  the  checks  and  drafts  and  other  negotiable  instru- 
ments which  pass  through  the  Clearing  Houses  of  the  country, 
and  from  this  one  source  alone  it  is  estimated  that  the  total 
amount  of  these  instruments  passing  through  said  Clearing 
Houses  of  the  entire  country  amount  annually  to  about  Four 
Hundred  Billion  Dollars  ($400,000,000,000.00). 

Thus  we  see  the  great  importance  of  these  small  pieces  of 
paper  known  as  negotiable  instruments  in  the  business  and  com- 
mercial life  of  this  country. 


CHAPTER  11. 

LAW  MERCHANT.! 

§    8.  Meaning  of  term,  §  11.  Origin     of     promissory     note 

9.  Origin.  under  law  merchant. 

10.  Origin  of  bill  of  exchange  un-  12.  Law  merchant  codified, 
der  law  merchant. 

§  8.  Meaning  of  term.  The  law  merchant  might  be  consid- 
ered as  a  code  of  rules  growing  out  of  the  needs  of  trade  which 
the  courts  administering  treated  as  distinct  from  the  ordinary 
common  law  of  England. 

The  law  merchant  in  other  words  is  a  system  of  law  which 
does  not  rest  exclusively  on  the  positive  institutions  and  local 
customs  of  any  particular  country,  but  consists  of  certain  prin- 
ciples of  equity  and  usages  of  trade  which  general  convenience 
and  a  common  sense  of  justice  have  established,  to  regulate  the 
dealings  of  merchants  and  mariners  in  all  the  commercial  coun- 
tries of  the  civilized  world.^ 

The  law  merchant  is  an  example  of  how  a  custom  or  usage 
becomes  gradually  grafted  into  the  law  until  it  becomes  as  much 
a  part  of  the  system  of  law  as  any  other  principle  in  that  system. 
It  was  first  a  mere  particular  usage  which  became  general  in  its 
character  and  finally  received  the  sanction  of  legal  tribunals 
which  recognized  it  as  law.^  We  must  understand  that  the  law 
merchant  was  no  part  of  the  law  of  England  for  generations 
after  it  had  followed  trade,  in  a  private  capacity,  to  the  British 
Islands.  Unlike  admiralty  and  equity,  it  was  for  centuries  a 
sort  of  tolerated  outlaw,  living  only  as  the  merchants  could 
keep  it  alive.  The  law  merchant  is  not  a  modification  of  the 
common  law,  it  occupies  a  field  over  which  the  common  law  does 
not  and  never  did  extend. 

*  On  Law  Merchant  see :     Van-  troduction   to   10th   Ed. ;   Chalmers 

heath  v.  Turner,  Winch  24 ;  Good-  on     Bills    of    Exchange,    Preface ; 

win  V.  Roberts,  L.  R.   10  Ex.  346.  Lowndes     on     Marine     Insurance ; 

See  also:     The  Elements  of  Mer-  Scrutton   on    the    Influence   of   the 

cantile    Law    by    Thomas    Edward  Roman  Law  on  the  Law  of  Eng- 

Scrutton,    Chapters    I,    II;    Street  land,  Chapter  XIII,  XIV. 

on    Foundations    of    Legal    Liabil-  23  K;erit  Com.  2. 

ity;    Smith's    Mercantile   Law,    In-  85  y.  B.  13  Edw.  IV,  9  PI.  5. 

13 


14  NEGOTIABLE   INSTRUMENTS.  §  9 

§  9.  Origin.  The  law  merchant  has  gone  through  three 
stages  in  reaching  the  position  it  now  holds  in  the  legal  tribunals. 
The  first  stage  extended  from  the  earliest  times  to  the  year 
1606.  During  this  time  the  law  merchant  was  considered  as  a 
special  kind  of  law  for  a  particular  class  of  people.  During  this 
period  the  business  of  the  commercial  world  was  transacted  or 
conducted  in  the  great  fairs  held  at  certain  places  at  fixed  times 
each  year,  to  which  merchant  and  trader  came.  At  each  fair  there 
sat  a  Court  to  administer  speedy  justice,  in  accordance  with  the 
law  merchant,"*  to  the  merchants  and  traders  there  assembled. 
When  any  doubt  or  dispute  arose  it  was  settled  according  to  the 
custom  among  merchants  as  declared  by  the  merchants  present. 

The  second  stage  of  the  law  merchant  extends  from  the  year 
1606  when  Lord  Coke  took  ofiice  as  Chief  Justice  of  England  un- 
til the  year  1756  in  which  Lord  Mansfield  became  Chief  Justice. 
The  most  noticeable  effect  upon  the  law  merchant  during  this 
period  was  the  manner  of  its  administration.  The  special  court 
of  the  fairs  died  out  and  the  law  merchant  was  administered  by 
the  King's  Court  of  Common  Law.  This  court  did  not  admin- 
ister it  as  law  but  as  a  custom.^  As  this  court  only  admin- 
istered it  as  a  custom  the  cases  went  to  the  jury  without  the 
facts  and  customs  separated,  in  consequence  of  which  very  little 
was  done  in  establishing  any  system  of  mercantile  law  in  England 
during  the  period. 

The  third  stage  began  with  the  year  1756  when  Lord  Mansfield 
became  Chief  Justice  of  the  King's  Bench  and  extends  to  the 
present  time.  The  thirty  years  which  Lord  Mansfield  sat  as  Chief 
Justice  was  the  period  in  which  a  system  of  mercantile  law  was 
fully  established  in  the  common  law  courts.  This  system  of 
law  has  been  added  to  constantly  by  the  addition  of  new  usages 
of  the  mercantile  world  which  have  been  proven  to  the  Courts. 

"Bills  of  Exchange  at  first  extended  only  to  merchant  stran- 
gers trafficking  with  English  merchants ;  and  afterwards  to  inland 
bills  between  merchants  trafficking  the  one  with  the  other  in 
England ;  and  afterwards  to  all  traders,  and  then  to  all  persons 
whether  traders  or  not ;  and  there  was  then  no  need  to  allege 
any  custom  of  merchants."** 

Thus  in  its  origin  the  law  merchant  distinguished  the  contracts 
of  foreign  merchants  from  the  contracts  of  ordinary  individuals, 
construing  them  not  according  to  the  tenets  of  the  common  law, 
but  according  to  the  usages  of  trade.    This  custom  of  regulating 

^Blackstone,  Book  III.  page  32.  OBrownich     v.     Lloyd,     2     Lut- 

^Vanheath  v.  Turner,  1  Winch.      wyche's  Rep.  1585. 
24  (T622). 


§§  10-12  LAW  MERCHANT.  15 

dealings  between  native  and  foreign  merchants  was  extended  to 
dealings  between  native  merchants,  but  was  confined  to  the  per- 
sons of  merchants,  as  apart  from  those  pursuing  other  vocations. 
And  it  was  not  until  1666  that  courts  declared  that  "the  law 
of  merchants  is  the  law  of  the  land,  and  the  custom  is  good 
enough  generally  for  any  man,  without  naming-  him  merchant." 

§  10.  Origin  of  bill  of  exchange  under  law  merchant.  The 
bill  of  exchange  is  the  earliest  form  of  a  negotiable  instrument.'' 
Bills  of  exchange,  which  were  first  used  by  the  bankers  and 
merchants  of  Florence  and  Venice  to  facilitate  the  transfer  of 
credits  between  distant  points,  came  to  England  through  France 
early  in  the  fourteenth  century,  that  is,  came  from  the  continent 
of  Europe  where  they  formed  part  of  the  modern  Roman  or  Civil 
law.  The  English  merchant  used  it  as  an  instrument  whereby  he 
avoided  either  sending  money  out  of  the  country  or  bringing 
money  into  the  country.  To  pay  a  third  party  he  would  give 
an  order  on  one  of  his  foreign  debtors.  Originally  a  bill  of 
exchange  was  purely  a  trade  transaction  which  was  a  means 
whereby  one  country  avoided  sending  money  to  another. 

§  11.  Origin  of  promissory  note  under  law  merchant.  Prom- 
issory notes  are  said  to  be  of  great  antiquity  and  to  have  been  in 
use  among  the  Romans ;  but  the  negotiability  of  these  instru- 
ments was  unknown  among  the  Romans  and  is  a  development  of 
modern  times.  The  time  of  the  introduction  of  promissory  notes 
into  England  is  not  absolutely  known  but  it  appears  to  have  been 
about  thirty  years  before  the  reign  of  Queen  Anne.  They 
were  in  use  a  considerable  time  before  they  became  the  subject 
of  litigation  and  legislation.  The  common-law  judges  were  op- 
posed to  the  negotiability  of  promissory  notes  payable  to  order 
or  bearer®  and  it  became  necessary  for  Parliament  to  legislate 
upon  the  matter,  the  result  of  which  was  the  enactment  of  a 
statute  conferring  upon  promissory  notes  the  same  qualities  of 
assignability  and  negotiability  as  were  possessed  by  the  inland 
bills  of  exchange.® 

§  12.  Law  merchant  codified.  In  the  seventeenth  century 
the  law  of  Bills  of  Exchange  was  codified  in  France,  but  in  Eng- 
land no  general  codification  took  place  until  1882  (when  the  Eng- 
lish Bills  of  Exchange  Act  was  enacted).  In  the  United  States 
the  earliest  general  codification  is  found  in  the  California  Civil 
Code  in  1872,  but  this  has  been  followed  within  the  last  decade  by 
a  more  widespread  adoption  of  the  Negotiable  Instruments  Law 

^  Mogodara  v.  Holt,  1  Show.  318.         »  Statute  of  3  and  4  Anne,  Chap- 
SBuller  v.  Crips,  6  Mod.  30.  ter,  9,  §§  1-3. 


15  NEGOTIABLE   INSTRUMENTS.  §  12 

on  the  general  lines  of  the  English  Bills  of  Exchange  Act  in  all 
but  one  of  the  states  of  the  Union.  That  is,  it  has  been  adopted 
in  forty-seven  out  of  the  forty-eight  states  of  the  Union,  the 
state  of  Georgia  being  the  only  state  which  has  not  adopted  the 
law.  It  has  also  been  adopted  in  Alaska,  District  of  Columbia, 
Hawaii  and  the  Philippine  Islands,  but  has  not  been  adopted  in 
Porto  Rico  and  the  Panama  Canal  Zone.*" 

i«  See  Introduction  to  Negotiable      Instruments     Law     Annotated,     in 

Appendix. 


CHAPTER  III. 
NEGOTIABILITY. 

§  13.  Meaning  of  term.  §  16.  Purpose  of  negotiability. 

14.  Origin  of  negotiability.  17.  Payment  by  negotiable  instru- 

15.  Distinction     between     assign-  ment. 

ability  and  negotiability. 

§  13.  Meaning  of  term.  The  term  negotiability  implies  a 
transferable  quality  in  the  instrument  to  which  it  is  applied.  It 
is  that  quality  of  bills  of  exchange  and  promissory  notes  which 
renders  them  transferable  from  one  person  to  another,  and  by 
possessing  which  they  are  emphatically  termed  negotiable  paper.-' 

Negotiability  in  the  law  merchant  is  the  property  whereby  a 
bill,  note  or  check  passes  or  may  pass  from  hand  to  hand  like 
money,  so  as  to  give  the  holder  in  due  course  the  right  to  hold 
the  instrument  and  collect  the  sum  payable,  for  himself,  free  from 
defenses. 

The  Negotiable  Instrument  Law  provides : 

"An  instnmtent  is  negotiated  when  it  is  transferred  from  one 
person  to  another  in  such  manner  as  to  constitute  the  transferee 
the  holder  thereof.  If  payable  to  hearer  it  is  negotiated  by  de- 
livery; if  payable  to  order  it  is  negotiated  by  the  indorsement  of 
the  holder  completed  by  delivery."^ 

Negotiation  means  the  act  by  which  a  negotiable  instrument  is 
put  into  circulation  by  being  passed  by  one  of  the  original 
parties  to  another  person.  If  A  gives  B  a  check  on  C  bank,  and 
B  presents  the  check  at  the  counter  of  C,  no  negotiation  is  nec- 
essary or  had.  He  simply  demands  and  receives  payment ;  but  if 
B  goes  to  D  store  and  buys  a  bill  of  goods  and  tenders  the  in- 
dorsed check  in  payment,  he  negotiates  the  check. "^* 

"An  instrument  negotiable  in  its  origin  continues  to  be  nego- 
tiable until  it  has  been  restrictively  indorsed  or  discharged  by 
payment  or  otherivise."^^ 

*  Kinney's  Law  Dictionary;  cases  directly  or  indirectly  bearing 
Odell  V.  Gray,  15  Mo.  2>2i7,  15  Am.  upon  or  citing  the  Law  are  grouped. 
Dec.  147 ;  Shaw  v.  Merchants  I^a-?.  ^^  Aurora  State  Bank  v.  Hayes 
Bank,  101  U.  S.  557 ;  Anniston  Eames  Elevator  Company,  88  Neb. 
Loan  &  Trust  Co.  v.  Steckney,  108  187,  190,  129  N.  W.  279. 

Ala.  146,  19  So.  63,  31  L.  R.  A.  234.  **  Neg.  Inst.  Law,  §  47,  where  all 

*  Neg.  Inst.  Law,  §  30,  where  all      cases  directly  or  indirectly  bearing 

upon  or  citing  the  Law  are  grouped. 

17 


18  NEGOTIABLE    INSTRUMENTS.  §§        14-15 

§  14.  Origin  of  negotiability.  Originally  all  instruments, 
including  bills  of  exchange,  promissory  notes  and  bank  checks 
were  non-negotiable — in  the  sense  that  the  maker  could,  when 
asked  for  payment,  deduct  from  the  amount  due  on  the  instru- 
ment any  just  claim  that  he  had  against  the  original  owner.  Such 
claim  was  termed  a  counter-claim,  or  set-off.  In  the  revival 
of  commerce  in  Italy,  in  the  eleventh  century,  merchants  and 
traders,  feeling  the  need  of  a  commercial  instrument,  similar 
to  a  bank  bill  that  could  be  used  in  barter  and  trade  and  com- 
mercial transactions,  and  realizing  that  no  such  instrument  could 
be  passed  from  hand  to  hand  or  sold  readily,  no  matter  how  good 
the  financial  standing  of  the  maker  was,  if  he,  the  maker,  could 
always  insist  on  adjusting  accounts  with  the  original  owner — 
adopted  a  custom  later  known  as  the  law  merchant,  under  which 
notes,  checks,  drafts,  and  bills  of  exchange,  drawn  in  certain 
prescribed  forms,  and  in  the  hands  of  a  bona  fide  purchaser, 
could  be  enforced  to  their  full  extent  against  the  maker,  regard- 
less of  certain  defenses  or  counter-claims  that  the  maker  might 
have  against  the  original  holder.  Such  instruments  were  nego- 
tiable and  such  was  the  origin  of  negotiability.^ 

In  England,  embarrassments  arose  in  the  application  of  the 
common  law  to  these  forms  of  contract  and  it  was  only  after  a 
long  struggle  that  the  courts  engrafted  upon  the  common  law 
the  law  merchant,  by  which  the  parties  to  bills  and  notes  were  put 
upon  a  footing  entirely  different  from  that  of  parties  to  other 
contracts.^ 

The  customs  and  usages  of  merchants  as  to  negotiability  of 
bills  of  exchange  finally  came  to  be  recognized  and  enforced 
by  the  courts  but  were  not  put  upon  a  firm  basis  until  they 
received  the  sanction  of  parliament.  Promissory  notes  were  first 
recognized  by  the  courts  as  negotiable  and  later  they  were 
refused  that  recognition.^  Their  negotiability  was  at  last  estab- 
lished in  1705  by  a  statute  passed  by  parliament.^  The  principles 
of  this  statute  have  been  followed  in  a  general  way  by  the  various 
states  of  this  country  and  embodied  in  statutes. 

§  15.     Distinction  between  assignability  and  negotiability. 

Assignability  is  a  more  comprehensive  term  than  negotiability. 
Assignability  pertains  to  contracts  in  general  while  negotiability 
pertains  to  only  a  special  class  of  contracts.  Property,  rights  in 
property  and  other  valuable  rights  evidenced  by  a  contract  are 

3  For  a  complete  discussion  of  ^  Clerk  v.  Martin,  1  Salk.  129,  2 
this  subject  see  Street  on  Founda-       Ld.  Raymond  757. 

tions  of  Legal  Liability.  ^  Statute  of  3  and  4  Anne,  Chap. 

4  Buller  V.  Crips,  6  Mod.  29.  9. 


§  15  NEGOTIABILITY.  19 

transferred  by  assignment.''  The  rights  evidenced  or  created  by 
ordinary  contractual  obligations  are  usually  a  kind  of  property, 
having  in  themselves  a  value  measured  in  law  by  the  damages 
assessable  upon  their  breach.  This  property  may  at  this  stage 
of  the  law  pass  from  person  to  person  just  as  any  other  property 
does.  But  there  are  well  settled  rules  governing  such  transfer, 
which  are  the  outgrowth  and  mingling  of  early  doctrines  of  the 
courts  of  common  law  and  of  equity.  The  primitive  view  was  that 
in  contracts  of  this  nature  that  only  a  party  to  the  agreement 
could  sue  upon  the  contract.  This  was  based  upon  the  ground 
that  the  contract  created  a  personal  obligation  between  the  credi- 
tor and  debtor.*  This  doctrine  has  been  greatly  modified  in  the 
various  states  by  statutes  which  declare  that  every  action  must  be 
prosecuted  by  the  real  party  in  interest.  Title  to  any  property 
or  rights  in  property  cannot  be  completely  passed,  as  to  the 
debtor,  by  assignment  without  notice  to  him.  The  result  of  this 
rule  is  that  if  the  debtor  performs  his  contract  to  the  original 
creditor  without  notice  of  the  assignment  he  is  discharged.* 
These  are  not  the  rules  as  to  negotiability.  The  person  who 
takes  an  instrument  by  indorsement  takes  it  free  from  all 
equities.*"  While  a  person  who  takes  an  instrument  by  assign- 
ment takes  it  subject  to  the  equities  incident  to  it.**  This  is  the 
distinguishing  feature  between  assignability  and  negotiability. 
Negotiability  is  applied  to  instruments  which  contain  a  promise 
to  pay  money.  These  instruments  embodying  a  promise  to  pay 
money  may  be  either  negotiable  or  non-negotiable.  In  order  to 
be  negotiable  under  the  law  merchant  they  must  contain  some 
words  indicative  of  negotiability.*^  The  usual  words  employed  to 
denote  this  quality  are  to  "A  or  order,"  to  "the  order  of  A"  or 
"to  bearer." 

Thus  then  the  material  difference  between  a  non-negotiable 
instrument  and  a  negotiable  instrument  is  that  the  party  to  a 
non-negotiable  instrument  who  has  agreed  to  pay  money  or  prop- 

''  Hoag  V.  Mendenhall,  19  Minn.  *"  Everston  v.  Bank,  66  N.  Y.  14  ; 

335 ;    Andrews    v.    Nat.    Bank    of  Wilson  Sewing  Mach.  Co.  v.  Spears, 

North  Am.,  7  Hun  20;  Harlowe  v.  50  Mich.  534,  15  N.  W.  894. 

Hudgins,  84  Tex.  107,  19  S.  W.  364,  n  Trustees  of  Union   College  v. 

31  Am.  St.  Rep.  21.  Wheeler,  61   N.  Y.  88;  Warner  v. 

^Beecher     v.      Buckingham,      18  Whittaker,  6  Mich.  133;  Timms  v> 

Conn.  110;  McWilliam  v.  Webb,  32  Shannon,  19  Md.  296. 

la.  577 ;  Halloran  v.  Whitcomb,  43  13  United  States  v.  White,  2  Hill 

Vt.  306.  (N.  Y.)  59,  37  Am.  Dec.  374;  Da- 

^Van  Buskirk  v.   Insurance  Co.,  vega  v.  Moore,  3  McCord   (S.  C.) 

14  Conn.  141;  Merchants'  and  Me-  482;  Putnam  v.  Crymes,  1  McMuU 

chanics  Bank  v.  Hewett,  3  la.  93;  (S.  C.)  9,  36  Am.  Dec.  250. 
Richards  v.  Griggs,  16  Mo.  416. 


20  NEGOTIABLE    INSTRUMENTS.  §§  16-17 

erty  under  it,  may  when  the  money  or  consideration  is  demanded 
by  a  purchaser,  set  off  against  it  any  claims  that  he  has  against 
the  original  owner,  which  he  could  have  set  off  if  it  had  not  been 
assigned — while  the  bona  fide  purchaser,  before  maturity,  of  a 
negotiable  instrument  can  enforce  it  for  its  full  amount  against 
the  maker,  regardless  of  any  counterclaim  or  other  equities  that 
the  maker  has  against  the  original  owner. 

§  16.  Purpose  of  negotiability.  The  primary  purpose  of  ne- 
gotiability is  to  allow  bills  and  notes  the  effect  which  money, 
in  the  form  of  government  bills  or  notes  supplies  in  the  commer- 
cial world.^^  A  man  does  not  always  have  property  or  valuable 
property  rights  which  he  can  turn  into  cash  at  any  moment. 
These  things,  however,  measure  his  credit,  and  he  avails  himself 
of  this  credit  by  executing  his  note  to  his  debtor  who  in  turn 
endorses  this  to  a  third  person.  Thus  men  in  this  way  without 
cash  in  hand  are  enabled  by  means  of  credit  to  conduct  and 
carry  to  completion  business  and  commercial  enterprises.  The 
sole  purpose  of  negotiability  then  is  to  allow  men  of  undoubted 
credit  to  carry  on  a  business  enterprise  upon  their  promissory 
notes  knowing  that  other  business  men  will  treat  these  promises 
as  cash.  Furthermore  the  purpose  of  negotiability  is  to  allow 
bills  and  notes  to  go  from  hand  to  hand  in  the  commercial  mar- 
kets and  to  take  the  part  of  money  in  commercial  transactions. 

§  17.     Payment  by  negotiable  instrument.    In  the  absence  of 

an  agreement,  either  express  or  implied,  it  is  generally  held  that 
a  negotiable  instrument  is  not  an  absolute  and  unconditional  pay- 
ment of  the  debt  and  a  discharge  of  the  original  obligation.  Thus 
it  has  been  held  that  the  debtor's  own  note  given  for  a  precedent 
or  contemporary  debt  is  conditional  payment.^*  But  some  juris- 
dictions hold  that  it  is  absolute  payment.*'** 

If,  however,  a  new  note  is  given  in  renewal  of  a  former  note 
and  for  a  less  amount  it  will  be  considered  as  a  satisfaction  ot 
the  prior  note  as  all  differences  are  presumed  to  have  been 
adjusted  when  the  new  note  was  given. *^ 

13  Friedlainder  v.  Railway  Co.,  i-*"  Hibben  v.  Hicks,  26  Ind.  App. 
130  U.  S.  416.  646,  —  N.  E.  — . 

14  Winsted  Bank  v.  Webb,  39  N.  i5  pjper  v.  Wade,  57  Ga.  223 ; 
Y.  325,  10  Am.  Dec.  435;  Night-  Bolt  v.  Dawkins.  16  S.  C.  198; 
ingale  v.  Chaffee,  11  R.  I.  609,  23  Draper  v.  Hitt,  43  Vt.  439,  5  Am. 
Am.   Rep.   531 ;   Sheehy  v.   Mande-  Rep.  292. 

ville,  6  Cranch  258.  But  see,  Jenness  v.  Lane,  26  Me. 

Contra,  Ward  v.  Bourne,  56  Me.      475. 
61 ;   Smith  v.  Bettger,  68  Ind.  254, 
34  Am.  Rep.  256. 


§  17  NEGOTIABILITY.  21 

Nor  is  a  new  note  executed  by  only  a  part  of  the  original 
promisors  generally  to  be  considered  as  payment  of  the  prior 
note  in  the  absence  of  any  agreement  to  that  effect.^^ 

In  case  the  bill  or  note  of  a  third  person  is  given  in  payment 
of  a  precedent  debt  the  payment  is  generally  held  to  be  con- 
ditional.^'' 

But  when  the  stranger's  note  is  payable  to  bearer  or  has  been 
indorsed  in  blank  by  a  prior  holder  so  that  it  may  be  transferred 
without  indorsement  it  is  then  considered  as  absolute  payment 
when  given  for  a  contemporaneous  debt.-^^ 

But  it  is  only  as  conditional  payment  when  payable  to  order 
and  can  be  transferred  only  by  indorsement.^^ 

A  note  is  not  discharged  by  giving  a  new  note  which  proves 
invalid.***  Thus  the  original  note  is  not  discharged  even  though 
it  is  surrendered  and  a  new  note  is  accepted  in  payment  without 
knowledge  that  the  nev/  note  is  a  forgery.** 

It  is  not  necessary  that  the  old  note  be  surrendered  or  can- 
celed before  a  new  note  can  operate  as  payment.** 

i«Hill  V.   Sleeper,   58  Ind.   221;  !» Monroe  v.  Hoff,  5  Denio  360; 

Bates  V.  Rosekrans,  Zl  N.  Y.  409;  Shriner  v.  Keller,  25  Pa.  St.  61. 

Boston     Nat.     Bank     v.     Jose,     10  See   Day   v.   Thompson,   64   Ala. 

Wash.  185,  38  Pac.  1026.  269. 

But  see,  Stanley  v.  McElrath,  86  20  Williams  v.  Gilchrist,  11  N.  H. 

Cal.  449,  25  Pac.   16,  10  L.  R.  A.  535;    Winsted    Bank   v.    Webb,  46 

545;  Bansman  v.  Credit  Guarantee  Barb.    177;    Edgell   v.    Stanford,   6 

Co.,  47  Minn.  Ill,  50  N.  W.  496.  Vt.  551. 

*''  Gresham   v.    Morrow,    40   Ga.  21  Athens    First    Nat.    Bank    v. 

487;  Woods  v.  Woods.   127  Mass.  Buchanan,  87   Tenn.   32,   9   S.   W. 

141 ;  Gibson  v.  Tobey,  46  N.  Y.  637,  202,  10  Am.  St.  Rep.  617,  12  L.  R. 

7  Am.  Rep.  397.  A.   199;  West  Phila.  Nat.  Bank  v. 

But  see,  Dennis  v.   Williams,  40  Field,  143  Pa.  St.  473,  22  Atl.  829, 

Ala.  633.  24  Am.  St.  Rep.  562. 

18  Tobey  v.  Barber,  5  Johns.  68.  22  French  v.  French,  84  la.  655, 

4   Am.   Dec.   326;   Day   v.   Kinney,  57  N.  W.  145,  15  L.  R.  A.  30;  Dixon 

131    Mass.   n-,    Susquehanna    Fert.  ^    Dixon,  31  Vt.  450,  76  Am.  Dec. 

Co.   V.   White,  66   Md.   444,   7  Atl.  i29;    East   River    Bank   v.   Butter- 

802.  worth,  45  Barb.  476. 

But   see,  Huse   v.   McDaniel,   33 
la.  406,  4  Am.  Rep.  244. 


CHAPTER  IV. 
GENERAL  DOCTRINE. 

§  18.  Negotiable  instruments  similar      §  20.  Equities. 

to  money.  21.  Circulation   when   parties   not 

19.  Bona  fide  holder.  immediate. 

§  18.  Negotiable  instruments  similar  to  money.  As  has  al- 
ready been  pointed  out  the  peculiarities  which  attach  to  negotiable 
paper  are  the  growth  of  time,  and  were  acceded  to  for  the  benefit 
of  trade.  While  all  choses  in  action  are  now  transferable,  the  ne- 
gotiable instrument  is  the  only  species  which  carries,  by  transfer, 
a  clear  title  and  a  full  measure ;  and  like  an  instrument  under  seal, 
imports  a  consideration.  Negotiable  instruments  are  thus  given 
many  of  the  peculiarities  of  money — i.  e.,  gold  and  silver  coin 
and  bank  bills.^ 

§  19.  Bona  fide  holder.  In  order  to  take  advantage  of  the 
special  privileges  attached  to  a  negotiable  instrument,  the  holder 
must  have  taken  it  before  it  was  due,^  and  with  no  notice  of  any 
irregularity  in  the  instrument,  or  of  any  valid  defenses  that  the 
maker  had  to  it,^  and  the  owner  must  have  parted  with  some- 
thing of  value  in  acquiring  it.^  The  consideration  need  not  have 
been  money.®  It  may  have  been  property,®  the  granting  of 
credit,'^  or  some  disadvantage  which  the  holder  assumed  in  acquir- 
ing it.  Such  a  holder  is  a  bona  Ude  holder.  He  is  often  spoken  of 
as  a  holder  in  due  course,  also,  as  a  bona  Ude  purchaser  for  value 
without  notice. 

ipriedlander     v.     Railway     Co.,  4  Webster   v.   Cobb,   17  111.   459; 

130  U.  S.  416;  Russel  v.  Whipple,  Tillow  v.  Britton,  9  N.  J.  L.  120; 

2  Cow  (N.  Y.)  536;  Durgin  v.  Bar-  Kinkel  v.  Harper,  7  Colo.  App.  45, 

tol,  64  Me.  473.  42  Pac.  173. 

2  Lansing  v.  Gaine,  2  Johns.  (N.  ^  In  re  Great  Western  Tel.  Co., 
Y.)  300,  3  Am.  Dec.  422;  Lancas-  5  Biss.  (U.  S.)  Z63,  10  Fed.  Cas.  No. 
ter  Bank  v.  Woodard,  18  Pa.  St.  5,740;  Mayer  v.  Heidelbach,  123  n! 
357,  57  Am.  Dec.  618;  Gordon  v.  Y.  332,  25  N.  E.  416,  9  L.  R.  A.  850,- 
Wansey,  21  Col.  77.  Greenwood  v.   Lowe,   7  La.   Ann. 

3  Ward  V.  Doane,  77  Mich.  328,  197. 

43  N.  W.  980 ;  Greneaux  v.  Wheel-  6  Pond  v.  Waterloo  Agricultural 

er,  6  Tex.   515;    Smith   v.   Florida  Works,  50  la.  596. 

Cent.  Ry.  Co.,  43  Fed.  731;  Can-  7  Drulling  v.   Battle  Creek  First 

ajoharie  Nat.  Bank  v.  Diefendorf,  Nat.  Bank,  43  Kan.  197,  23  Pac.  94, 

123  N.  Y.  191,  25  N.  E.  402,  10  L.  19  Am.  St.  Rep.  126. 

R.  A  674 

22 


§  20  GENERAL  DOCTRINE.  23 

§  20.  Equities.  A  makes  a  certain  instrument  payable  to 
B,  promising  to  pay  him  a  certain  amount  of  money.  That  instru- 
ment is  vaHd  regardless  of  whether  or  not  it  is  negotiable  by  the 
law  merchant.  B  can  recover  from  A,  providing,  of  course,  there 
has  been  a  consideration,  and  if  B  assigns  that  over  to  some  one 
else,  that  other  person  can  recover  also  from  A,  The  instrument  is 
valid,  then,  whether  it  is  negotiable  by  the  law  merchant  or  not. 
The  question  as  to  whether  or  not  it  is  negotiable  by  the  law 
merchant  becomes  important  when  there  are  some  equities  which 
attach  to  the  instrument,  and  then,  if  it  is  not  negotiable  by  the 
law  merchant,  the  person  takes  it  subject  to  those  equities ;  it  has 
certain  luggage  attached  to  it  which  the  person  who  gets  the  in- 
strument must  also  take — he  must  take  the  luggage  with  the  in- 
strument. Therefore,  it  is  important  to  know  whether  or  not  an 
instrument  is  negotiable  by  the  law  merchant.  Instruments  which 
have  this  luggage  attached  to  them  are  binding,  but  we  are  con- 
sidering now  whether  these  instruments  are  negotiable  by  the  law 
merchant  for  other  reasons. 

In  general  it  may  be  here  stated  that  there  are  certain  essen- 
tials which  an  instrument  negotiable  by  the  law  merchant  must 
have.  The  bill  must  contain  an  order,  not  merely  a  request.®  A 
orders  you  to  do  so  and  so ;  he  does  not  merely  request  you  to  do 
it.  A  note  must  contain  a  promise.®  A  promises  to  do.  The 
order  or  promise  must  be  unconditional ;  absolutely  for  the  pay- 
ment of  money  alone.*®  Thus  an  order  for  50  bushels  of  wheat 
or  corn  is  not  sufficient  because  not  payable  in  money.  There 
must  be  a  payment  in  money  and  nothing  else  attached  to  it. 
The  amount  of  money  must  be  certain;**  the  time  of  payment 
must  be  a  time  certain  to  arrive,*-  and  the  instrument  must  be 
specific  as  to  all  its  parties.  In  a  promissory  note  it  must  be  spe- 
cific as  to  all  its  parties,  that  is,  it  must  be  specific  as  to  the 
maker  and  the  payee.  In  a  bill  of  exchange  the  drawer,  drawee 
and  payee  must  be  specific. 

Now,  the  question,  whether  an  instrument  has  all  these 
requisites  which  are  required  by  the  law  merchant  in  order  to  be 
negotiable,  becomes  important  when  the  instrument  is  in  the  hand.. 

SGillilan   v.   Myers,   31    111.   525;  "  Neg.    Inst.    Law,    §    2;    Hatch 

Knowlton  v   Cooley,  102  Mass.  233.  v.  Dexter  First  Nat.  Bank,  94  Me. 

9  Smith  V.  Bridges,  1  111.  18;  348,  47  Atl.  908,  80  Am.  St.  Rep. 
Hatch  V.   Gillettee,  8   N.   Y.   App.  401. 

Div.  605,  40  N.  Y.  S.  221.  iSHanel  v.  Marston,  7  Rob.  (la.) 

10  South  Bend  Iron  Works  v.  34;  New  Windsor  First  Nat.  Bank 
Paddock,  37  Kan.  510,  15  Pac.  574;  v.  Brynum,  84  N.  C.  24,  Zl  Am. 
Wainwright  v.  Straw,  15  Vt.  215,  Rep.  604;  Neg.  Inst.  Law,  §  20 
40  Am.  Dec.  675.  (1) ;  Bills  Exch.  Act,  §§  3,  83. 


24  NEGOTIABLE    INSTRUMENTS.  §  20 

of  a  bona  fide  purchaser  for  value.  A  person  who  gets  a  note 
with  equities  attached  to  it,  and  gives  vakie  for  it,  gets  that  instru- 
ment free  from  all  those  equities  if  it  is  negotiable  by  the  law 
merchant.  For  instance,  suppose  a  note  has  been  obtained  from  A 
by  fraud ;  he  thinks  he  has  been  signing  a  receipt  when  in  fact  he 
was  signing  a  negotiable  promissory  note,  and  he  has  been  negli- 
gent in  signing;  it  gets  into  the  hands  of  X,  and  X  transfers  it 
to  Y.  Y  can  recover  against  A.  That  equity  does  not  run  against 
a  bona  Ude  holder  for  value.^^  Suppose  it  has  some  of  these  essen- 
tials lacking  in  order  to  make  it  negotiable.  In  that  case  X,  Y,  or 
the  person  who  holds  the  instrument  for  value,  would  take  it  sub- 
ject to  the  equity  that  the  note  was  obtained  from  A  by  fraud. 
If  it  was  not  negotiable  by  the  law  merchant,  A  would  have  a 
right  to  take  advantage  of  that  equity. 

There  are  some  things  which  even  a  bona  fide  holder  for  value 
without  notice  can  not  maintain  suit  against.  Suppose  some 
one  forges  A's  name  to  a  note ;  now,  the  good  reason  of  the  law 
merchant  and  merchants  generally  would  hold  that  that  should 
not  be  held  as  valid  against  A,  even  in  the  hands  of  a  bona  fide 
purchaser  for  value  without  notice.  A  is  not  a  party  to  it,  and 
we  shall  find  out  later  that  that  is  a  real  defense;  and  any  per- 
son holding  that  instrument  and  tr3'ing  to  recover  against  A,  A 
would  have  the  right  to  set  up  against  him  that  it  was  a  forgery, 
even  though  it  was  negotiable  by  the  law  merchant  and  even 
though  the  person  holding  it  is  a  holder  for  value  without 
notice.*^ 

Thus  we  see  there  is  one  fact  and  principle  that  we  must  bear  in 
mind  all  the  time,  and  that  is,  if  a  person  makes  an  agreement  or 
contract  of  any  nature,  and  it  is  such  a  contract  as  would  be  bind- 
ing in  the  law  of  contracts,  then  that  contract  is  binding  as  be- 
tween those  parties.  So,  if  a  person  makes  a  contract  or  a  written 
instrument  of  any  nature,  whether  or  not  that  instrument  is 
negotiable  by  the  law  merchant,  he  is  bound  if  he  would  be  bound 
by  the  law  of  contracts.  If  one  attempts  to  make  a  promissory 
note  or  a  bill  of  exchange  but  does  not  do  it  and  makes  some 
other  paper,  he  is  bound  just  the  same.  We  must  consider  the 
difference.  The  law  of  contracts,  we  might  say,  controls  always 
as  between  the  immediate  parties.  The  law  of  bills  and  notes 
becomes  important  when  we  consider  the  paper  in  the  hands  of 
an  innocent  holder  for  value. 

13  Von    Windisch    v.    Klaus,    46  17,    92    Am.    Dec.    521;    Roach    v. 

Conn.  433 ;  Strough  v.  Gear,  48  Ind.  Woodall,  91   Tenn.   206,   18   S.   W. 

100.  407,  30  Am.  St.  Rep.  883. 

I'*  Foltier  v.  Schroder,  19  La.  Ann. 


§  21  GENERAL  DOCTRINE.  25 

§  21.  Circulation  when  parties  not  immediate.  As  between 
the  immediate  parties,  for  example,  the  drawer  and  payee  on  a 
promissory  note,  circulation  has  not  begun,  but  when  it  circu- 
lates in  other  hands,  then  it  partakes  of  the  nature  of  money  and 
will  circulate  just  as  money  does,  providing  it  is  negotiable  by 
the  law  merchant. ^^  Suppose  X  promises  to  pay  A  $50  and  to 
deliver  him  50  bushels  of  wheat.  Now,  in  the  absence  of  any 
fraud  or  anything  of  that  nature,  that  is  absolutely  binding  as 
between  them,  and  B  can  recover  from  A  $50  and  50  bushels  of 
wheat.  Now,  suppose  that  is  assigned  by  B  to  C  and  C  to  D. 
Now,  that  is  a  case  where  there  is  a  valid  contract.  Any  party 
to  the  instrument  can  proceed  upon  it  and  can  recover.  Now, 
suppose  this  instrument  has  been  procured  by  fraud ;  that  A 
believes  he  is  making  a  receipt  for  50  bushels  of  wheat  to  B  and, 
as  a  matter  of  fact,  he  promises  to  pay  him  $50  and  deliver  him 
50  bushels  of  wheat,  but  he  is  negligent  and  careless  and  as  a 
result  it  turns  out  to  be  some  other  instrument.  Well,  of  course, 
between  A  and  B,  B  could  not  recover,  but  suppose  B  gets  it 
and  indorses  it  to  C  and  C  to  D.  Can  D  recover  upon  that 
instrument?  No.  That  is  an  instrument  that  would  be  non- 
negotiable  by  the  law  merchant  and  D  could  not  recover  on  it; 
there  were  certain  equities  that  went  with  it,  and  A  can  set  the 
equities  up  against  anyone  who  gets  that  instrument.  So,  when 
it  gets  in  the  hands  of  anybody  else,  A  has  a  right  to  set  up 
that  defense.^®  Now,  suppose  it  is  negotiable  by  the  law  mer- 
chant, the  promise  is  to  pay  $50  alone,  but  suppose  the  instru- 
ment has  been  procured  by  fraud  from  A  and  B  instead  of  be- 
ing a  receipt  it  is  a  promisson,^  note  and  A  thinks  he  is  sign- 
ing a  receipt,  and  the  circumstances  are  like  the  others.  In  that 
case  B  could  not  recover  against  A,  although  it  has  all  the  requi- 
sites of  a  negotiable  instrument.  As  between  the  immediate  par- 
ties the  ordinary  law  of  contracts  would  apply  and  the  fraud 
could  be  set  up.*''  But  let  us  suppose  that  it  is  endorsed  by  B 
to  C  and  by  C  to  D.  D  has  no  notice  of  any  equity  and  gives  full 
value  for  it,  and  he  endeavors  to  recover  against  A.  A  cannot 
set  up  fraud  as  a  defense  because  it  is  an  instrument  negotiable 
by  the  law  merchant  and  in  the  hands  of  a  bona  fide  holder  for 
value  without  notice.  A  cannot  set  up  that  defense.  Now,  if  D 
knew  that  that  had  been  procured  by  fraud  he  could  not  collect. 

'^^  Supra,  §  18,  note  1.  5  Kan.  App.  437,  49  Pac.  324;  Tur- 

i« Trustees   of  Union    College   v.  ley   v.   Bartlett.   10  Heisk.    (Tenn.) 

Wheeler,    6    N.    Y.    88;    Timms    v.  221;   Kulenkamp  v.   Grofif,  7  Mich. 

Shannon,  19  Md.  296.  675,  40  N.  W.  57. 
*''  Lancaster  Nat.  Bank  v.  Mackey, 


26  NEGOTIABLE   INSTRUMENTS.  §21 

If  a  person  gets  a  negotiable  instrument  and  he  has  given  value 
and  has  no  notice  of  wrongdoing,  good  common  sense  would  say 
that  he  could  recover  just  like  he  had  gotten  a  ten  dollar  bill. 
That  is  the  general  doctrine  underlying  the  law  of  negotiable 
instruments.^'^ 

18  Supra,  §  18,  note  1. 


CHAPTER  V. 


PARTIES  AND  THEIR  CAPACITY. 


§  22.  Parties    and    their    capacity — 

In  general. 
23.  Parties     partially     or     wholly 
incapacitated — In   general. 

24.  Same — Persons    lacking  men- 

tal capacity — Infants. 

25.  Same — Persons    lacking    men- 

tal capacity — Lunatics. 

26.  Same — Persons    lacking    men- 

tal capacity  —  Drunkards 
and  spendthrifts. 

27.  Same — Persons    lacking    legal 

capacity  other  than  mental 
— Married  women. 

28.  Same — Persons    lacking    legal 

capacity  other  than  mental 
— The  bankrupt  or  insolv- 
ent payee. 

29.  Same — Persons    lacking    legal 

capacity  other  than  mental 
— Alien  enemies. 

30.  Parties    not    incapacitated — In 

general. 


§  31.  Same — Persons  acting  in 
fiduciary  capacity — Execu- 
tors and  administrators. 

32.  Same — Persons  acting  in 
fiduciary  capacity  —  Trus- 
tees and  guardians. 

23.  Same — Persons  acting  in 
representative  capacity  — 
Agent. 

34.  Same — Persons       acting       in 

representative  capacity  — 
Partners. 

35.  Same — Persons  acting  in  rep- 

resentative capacity — Private 
corporations. 

36.  Same — Persons  acting  in  rep- 

resentative capacity — Mu- 
nicipal or  public  corpora- 
tions. 

37.  Same — Persons  acting  in  rep- 

resentative capacity — Public 
officers. 


§  22.  Parties  and  their  capacity — In  general.  In  this  chap- 
ter we  shall  consider  parties  to  bills,  notes  and  checks  and  the 
capacity  of  such  parties.  It  may  be  stated  that  the  general 
rules  governing  contracts  will  apply  as  to  the  capacity  of  persons 
to  make  and  indorse  bills,  notes  and  checks,*  and  also  as  to  the 
effect  of  the  various  forms  of  legal  disability,  as  infancy,  in- 
sanity, coverture  and  alien  enmity,  upon  the  rights  of  the  par- 
ties. Paper  executed  by  persons  who  are  under  any  of  the  above 
disabilities,  is  either  void  or  voidable.  Others,  as  partnerships, 
corporations,  and  agents,  who  have  capacity  to  make  simple  con- 
tracts also  have  capacity,  to  certain  extent,  to  execute  and  trans- 
fer bills,  notes  and  checks.  We  shall  consider  in  turn  the  capac- 
ity of  all  these  parties  to  execute  negotiable  instruments,  or  bills, 
notes  and  checks. 


1  Bromwich  v.  Loyd,  Lutw.  1582; 
Hodges   V.    Steward,    12   Mod.   36 ; 


Sarsfield  v.  Witherley,  2  Vent.  292. 


27 


28  NEGOTIABLE   INSTRUMENTS.  §§  23-24 

For  convenience,  parties  and  their  capacity  may  be  considered 
under  two  main  divisions  or  heads,  viz.,  1st — those  parties  par- 
tially or  wholly  incapacitated,  and  2nd — those  parties  not  in- 
capacitated. 

§  23.     Parties  partially  or  wholly  incapacitated — In  general. 

Parties  partially  or  wholly  incapacitated  may  be  classified  either 
as  parties  lacking  mental  capacity,  such  as  infants,  lunatics, 
drunkards  and  spendthrifts;  or  as  persons  lacking  legal  capacity 
other  than  mental,  such  as  married  women,  the  bankrupt  or  in- 
solvent payee  and  alien  enemies. 

§  24.     Same — Persons    lacking    mental    capacity — Infants. 

There  is  a  difference  of  opinion  in  the  decisions  of  the  various 
states  as  to  whether  a  negotiable  instrument  made,  accepted  or 
indorsed  by  an  infant,  that  is,  by  one  under  twenty-one  years 
of  age,  is  absolutely  void  or  is  merely  voidable.^  The  better 
opinion  is  that  such  note  is  voidable  and  may  be  ratified  by  the 
minor  after  reaching  his  majority^  But  before  reaching  his 
majority  and  ratifying  the  instrument  the  infant  cannot  bind 
himself  absolutely  as  drawer,  indorser,  acceptor  or  maker  of  a 
bill  of  exchange  or  promissory  note."* 

If  an  instrument  is  given  by  an  infant  for  necessaries,  the  bet- 
ter opinion  is  that  the  instrument  is  voidable  and  if  repudiated 
by  the  infant,^  he  may  be  recovered  against  not  on  the  note  but 
for  the  value  of  the  articles  supplied,  or  service  rendered,  that  is, 
in  actions  known  technically  as  "quantum  valebat"  and  "quantum 
meruit,"  respectively.* 

A  note,  bill  or  check  made  payable  to  an  infant  is  enforceable 
by  the  infant  against  the  maker  or  acceptor,  as  the  privilege  of 

3  Tyler   v.   Gallop,  68  Mich.   185,  Mich.    304;    Little    v.    Duncan,    9 

35  N.  W.  902,  13' Am.  St.  Rep.  336;  Rich.  55,  64  Am.   Dec.  700;    Stern 

Little  V.   Duncan,  9  Rich.    (S.   C.)  v.  Meikleham,  56  Hun  (N.  Y.)  475, 

55,  64  Am.  Dec.  700;  Askey  v.  Wil-  10  N.  Y.  S.  216. 

liams,  74  Tex.  294,  11  S.  W.  1101.  5  5  Morton  v.  Steward,  5  111.  App. 

L.  R.  A.  176.    See  note  18  Am.  St.  533;   McCrillis  v.   How,   3    N.    H. 

Rep.  606-611.  348;    Swasey   v.   Vanderheyden,    10 

Contra,     Wentworth     v.     Went-  Johns.  (N.  Y.)  Zi. 

worth,    5    N.    H.   410;    McMim    v.  But  see,  Earle  v.  Reed,  10  Mete. 

Richards,  6  Yerg.  (T^^nn.)  9.  (Mass.)    387;   Aaron   v.   Harley,  6 

3  Heady  v.    Boden,   4   Ind.    App.  Rich.  (S.  C.)  26;  Bradley  v.  Pratt, 

475,    30    N.    E.    1119;    Whitney   v.  23  Vt.  378. 

Dutch,   14   Mass.  4.^7,   7  Am.   Dec.  «  Guthrie  v.  Morris,  22  Ark.  411; 

229;  Minock  V.  Shortridge,  21  Mich.  Munson    v.    Washband,    31    Conn. 

304.  303,    83    Am.    Dec.    151;    Askey   v. 

^Fetrow    v.    Wiseman,    40    Ind.  Williams,   74   Tex.   294,    11    S.   W. 

148;     Minock    v.     Shortridge.    21  1101,  5  L.  R.  A.  176. 


§  24  PARTIES  AND  THEIR  CAPACITY.  29 

avoiding  the  contract  lies  with  the  infant  and  is  for  his  benefit.'' 
The  one  who  pays  should  use  due  care  in  paying  lest  payment 
should  be  made  to  the  guardian  rather  than  to  the  infant. 

An  infant's  indorsement,  that  is,  his  writing  his  name  on  the 
back  and  making  the  instrument  payable  to  some  one  else,  is 
voidable,  not  absolutely  void.  He  may  choose  to  disaffirm  it, 
and  by  returning  the  consideration  received,  compel  the  maker 
or  acceptor  to  pay  him,  although  the  money  has  already  been 
paid  to  the  indorsee  or  the  one  to  whom  the  infant  indorses  it ; 
or  the  infant  may  disaffirm  the  indorsement,  notify  all  the  par- 
ties, and  if  payment  has  not  been  made  to  the  indorsee,  destroy 
his  title  to  the  bill  or  note.^ 

In  case  of  the  indorsement  of  the  note  or  bill  by  the  infant 
payee,  the  maker  or  acceptor  is  liable,  as  the  fact  that  they  make 
the  instrument  payable  to  an  infant  estops  or  precludes  them 
from  denying  his  capacity  to  indorse  the  instrument.  It  would 
be  absurd  to  allow  one  who  has  made  an  instrument  payable  to 
an  infant,  or  his  order,  to  refuse  to  pay  the  money  to  one  to 
whom  the  infant  had  ordered  it  to  be  paid,  in  distinct  violation 
of  his  promise.^ 

The  Negotiable  Instruments  Law  provides  :*** 

'^The  indorsement  or  assignment  of  the  instrument  by  a  cor- 
poration or  by  an  infant  passes  the  property  therein,  notwith- 
standing that  from  zmnt  of  capacity  the  corporation  or  infant 
may  incur  no  liability  thereon." 

The  above  section  of  the  law  does  not  take  away  the  infant's 
right  to  disaffirm  his  indorsement  and  recover  the  instrument 
even  against  an  innocent  indorsee  for  value.*®* 

As  the  instrument  of  an  infant  is  not  absolutely  void,  but 
voidable  only  at  his  election,  it  follows  that,  after  reaching  full 
age,  the  then  adult  may  ratify  and  affirm  his  bill  or  note  exe- 
cuted while  he  was  an  infant.  Unless  a  written  ratification  is 
required  by  statute,  a  verbal  ratification  is  sufTcient.  In  some 
states  by  statute  it  is  required  that  this  ratification  be  in  writ- 
ing. 

'"Garner  v.   Cook,   30   Ind.   331;  Hardy    v.    Waters,    38    Me.    450; 

Dulty  V.  Brownfield,  1  Pa.  St.  497 ;  Nightingale      v.      Withington,      IS 

Grey  v.  Cooper,  3  Dougl.  65 ;  Bun-  Mass.  272,  8  Am.  Dec.  101. 

ker's  Cases,  331.  ^®  Neg.  Inst.  Law,  §  22,  where  all 

*  Hardy  v.  Waters,  38  Me.  450;  cases  directly  or  indirectly  bearing 

Nightingale      v.      Withington,      15  upon  or  citing  the  Law  are  grouped. 

Mass.  272,  8  Am.  Dec.  101 ;   Story  i»*  Murray     v.     Thompson,     136 

Prom.  Notes,  §80.  Tenn.  118,  188  S.  W.  578,  L.  R.  A. 

»Frazier  v.  Massey,  14  Ind.  382,  1917  B,  1172. 


30  NEGOTIABLE    INSTRUMENTS.  §    25 

§  25.  Same — Persons  lacking  mental  capacity — Lunatics 
and  imbeciles.  The  bill  or  note  of  a  lunatic,  imbecile,  idiot,  or 
other  persons  non  compos  mentis,  from  age  or  personal  infirmity, 
is,  subject  to  the  conditions  set  out  below,  not  binding  on  such 
persons  during  the  period  of  incompetency.-^^  There  is  a  con- 
flict of  authority  in  the  various  jurisdictions  as  to  whether 
one  ignorant  of  the  incompetency  of  a  person  with  whom  he 
contracts  will  be  protected.  The  better  opinion  would  seem 
to  be  that  he  will  be  protected  if  he  has  acted  in  good  faith 
and  taken  no  undue  advantage  of  the  afflicted  person.*^ 

That  is,  he  will  be  protected  if  the  note  was  obtained  or  the 
contract  entered  into  in  good  faith,  in  ignorance  of  the  want  of 
capacity  of  the  insane  person  to  contract,  and  for  a  full  and 
adequate  consideration  of  money  paid,  or  property  delivered  to 
him. 

As  to  whether  a  bill  or  note  given  for  necessaries  binds  one 
under  such  incompetency,  the  more  just  rule  would  seem  to  be 
to  place  such  an  instrument  upon  the  same  footing  as  the  bill 
or  note  of  an  infant  given  for  necessaries,  as  discussed  in  the  pre- 
vious section.-*' 

Contracts  with  a  person  who  has  been  adjudged  judicially  to 
be  insane  and  for  whom  a  committee  or  guardian  has  been  ap- 
pointed to  care  for  his  interests  are  not  valid  and  cannot  be  en- 
forced if  disaffirmed  or  avoided.  If  the  insanity  of  a  party  to  a 
contract  is  known,  the  contract  is  absolutely  void.^^ 

"  15  Am.  Dec.  361  note;  Mussle-  Boone,  102  Ga.  202,  29  S.  E.  182,  66 

man  v.  Cravens,  47  Ind.  1;   Ellars  Am.  St.  Rep.  167,  40  L.  R.  A.  250; 

V.  Mossbarger,  9  111.  App.  122 ;  Hale  Am.  Dec.  372. 

V.  Browne,  11  Ala.  87;  Milligan  v.  Seaver  v.   Phelps,  11  Pick.  304,  22 

Pollard,   112  Ala.  465,  20  So.  620;  13  Navasota   First   Nat.   Bank  v. 

Burke  v.   Allen,  29  N.   H.   106,  61  McGinty,    29   Tex.    Civ.   App.    539, 

Am.  Dec.  642 ;  Carrier  v.   Sears,  4  69  S.  W.  495 ;  In  re  Renz,  79  Mich. 

Allen    (Mass.)    336,   81    Am.    Dec.  216,  44  N.  W.  598;  Hosier  v.  Beard, 

707 ;      American      Trust      Co.      v.  54  Ohio  St.  Rep.  398,  43  N.  E.  1040, 

Boone,  102  Ga.  202,  29  S.  E.  182,  66  56  Am.   St.  Rep.  720,  35  L.  R.  A. 

Am.  St.  Rep.  167,  40  L.  R.  A.  250.  161. 

See  note  11  Am.  St.  Rep.  320.  Contra,  Milligan  v.   Pollard,   112 

12  Memphis  Nat.  Bank  v.  Sneed,  Ala.  465,  20  So.  620;  Davis  v.  Tar- 

97  Tenn.  120,  36  S.  W.  716,  56  Am.  ver,  65  Ala.  98;  McKee  v.  Purnell, 

St.    Rep.    788,    34    L.    R.    A.    274 ;  18  Ky.  L.  Rep.  879,  38  S.  W.  705. 

Snyder  v.  Lanback,  7  Wkly.  Notes  '^  American    Trust,    etc.,    Co.    v. 

Cases   (Pa.)   464  note;  Mussleman  Boone,   102  Ga.  202,  29  S.   E.  182, 

V.   Cravens,   47   Ind.    1;   Hosier   v.  66  Am.  St.   Rep.   167,  40  L.   R.  A. 

Beard,    54   Ohio    St.    Rep.    398,   43  250;   Hughes  v.  Jones,    116   N.   Y. 

N.  E.  1040,  56  Am.  St.  Rep.  720,  35  67,  22  N.  E.  446,  15  Am.  St.  Rep. 

L.  R.  A.  161.  386,  5  L.  R.  A.  637;   Schramek  v. 

Contra,   American   Trust   Co.   v.  Shepeck,   120  Wis.  643,  98  N.  W.' 


§  26  PARTIES  AND  THEIR  CAPACITY.  31 

Such  persons  of  unsound  mind  may  be  payees  of  bills  or  notes 
and  may  compel  payment  to  them  or  a  return  of  the  considera- 
tion. As  payees  they  may  indorse  the  paper  and  the  indorsee 
may  recover  of  the  maker  or  acceptor,  and  the  latter  are  estopped 
from  denying  the  payee's  capacity  to  indorse  if  the  payee  was 
incompetent  when  the  bill  or  note  was  executed.^^ 

It  has  been  held,  that  the  insanity  of  the  indorser  may  be 
pleaded  by  the  maker  of  a  note  in  an  action  brought  against  him 
by  the  indorsee.-^®  But  the  better  doctrine  is  as  above  stated  that 
the  contract  of  indorsement  by  an  insane  person  is  voidable  and 
not  void,  and  such  contract  is  binding  upon  all  prior  parties  to 
the  instrument  who  are  of  sound  mind.^''  No  action  will  lie  on 
an  accommodation  indorsement  of  a  promissory  note  by  a  luna- 
tic, even  in  favor  of  an  innocent  holder.*^ 

There  is  a  presumption  that  every  person  is  of  sound  mind  and 
capable  in  that  respect  of  contracting  a  liability  on  a  bill,  note 
or  check  until  the  contrary  appears.*'*  If  a  person  contracts 
such  a  liability  with  a  third  person  whom  he  knows  to  be  insane, 
it  is  not  valid,  for  unsoundness  of  mind  would  be  a  good  de- 
fense, if  it  could  be  shown  that  the  defendant  was  not  of  capacity 
and  the  plaintiff  knew  it.*®  But  where  a  person  as  above  in  good 
faith  contracts  with  another,  without  notice  of  any  such  insanity 
as  affects  his  capacity  to  contract,  the  ordinary  presumption  of 
sanity  prevails,  and  the  contract  is  valid,  unless  undue  advantage 
was  taken  of  the  lunatic.** 

§  26.  Same — Persons  lacking  mental  capacity — Drunkards 
and  spendthrifts.  If  a  person  became  so  drunk  as  to  be  de- 
prived of  understanding  and  reason  and  in  such  a  condition  signs 
a  bill  or  note,  either  as  maker,  drawer,  indorser  or  acceptor,  the 

213;  Coleman  v.  Farar,  112  Mo.  54,  56  Am.  St.  Rep.  788,  34  L.  R.  A. 

20  S.  W.  441.  274;  Bechtel's  Appeal,  133  Pa.  St. 

But  see,  Kimball  v.  Bumgardner,  367,  19  Atl.  412. 

16  Ohio  Cir.  Ct.  587,  9  Ohio  Civ.  i»  Jackson     v.     Van     Dusen,     5 

Dec.  409.  Johns.  144;  1  Parsons  on  Notes  and 

15  Carrier     v.     Sears,     4     Allen  Bills  150. 

(Mass.)  336,  81  Am.  Dec.  707.  20 Hannahs  v.  Sheldon,  20  Mich. 

16  Walker  v.  Winn  (Ala.  1905),  278;  Lincoln  v.  Buckmaster,  32 
39  So.  12;  Burke  v.  Allen,  29  N.  H.  Vt.  652;  Hughes  v.  Jones,  116  N. 
106,  61  Am.  Dec.  642.  Y.  67,   22   N.   E.   446,    15   Am.   St. 

17  Carrier     v.     Sears,     4     Allen  Rep.  386,  5  L.  R.  A.  637. 

(Mass.)  336,  81  Am.  Dec.  707.  3i  Mutual  Life  Ins.  Co.  v.  Hunt, 

18  Van  Patton  v.  Beal,  46  la.  79  N.  Y.  541 ;  Hosier  v.  Beard,  54 
62 ;  Edwards  v.  Davenport,  20  Fed.  Ohio  St.  Rep.  398,  43  N.  E.  1040,  56 
756 ;  Smith  v.  Mirsack,  6  C.  B.  486.  Am.  St.  Rep.  720,  35  L.  R.  A.  161 ; 

But  see,   Memphis  Nat.  Bank  v.      Behrens  v.  McKenzie,  23  la.  343. 
Sneed,  97  Tenn.  120,  36  S.  W.  716, 


32  NEGOTIABLE    INSTRUMENTS.  §  27 

instrument  as  to  him  is  voidable.^^  He  may  ratify  the  instru- 
ment when  he  becomes  sober  and  be  bound  by  it.^"*  Many  courts 
hold  that  drunkenness,  unless  procured  by  the  payee's  connivance, 
must  be  habitual  and  amount  practically  to  mental  unsoundness 
in  order  that  it  may  be  set  up  as  a  defense  on  an  instrument.^'' 
The  spendthrift,  as  in  cases  of  infancy,  lunacy,  or  drunkenness, 
may  be  placed  under  the  care  of  a  guardian.^^  A  person  who 
has  been  deprived  of  his  property  for  any  of  the  above  causes 
is  considered  incompetent  to  make  a  negotiable  instrument.  So 
likewise  a  spendthrift  when  placed  under  the  care  of  a  guardian 
is  held  to  be  incompetent  to  make  a  negotiable  instrument.  By 
the  weight  of  authority  when  under  the  care  of  a  guardian  he 
cannot  indorse  a  note  made  payable  to  himself,  for  if  he  is  held 
to  be  incompetent  to  make  a  negotiable  instrument  in  the  first  in- 
stance he  could  not  consistently  be  held  to  incur  any  liability  by 
indorsement.^® 

§  27.  Same — Persons  lacking  legal  capacity  other  than  men- 
tal— Married  women.    Wherever  the  common  law  prevails,  a 

married  woman  cannot  bind  herself  as  a  party  in  any  way  to  a 
bill  or  note  and  such  instruments  signed  by  her  are  absolutely 
void.  There  were  a  few  exceptions  to  this,  however,  at  common 
law,  as  where  the  husband  was  an  alien  enemy  and  the  like.  In 
those  states  where  the  common  law  has  been  unchanged  by  legisla- 
tive enactment  the  common  law  rules  still  prevail ;  if  a  special  or 
limited  power  to  contract  is  given  them,  they  are  still  deemed 
prima  facie  unable  to  contract,  and  the  burden  is  on  the  persons 
relying  on  the  validity  of  their  contracts  to  bring  them  within  the 
rule  set  down  in  the  legislative  enactment.*'^ 

Modern  statutes  in  most  of  the  states  enlarge  the  capacity  of  a 
married  woman  as  to  the  making  of  contracts.  The  general  scope 
of  this  remedial  legislation  is  either  to  give  her  power  to  con- 
tract the  same  as  if  single  or  contract  as  if  single  with  reference 
to  or  for  the  benefit  of  her  separate  estate  and  in  either  case  her 


23Jenners  v.  Howard,  6  Blackfd 
240;  Conant  v.  Jackson,  16  Vt 
335 ;  Miller  v.  Finley,  26  Mich.  249 
Gore  V.  Gibson,  13  Mees  &  W.  623 
State  Bank  v.  McCoy,  69  Pa.  St 
204.    See  note  107  Am.  St.  Rep.  545 

23  Calkins  v.  Fry,  35  Conn.  170 
Joest  V.  Williams,  42  Ind.  565 
Mathews  v.  Baxter,  L.  R.  8  Exch 


St.  204,  8  Am.  Rep.  246;  Hale  v. 
Brown,  11  Ala.  87;  Smith  v.  Wil- 
liamson, 8  Utah  219. 

2^  Manson  v.  Felton,  13  Pick. 
206;  Lynch  v.  Dodge,  130  Mass. 
458. 

26  Lynch  v.  Dodge,  130  Mass.  458. 

27  Kenworthy  v.  Sawyer,  125 
Mass.  28;  Kenton  Ins.  Co.  v.  Mc- 


132.  Clelland,  43  Mich.  564;  Comings  v. 

But    see,    Berkley    v.    Canon,    4  Leedy,  114  Mo.  454,  21  S.  W.  804; 

Rich.  136.  Connor  v.   Martin,   1    Strange,   516. 

2*  State  Bank  v.  McCoy,  69  Pa.  See  note  3  L.  R.  A.  (N.  S.)  145. 


§§  28-30  PARTIES  AND  THEIR   CAPACITY.  33 

power  to  execute  negotiable  instruments  would  be  the  same  as 
in  case  of  other  contracts.  In  some  states  she  is  forbidden  to 
execute  such  instruments  as  surety  and  her  engagements  as  surety 
are  absolutely  void  and  cannot  be  ratified  by  her  after  coverture  is 
terminated,  either  by  death  or  divorce.^^ 

§  28.  Same — Persons  lacking  legal  capacity  other  than  men- 
tal— Bankrupt  or  insolvent  payee.  A  bankrupt  cannot  indorse 
a  bill  or  note,  since  all  his  bills  and  notes  receivable  are  col- 
lectible only  by  the  assignee  or  trustee  in  bankruptcy.  Any  in- 
dorsements which  he  attempts  to  make  are  absolutely  void.  The 
one  exception  to  the  above  rule  is  that  when  the  bankrupt  shall 
have  sold  the  paper  before  his  bankruptcy,  the  title  obtained  by 
the  purchaser  will  be  superior  to  that  of  the  assignee  or  trustee 
although  the  indorsement  was  made  after  the  bankruptcy.-® 

§  29.  Same — Persons  lacking  legal  capacity  other  than  men- 
tal— Alien  enemies.  In  times  of  peace  aliens  may  contract  with 
each  other  as  other  persons  may  but  in  times  of  war  alien  enemies 
cannot  contract  with  each  other  when  it  necessitates  communi- 
cation across  the  line  of  hostilities;  hence  they  cannot  execute 
negotiable  paper  which  is  binding  either  during  or  after  the  close 
of  hostilities.  Alien  enemies  are  those  who  are  subjects  of  dif- 
ferent sovereignties  which  are  at  war  with  each  other.  In  some 
cases,  war  simply  suspends  the  contractual  powers  of  aliens  and 
does  not  terminate  them.  But  in  no  case  will  communications  or 
transfers  of  property  or  money  across  the  line  of  hostilities  be 
permitted.^" 

§  30.  Parties  not  incapacitated — In  general.  Parties  not  in- 
capacitated may  be  classified  as.  1st,  those  acting  in  a  fiduciary 
capacity,  such  as  executors,  administrators,  trustees,  guardians, 
committees,  and  the  like:  2nd,  those  acting  in  a  representative 

28  The   law   of    the   place   deter-  28  N    J.  Eq.   (2  Stew.)   547;  First 

mines     the     capacity     of     married  Nat.   Bank  v    Gish,  72  Pa.  St.   13; 

women     to     enter     into     contracts.  Jerome  v.  McCarter,  94  U.  S.  734. 

Bell    V.    Packard,   69    Mc.    105.    31  3»  Woods    v.    Wilder,    43    N.    Y. 

Am.    Rep.    251;    Bowles    v.    Field,  164,  3  Am.  Rep.  684;  Craft  v.  U.  S., 

83   Fed.  886;    Robinson   v.    Queen,  12  Ct.  CI.  178;  Billgerry  v.  Branch, 

87  Tenn.  445,  11  S.  W.  38,  10  Am.  19  Gratt.   (Va.)   393.  100  Am.  Dec. 

St.  Rep.  690,  3  L.  R.  A.  214.  679;  Ledoux  v.  Buhlcr,  21  La.  Ann. 

But  in  La.,  and  generally  under  130;    Russell    v.    Russell,    1    Mac- 

the    civil    law,    the    wife's    domicile  Arthur  (D.  C.)  263. 

determines    her    capacity.      Gamier  As    to    transfer    in    this    country 

V.  Poydras,  13  La.  177.  of  a   note  bv  an   alien   enemy,   see 

29Hersey   v.   Elliot,  67  Me.  526.  Morris    v.    Poillon.    50    Ala.    403; 

24  Am.  Rep.  50;  Hughes  v.  Nelson,  Morrison  v.  Lovell,  4  W.  Va.  346. 


34  NEGOTIABLE    INSTRUMENTS.  §  31 

capacity  as  agents,  partners,  private  corporations,  municipal  or 
public  corporations  and  public  officers. 

§  31.  Same — Persons  acting  in  fiduciary  capacity — Execu- 
tors and  administrators.  In  general,  the  legal  representatives 
of  decedents,  known  as  executors  and  administrators  succeed  to 
all  the  interests  and  rights  of  such  decedents.  The  rights  and 
remedies  attaching  to  all  their  contracts  and  instruments,  v^hether 
negotiable  or  not,  pass  to  the  executors  and  administrators.  The 
assets  of  the  decedent's  estate  also  pass  to  these  legal  representa- 
tives. But  these  rules  are  subject  to  the  exception  that  all  those 
rights  and  obligations  arising  from  the  decedent's  contracts  which 
are  so  personal  in  their  character  that  no  one  could  take  his  place 
in  the  matter,  do  not  pass  to  his  executors  or  administrators. 

An  executor  or  administrator  cannot  make  or  indorse  a  promis- 
sory note  so  as  to  bind  the  estate  of  the  decedent.  By  his  con- 
tact he  can  only  bind  himself  and  he  can  in  no  way  bind  the 
estate  under  his  control  except  as  to  the  debts  contracted  by  the 
decedent  himself.  In  case  he  should  make  a  promissory  note  or 
accept  a  bill  of  exchange  and  it  should  be  negotiated  before  due, 
the  executor  has  created  a  personal  liability. 

The  fact  that  the  executor  in  making  the  instrument  describes 
himself  as  executor  does  not  give  him  capacity  to  bind  the  estate.^^ 
In  case  a  promissory  note  or  bill  of  exchange  which  is  made  pay- 
able to  the  deceased  or  his  order  comes  into  the  hands  of  the 
executor  or  administrator  there  is  a  conflict  of  authority  as  to 
whether  either  of  them  may  indorse  in  such  a  manner  as  to  pre- 
clude a  personal  liability .^^^  In  case  the  note  has  been  indorsed 
by  the  payee  before  his  death  it  is  necessary  that  the  note  be 
again  indorsed  in  order  to  pass  title. 

31  Rittenhouse  v.  Ammerman,  64  Brown,  64  la.  425,  20  N.  W.  745,  52 
Mo.  197,  27  Am.  Rep.  215;  Funker-  Am.  Rep.  446;  Bogert  v.  Hertell,  40 
burg  V.  Gorham,  46  Ga.  296;  Walk-      Hill  492. 

er  V.  Patterson,  36  Me.  273 ;  Greg-  But    see,    Smith    v.    Whiting,    9 

ory  V.  Leigh,  33  Tex.  813 ;  Sneed  v.  Mass.  334 ;   Sanders  v.   Blain,  6  J. 

Coleman,  7  Gratt.  300.  J.  Marsh  446,  22  Am.  Dec.  86. 

As   to   liability   of   administrator  Must    indorse    without    recourse. 

or    executor    as    acceptor    of    bill  Foster  v.  Fuller,  6  Mass.  58;  Liy, 

drawn    against    him    as    such,    see  ingston  v.  Gaussen,  21  La.  Ann.  286, 

Tassey  v.  Church,  4  Watts  &  S.  141.  99  Am.  Dec.  731. 

39  Am.  Dec.  65.  As  to  power  of  a  foreign  execu- 

But  see,  Schmiltler  v.  Simon,  114  tor  to  transfer  bill  see,  Dial  v.  Gary, 

N.  Y.  176,  21  N.  E.  162.  14   S.    C.    573,   37   Am.   Rep.   737', 

32  Wool ey  V.  Lyon,  117  111.  244,  Stearns  v.  Burnham,  5  Me.  261,  17 
6  N.  E.  867,  57  Am.  Rep.  867 ;  Wade  Am.  Dec.  228. 

V.  Wade,  36  Tex.  529;  Campbell  v. 


§§  32-33  PARTIES  AND  THEIR  CAPACITY.  35 

§  32.  Same^ — Persons  acting  in  fiduciary  capacity — Trustees 
and  guardians.  Trustees  and  guardians  have  capacity  to  trans- 
fer instruments  but  they  can  incur  only  a  personal  liability.  An 
estate  is  committed  to  them  and  they  have  capacity  to  hold  it  and 
keep  it  intact,  not  for  themselves  but  for  others.  They  have  such 
powers  as  are  necessary  for  them  to  exercise  in  carrying  into 
force  and  efifect  the  estate  which  they  control.  If  a  trustee  or 
guardian  executes  a  bill  or  note  and  describes  himself  as  such  he 
does  not  bind  the  estate  but  incurs  only  a  personal  Hability.^* 

Trustees  and  guardians,  like  executors  and  administrators,  can- 
not bind  the  estate  under  their  control,  or  the  persons  for  whom 
or  for  whose  benefit  they  act,  by  their  promissory  note,  or  by 
the  acceptance  of  a  bill  of  exchange;  to  give  any  vaHdity  to  such 
a  note  or  bill  they  must  be  deemed  personally  bound  as  makers 
or  acceptors. 

It  has  been  held  that  a  guardian  may  indorse  a  note  or  bill  of 
exchange  payable  to  his  order  as  guardian  so  as  to  pass  title,  the 
reasoning  being  upon  the  theory  that  the  words  "as  guardian" 
are  merely  descriptive  of  the  payee.^  But  the  better  doctrine 
seems  to  be  that  if  the  indorsee  takes  such  an  instrument,  the 
words  "as  guardian"  should  be  sufficient  to  put  him  on  his 
guard  and  if  the  transfer  was  in  fraud  of  the  trust  the  indorsee 
should  be  held  personally  liable.^ 

§  33.  Same — Persons  acting  in  representative  capacity — 
Agent.  All  persons  who  are  themselves  competent  to  become 
parties  to  a  negotiable  contract,  in  their  own  individual  right, 
can  do  so  through  the  instrumentality  of  an  agent.^*  It  is  not 
necessary  that  the  agent  himself  should  be  competent  to  make  a 
contract,  as  he  is  the  mere  instrument  of  the  contracting  party, 
who,  of  course,  must  be  capable.^'' 

The  best  mode  for  an  agent  to  sign  or  indorse  a  bill  or  note 
for  his  principal,  so  that  it  may  clearly  appear  that  he  is  the 
mere  scribe,  as  it  were,  who  writes  for  another,  is  as  follows: 

33Towne  v.  Rice,  122  Mass.  67;  ^5  shaw   v.    Spencer,    100    Mass. 

McGavock    v.    Whitfield,    45    Miss.  382,    97    Am.    Dec.    107;    Smith    v. 

452;  Shiff  v.  Shiff,  20  La.  Ann.  269;  Dibrell,  31  Tex.  239,  98  Am.  Dec. 

Conner  v.  Clarke,  12  Cal.  168.  526 ;  Nickerson  v.  Gilliam,  29  Mo. 

But  see,  Gandy  v.  Babbitt,  56  Ga.  456,  11  Am.  Dec.  583. 

640.  ^*  Lea  v.  Bringier,   19  La.  Ann 

**  Westmoreland    v.    Foster,    60  197;   Ferguson   v.    Morris,  67   Ala. 

Ala.  448;   Thornton  v.   Rankin,   19  389. 

Mo.   193 ;   Zellner  v.   Cleveland,  60  37  Governor    v.    Daily,    14    Ala. 

Ga.   633;    Jenkins   v.    Sherman,    11  469;  Felker  v.  Emerson,  16  Vt.  653, 

Miss.  884,  28  So.  726;  McKinney  v.  42  Am.  Dec.  532. 
Beeson,  14  La.  254. 


36  NEGOTIABLE    INSTRUMENTS.  §  33 

"X,  by  his  attorney  or  agent,  Y;"  or,  "X,  by  Y,  agent;"  or, 
"Y,  for  X;"  or,  "Y,  agent  for  X."  It  is  held  competent  also 
for  the  agent  to  sign  simply  the  principal's  name,  and  to  show 
his  authority  to  do  so  by  other  evidence.^^  If  the  agent  sign  a 
note  with  his  own  name,  and  discloses  no  principal,  he  is  per- 
sonally bound.  And  though  he  write  "agent"  after  his  name, 
he  is  still  bound  personally  unless  the  name  of  the  principal  can 
be  found  within  the  four  corners  of  the  instrument.^* 

The  Negotiable  Instruments  Law  provides: 

"Where  the  instrument  contains  or  a  person  adds  to  his  sig- 
nature words  indicating  that  he  signs  for  or  on  behalf  of  a  prin- 
cipal, or  in  a  representative  capacity,  he  is  not  liable  on  the  in- 
strument  if  he  was  duly  authorized;  but  the  mere  addition  of 
zvords  describing  him  as  an  agent,  or  as  Ming  a  representative 
character,  without  disclosing  his  principal,  does  not  exempt  him 
from  personal  liability."'*^ 

Thus  one  is  not  relieved  from  liability  by  adding  the  descriptive 
term  "trustee,"  "administrator,"  "guardian,"  "agent"  "secretary" 
or  any  such  term.^"*  Unless  the  promise  purports  to  be  by  the 
corporation,  it  is  that  of  the  persons  who  subscribe  to  it.  Unless 
the  language  creates  or  fairly  implies  the  undertaking  of  the  cor- 
poration, or  if  the  purpose  is  equivocal,  the  obligation  is  that  of 
its  apparent  makers.^**" 

"A  sijinahire  by  ' procMration'  operates  as  notice  that  the  agent 
has  but  a  limited  authority  to  sign,  and  the  principal  is  bound 
only  in  case  the  agent  in  so  signing  acted  within  the  actual  limits 
of  his  authority.'*^ 

The  terms  "per  procuration"  and  "per  proc"  are  seldom,  if 
ever,  used  in  this  country.  They  have  a  special  technical  mean- 
ing and  are  an  express  intimation  of  a  special  and  limited  author- 

38  First  Nat.  Bank  v.  Gay.  63  Mo.  Coy  v.  Stiner,  53  Mich.  42 ;  Handy- 

33,   21    Am.   Rep.   430;    Mechanics'  side  v.  Cameron,  21  111.  588,  74  Am. 

Bank     v.     Bank    of     Columbia,     5  Dec.  119. 

Wheat.  326.  ^"  Negotiable    Instruments    Law, 

3'J  Bryson  v.  Lucas,  84  N.  C.  286,  §  20,  where  all  cases  directly  or  in- 

37  Am.  Rep.  634;  Rodger  Williams  directly  bearing  upon  or  citing  the 

Bank  v.  Groton  Mfg.  Co.,  16  R.  I.  Law  are  grouped. 

504,  17  Atl.  170 ;  Penn.  Mutual  Life  ^Oa  Sumwalt   v.    Rigsley,   20   Md, 

Ins.  Co.  V.  Conoughy,  54  Neb.  124,  107;   Daniel  v.   Glidden,   38  Wash. 

74  N.  W.  422;  Peterson  v.  Honan,  556. 

44  Minn.  166,  46  N.  W.  303.  20  Am.  4<»''  Casco  National  Bank  v.  Clark, 

St.  Rep.  564.  139  N.  Y.  307. 

Contra,    Keidan    v.    Winegar,    95  ^^  Negotiable    Instruments    Law, 

Afich.   430      This   decision  affirmed  §21,  where  all  cases  directly  or  in- 

by  statute.  directly  bearing  upon  or  citing  the 

May  be  authorized  by  parol.   Odd  Law  are  grouped. 
Fellows    V.    Bank,    42    Mich.    461; 


§  33  PARTIES  AND  THEIR  CAPACITY.  37 

ity;  and  a  person  taking  a  bill  so  drawn,  accepted,  or  indorsed, 
is  bound  to  inquire  into  the»extent  of  the  authority. 

Where  an  agent  accepts  or  indorses  "per  proc."  the  taker  of  a 
bill  or  note  so  accepted  or  indorsed  is  bound  to  inquire  as  to  the 
extent  of  the  agent's  authority.  But  when  the  agent  has  the 
authority  to  do  the  act  in  question,  his  abuse  of  such  authority 
will  not  affect  a  bona  fide  holder  for  value.^^'^ 

The  power  to  make  or  indorse  negotiable  paper  must  be  ex- 
pressly granted  or  given  by  the  principal.  Thus  the  general 
authority  bestowed  upon  an  agent  to  transact  the  business  of  his 
principal  and  to  receive  payment  of  and  to  discharge  debts,  will 
not  imply  an  authority  to  accept  or  indorse  bills  so  as  to  charge 
the  principal.  A  power  expressly  granted  is  subject  to  strict 
interpretation,  and  must  be  performed  in  strict  conformity  with 
the  terms  thereof.^  Thus  it  has  been  decided  that  a  negotiable 
instrument  differing  in  amount  from  that  authorized,  or  made 
payable  at  a  different  time  will  not  bind  the  principal.^'  The 
implied  authority  of  an  afrent  to  bind  his  principal  by  a  bill  or 
note  is  upheld  in  some  cases,  as  where  the  agent  has  formerly 
made  a  note  or  drawn  a  bill  for  his  principal,  and  such  principal 
has  recognized  his  acts.**  It  i=;  provided  in  the  Negotiable  In- 
strument Law  that:  "The  signature  of  any  party  may  be  made 
by  a  duly  authori::ed  agent.  No  particular  form  of  appointment 
is  necessary  for  the  purpose,  and  the  authority  of  the  agent  may 
be  established  as  in  other  cases  of  agency."'^'* 

The  Kentucky  Act  requires  the  a'zent  to  be  duly  authorized  in 
writing  but  it  is  held  that  the  ni^fhority  to  execute  a  non-nego- 
tiable instrument  is  not  required  to  be  in  writing.^* 

The  above  section  permits  proof  of  the  ostensible  authority  of 
the  agent  to  act  for  a  corporation  in  issuing  negotiable  paper ; 

«a  Bryant.    Powis    &    Bryant    v.  Y.  398;   Greenfield  Bank  v.  Crafts 

Quebec    Bank    (1893)     (England),  2  Allen.  269. 

A.  C.  170,  179.  45  Neg.    Inst.    Law,    §    19,   where 

^^Handyside  v.  Cameron,  21   III.  cases  are  collected.    Odd  Fellows  v. 

588,  74  Am.  Dec.   119;  Humphreys  Bank,  42  Mich.  461;  Sager  v.  Tuix 

V.  Wilson,  43  Miss.  328;  Temple  v.  per,  42  Mich.  605;  Kennedy  v.  Gra- 

Pomroy,    4    Grey    128;    Ryhiner   v.  ham,  adm.,  9  Ind.  App.  624,  35  N. 

Feickert,  92   111.   305,   34  Am.   Rep.  E.  925,  2,7  N.  E.  25. 

130.  In    case    of    partnership   plaintiff 

But  see,  Nutting  v.  Sloan,  59  Ga.  must  show  authorization  in  case  it 

392.  is  disputed.   Gooding  v.  Underwood, 

43  King   V.    Sparks,    77   Ga.   285;  89  Mich.  189. 

Blackwell  v.  Ketcham,  53  Ind.  184.  45a  pinley  v.  Smith,  165  Ky.  445, 

44  Stroh  V.  Hinchman,  Z7  Mich.  177  S.  W.  262,  L.  R.  A.  1915  F,  777. 
490;    Hammond   v.   Varian,   54    N. 


38  NEGOTIABLE   INSTRUMENTS.  §  34 

but  what  shall  constitute  sufficient  proof  of  such  authority  is  left 
to  the  common  law."*^"" 

A  general  authority  to  an  agent  is  presumed  to  continue  until 
its  revocation  is  generally  known.  And  if  A  is  the  agent  of  B 
to  draw  bills  in  his  name,  B  will  be  liable  as  drawer  to  ignorant 
indorsees,  who  had  no  knowledge  of  the  change  in  the  relation- 
ship of  the  parties,  or  of  the  revocation  of  the  agency.^® 

It  should  be  noted  that  officers  of  the  government  and  other 
public  corporations  are  not  held  to  the  same  rule  of  agency 
by  which  in  exceeding  their  authority  they  bind  themselves; 
everyone  having  dealings  with  a  public  officer  is  supposed  to  know 
the  legal  limitations  of  his  agency,  so  that  when  a  public  officer 
in  innocent  mistake  of  the  law  makes  an  unauthorized  contract 
in  the  name  of  the  public  corporation  neither  he  nor  the  cor- 
poration is  bound.*'' 

The  officer  of  a  public  corporation  acting  in  his  official  capacity 
must  use  care  that  his  official  character  appears  on  the  face  of 
the  instrument,  and  it  is  held  that  merely  adding  his  official 
designation  to  his  signature  will  relieve  him  of  personal  liabiHty. 

Below  is  a  form  of  signature  by  an  agent. 
Signature  by  an  Agent. 


$100.00  Minneapolis,  Minn.,  July  1,  1921. 

Thirty  days  after  date  I  promise  to  pay  to  the  order  of 

Earl  Matlock 

One  hundred Dollars 

DONALD  S.  MORRIS, 

By  NATHAN  C.  REDDING, 

Agent. 


§  34.  Same — Persons  acting  in  representative  capacity — 
Partners.  Partners  only  have  implied  power  to  make  and  ne- 
gotiate negotiable  instruments  in  case  the  firm  is  a  trading  part- 
nership, or  one  whose  business  necessitates  the  use  of  negotiable 
paper.    If  it  is  in  the  nature  and  scope  of  the  firm's  business 

45b  Grant  County  State  Bank  v.  *''  The     Floyd     Acceptances,     7 

N.  W.  Land  Co.,  28  N.  D.  479,  ISO  Wall.  666;  Walker  v.  Christian,  21 

N.  W.  736.  Gratt.  297;   Hodgson   v.   Dexter,   1 

4«  Story  on  Agency,  §§  470-473.  Cranch.  345. 


§  34  PARTIES  AND  THEIR  CAPACITY.  39 

to  issue  such  paper,  any  one  or  more  partners  may  bind  the  firm 
by  executing  or  accepting  a  note  or  bill  in  a  transaction  within 
such  scope  even  though  the  proceeds  are  for  his  own  benefit  if 
the  holder  of  the  paper  was  not  a  party  to  the  fraud."*^  But  if 
money  is  loaned  to  a  firm  on  the  sole  credit  of  one  of  its  mem- 
bers, and  a  note  is  given  therefor  signed  by  such  member,  the 
obligation  is  that  of  the  individual  member  and  not  that  of  the 
firm,  and  the  fact  that  the  proceeds  thereof  are  used  for  the 
benefit  of  the  firm  is  not  material. 

As  a  general  rule  a  secret,  silent,  or  dormant  partner,  whose 
name  does  not  appear,  is  bound  by  notes  made  or  bills  drawn,  ac- 
cepted, or  indorsed  by  his  co-partners  in  the  name  of  the  firm, 
both  when  they  are  negotiated  for  the  benefit  and  when  given  un- 
der such  circumstances  as  to  bind  the  firm. 

After  the  dissolution  of  a  partnership,  no  partner  has  any 
authority  to  bind  any  former  partner  by  giving  a  promissory 
note  in  the  name  of  the  firm  ;  the  act  of  dissolution  is  a  revocation 
of  all  authority  to  act  for  and  contract  in  the  name  of  the  part- 
nership.^® As  between  the  firm  and  the  world,  the  authority  of 
the  ex-partners  to  bind  each  other  by  bills  or  notes  within  the 
scope  of  the  former  partnership  continues  until  a  suffcient  notice 
of  the  dissolution  is  duly  given. 

Biit  notice  is  not  necessary  when  a  secret,  silent,  or  dormant 
partner  retires,  for  he  has  not  been  held  out  as  a  member  of  the 
firm.  If,  however,  such  partner  is  known  to  certain  individuals  to 
have  been  a  partner,  he  must  notify  them  of  his  retirement  to 
escape  liability  for  future  acts  of  the  firm.^** 

The  proper  form  of  signing  the  firm  name  to  any  contract 
made  by  a  partner  is  to  write  the  firm  name  and  nothing  else. 
It  is  permissible  but  unnecessary  to  write  the  name  of  the  part- 
ner after  the  firm  signature,  thus :  "Smith  &  Brown,  per  William 
J.  Brown." 

As  to  accommodation  paper,  which  term  will  be  explained  later, 
the  following  rule  has  been  laid  down :  No  one  member  of  a  firm 
can  bind  it,  without  the  consent  of  all  its  members,  by  signing 
the  co-partnership  name  as  drawer,  maker,  acceptor,  or  indorser 

48  Bank  V.  Alden,  129  U.  S.  2>7Z;  43  Am.  Dec.  168;  Hurst  v.  Hill.  8 
Fulton  V.  Loughlin,  118  Ind.  286;  Md.  399,  63  Am.  Dec.  705;  Wilson 
Carrier  v.  Cameron,  31  Mich.  ZIZ ;  v.  Forder,  20  Ohio  St.  95,  5  Am. 
Hayward    v.    Gray,    12    Gray    453 ;  Rep.  627. 

Spaulding   v.    Kelly,    50    N.    Y.    S.  50  pit^jn  y_  Beufer,  50  Kan.  108, 

244;    Towle  v.   Dunham,   76   Mich.  34  Am.  St.  Rep.  110;  Baptist  Book 

367.     See  note  48  Am.  St.  Rep.  438.  Concern  v.  Carswell,  Tex.  Civil  Ap- 

49  Humphries  v.  Chastain,  5  Ga.  peals,  1898,  46  S.  W.  858;  Nuss- 
166,  48  Am.  Dec.  247;  Commercial  baumer  v.  Becker,  87  111.  281,  29 
Bank  v.  Perry,  10  Rob.    (La.)   61,  Am.  Rep.  53. 


40  NEGOTIABLE    INSTRUMENTS.  §    35 

of  negotiable  paper  for  his  private  accommodation  or  for  the 
accommodation  of  a  third  party,  and  this  for  the  obvious  reason 
that  such  a  transaction  is  not  within  the  scope  of  the  co-partner- 
ship business,  unless  expressly  or  impliedly  made  so  and  that  it 
would  ordinarily  be  without  authority  and  in  fraud  of  the  firm.'** 

§  35.  Same — Persons  acting  in  representative  capacity- 
Private  corporations.  The  power  of  private  corporations  to  be- 
come parties  to  bills  of  exchange  or  promissory  notes  is  co- 
extensive with  their  power  to  contract  debts.*^  Whenever  a 
corporation  is  authorized  to  contract  a  debt  it  may  draw  a  bill 
or  give  a  note  in  payment  of  it.  Every  corporation,  therefore, 
may  become  a  party  to  bills  or  notes  for  some  purposes.  Thus,  a 
mere  religious  corporation  may  need  fuel  for  its  rooms,  and  as 
an  economical  measure  may  buy  a  cargo  of  coal,  and  give  its 
note  for  it ;  and  such  a  note  would  undoubtedly  be  valid. 

The  cashier  of  a  bank,  the  president  of  a  corporation  or  any 
other  administrative  officer,  as  secretary  or  treasurer,  may  be 
expressly  authorized  to  issue  negotiable  paper  for  the  corporation, 
or  he  may  have  such  power  from  implication  by  reason  of  having 
previously  exercised  the  power.^^ 

The  Negotiable  Instruments  Law  provides  as  follows :  "Where 
an  instrument  is  dramn  or  indorsed  to  a  person  as  'cashier'  or 
other  fiscal  officer  of  a  bank  or  corporation,  it  is  deemed  prima 
facie  to  be  payable  to  the  bank  or  corporation  of  which  he  is 
such  officer;  and  may  be  negotiated  by  either  the  indorsement  of 
the  bank  or  corporation,  or  the  indorsement  of  the  officer."^^ 

The  directors  of  a  corporation  are  in  control  of  its  afifairs  and 
have  the  management  of  its  business,  subject  to  the  restrictions 
and  limitations  imposed  upon  them  by  the  articles  of  incorpora- 
tion, by-laws  and  statutes.  If  the  issuing  of  commercial  paper 
is  within  the  power  of  the  corporation  itself,  such  paper  may  in 
all  cases  be  executed  by  the  directors  acting  as  a  board.  So  the 
sole  manager  of  a  corporation  intrusted  by  the  officers  with  its 
entire  conduct  may  bind  it  by  executing  a  note  in  its  name, 
especially  where  the  officers  had  previously  acquiesced  in  his 
execution  of  similar  notes.^* 

51  Hendric  v.  Berkowitz,  Z7  Cal.  Co.,  27  N.  Y.  546,  84  Am.  Dec.  298. 
113,  99  Am.  Dec.  251;  Chenowith  sSQdd  Fellows  v.  Sturgis  First 
V.  Chamberlin,  6  B.  Mon.  (Ky.)  Nat.  Bank.  42  Mich.  461;  Olcott  v. 
60,  43  Am.  Dec.  145;  Fort  Madison  Tioga  R.  Co.,  27  N.  Y.  546,  84  Am. 
Bank  V.  Alden,  129  U.  S.  381.  Dec.  298. 

52  Mott  V.  Hicks,  1  Cow.  (N.  Y.)  53a  Neg.  Inst.  Law,  §  42,  where  all 
513,  13  Am.  Dec.  550;  Auerbach  v.  cases  directly  or  indirectly  bearing 
Le  Sueur  Mill  Co.,  28  Minn.  291,  41  upon  or  citing  the  Law  are  grouped. 
Am.  Rep.  285;  Olcott  v.  Tioga  R.  54  American  Exch.  Nat.  Bank  v. 


§  36  PARTIES  AND  THEIR  CAPACITY. 


41 


The  power  to  receive  negotiable  paper  must  necessarily  be  ac- 
companied by  a  power  to  transfer  it  to  a  third  person,  in  the 
ordinary  course  of  its  business.^^  Many  of  the  same  rules  which 
control  indorsement  and  transfer  of  negotiable  paper  by  agents 
are  also  applicable  to  officers  and  agents  of  a  corporation. 

We  have  already  seen  under  the  section  pertaining  to  agents 
as  parties  {^22)  the  proper  form  of  making  the  signature  of 
a  corporation  by  an  agent  or  officer.  In  making  such  paper  it 
is  generally  held  that  the  corporation  may  dispense  with  the  use 
of  its  corporate  seal. 

Below  is  a  form  of  signature: 
Corporate  Signature. 


$250.00  St.  Paul,  Minn.,  July  1,  1921. 

Sixty  days  after  date  The  Acme  Company  promises 

to  pay  to  the  order  of  Joseph  Thompson 

Two  hundred  fifty Dollars 

at  First  National  Bank. 

Valued  received.  THE  ACME  COMPANY. 

By  JAMES  STARR, 

Treasurer. 


§  36.  Same — Persons  acting  in  representative  capacity — 
Municipal  or  public  corporations.  As  to  municipal  or  public 
corporations,  such  as  cities,  towns  and  other  like  corporations 
created  by  the  government  as  governmental  agencies,  it  is  held 
that  there  is  no  doubt  that  they  may  have  the  povvcr  conferred 
on  them  to  execute  negotiable  paper,  but  the  better  opinion  is 
that  such  power  does  not  exist  unless  expressed  or  clearly  implied. 
And  the  extent  of  the  power  may  be  limited  by  statute,  as  well 
as  the  existence  of  the  power.^® 

Oregon  Pottery   Co.,   55  Fed.   Rep.  56  Qaiborne    Co.    v.    Brooks,    111 

265 ;  Credit  Co.  v.  Howe  Mach.  Co.,  U.  S.  400 ;   Newgrass  v.   New  Or- 

54  Conn.  357,  1  Am.  St.  Rep.  133.  leans,  42  La.  Ann.  163,  21  Am.  St. 

ssMcIntire    v.    Preston,    10    111.  Rep.   368;    Knopp    v.    Hoboken,    39 

48.  48  Am.  Dec.   321;   Goodrich  v.  N.  J.  L.  394;  Merrill  v.  Alonticello. 

Reynolds,  31   111.  490,  83  Am.  Dec.  138  U.   S.  673;  State  v.   Smith,  47 

240;  Buckley  v.  Briggs,  30  Mo.  452.  N.  J.  L.  473. 


42  NEGOTIABLE    INSTRUMENTS.  §  '^'^ 

§37.  Same — Persons  acting  in  representative  capacity — 
Public  officers.  A  negotiable  instrument  may  be  drawn  pay- 
able to  the  order  of  "the  holder  of  an  office  for  the  time  being."^'^ 
This  provision  of  the  law  was  intended  to  declare  the  general 
rule  that  where  an  instrument  was  payable  to  a  person  holding 
a  position  of  a  representative  character  that  he  may  be  regarded 
as  the  payee  of  the  instrument  in  behalf  of  all  the  persons  whom 
he  represents. 

When  public  officers  in  good  faith  contract  with  parties  having 
full  knowledge  of  the  extent  of  their  authority,  or  who  have  equal 
means  of  knowledge  with  themselves,  they  do  not  become  individ- 
ually liable  unless  the  intent  to  incur  a  personal  responsibility  is 
clearly  expressed,  although  they  may  through  ignorance  of  the 
law  have  exceeded  their  authority.  This  should  be  the  rule  in 
case  of  the  making,  drawing,  accepting,  and  indorsing  of  nego- 
tiable instruments  by  public  officers,  but  the  cases  upon  this  ques- 
tion are  not  all  in  accord  with  the  application  of  this  rule  to  such 
instruments.^^ 

57Neg.    Inst.   Law,    §   8,    sub.   6,  -"^s  Walker  v.  Christian,  21  Gratt. 

where    all    cases    directly    or    indi-  297;  Hodgson  v.  Dexter,  1  Cranch 

rectly   bearing   upon    or    citing   the  345. 
Law  are  grouped. 


■K^ 


"^JLaJM" 


.An^roi^Jl 


CHAPTER  VI. 


FORMAL  AND  ESSENTIAL  REQUISITES. 
§  38.  Definition  of  promissory  note.       §  49.  Must  be  certain  as  to  time  of 


39.  Definition  of  bill  of  exchange. 

40.  Formal    and    essential    requi- 

sites in  general. 

41.  Must  be  in  writing. 

42.  As  to  style  and  material. 

43.  The  date. 

44.  The  signature. 

45.  Must  be  promise  or  order  to 

pay. 

46.  Must  be  payable  to  order  or 

bearer. 

47.  Must  be  certain  as  to  promise 

or  order  to  pay. 

48.  Must  be  certain  as  to  amount. 


payment. 

50.  As  to  place  of  payment. 

51.  Must  be  payment  in  money. 

52.  Must  be  necessary  parties. 

53.  The  delivery. 

54.  As  to  value  received. 

55.  As   to  agreements   controlling 

the  operation. 

56.  As  to  days  of  grace. 
56a.  As  to  payable  at  a  bank. 

57.  As  to  stamps. 

58.  As  to  blanks. 

59.  As    to    instruments   bearing    a 

seal. 

60.  The    several    parts    of   a    for- 

eign bill  called  a  set. 


§38.  Definition  of  promissory  note.  A  satisfactory  defi- 
nition of  a  promissory  note  is  found  in  the  Negotiable  Instru- 
ments Law,  which  states : 

"A  negotiable  promissory  note  within  the  meaning  of  this  act 
is  an  unconditional  promise  in  writing  made  by  one  person  to 
another,  signed  by  the  maker,  engaging  to  pay  on  demand,  or  at 
a  iixed  or  determinable  future  time,  a  sum  certain  in  m,oney  to 
order  or  to  bearer.  Where  a  note  is  drawn  to  the  maker's  own 
order,  it  is  not  complete  until  indorsed  by  him."^ 

The  above  section  has  changed  the  old  existing  law  in  a  num- 
ber of  jurisdictions. 

§39.  Definition  of  bill  of  exchange.  The  following  is  a  good 
definition  of  a  bill  of  exchange  found  in  the  Negotiable  Instru- 
ments Law : 

"A  bill  of  exchange  is  an  unconditional  order  in  writing  ad- 
dressed by  one  person  to  another,  signed  by  the  person  giving 
it,  requiring  the  person  to  whom  it  is  addressed  to  pay  on  de- 


1  Neg.  Inst.  Law,  §  184,  where  all 
cases  directly  or  indirectly  bearing 


upon  or  citing  the  Law  are  grouped. 


43 


44  NEGOTIABLE    INSTRUMENTS.  §  40 

mand,  or  at  a  iixed  or  determinable  future  time,  a  sum  certain 
in  money  to  order  or  to  bearer."^ 

Bills  of  exchange  are  either  foreign  or  inland — foreign,  when 
drawn  in  one  state  or  country,  and  made  payable  in  another  state 
or  country ;'  inland,  when  drawn,  and  made  payable  in  the  same 
state  or  country.*  For  the  purpose  of  the  law  of  negotiable  in- 
struments, the  several  states  of  the  United  States  are  foreign  to 
each  other.'  Thus,  a  bill  drawn  in  Pittsburg,  Pennsylvania,  and 
payable  in  Columbus,  Ohio,  is  a  foreign  bill,  while  one  drawn  in 
Cincinnati,  Ohio,  and  payable  in  Cleveland,  in  the  same  state,  is 
an  inland  bill  of  exchange. 

The  Negotiable  Instruments  Law  provides: 

''An  inland  bill  of  exchange  is  a  bill  which  is,  or  on  its  face 
purports  to  be,  both  draimi  and  payable  within  this  state.  Any 
other  bill  is  a  foreign  bill.  Unless  the  contrary  appears  on  the 
face  of  the  bill,  the  holder  may  treat  it  as  an  inland  bill."^ 

A  bill  drawn  in  one  state  and  addressed  to  the  drawee  in  another 
state,  had  for  a  long  time  prior  to  the  Negotiable  Instruments 
Law  been  held  to  be  a  foreign  bill.®* 

§  40.  Formal  and  essential  requisites  in  general.  The  Nego- 
tiable Instruments  Law  has  the  following  provisions:'^ 

"An  instrument  to  be  negotiable  must  conform  to  the  following 
requirements:  (1)  It  must  be  in  writing^  and  signed^  by  the 
maker  or  drazver.  {2)  Must  contain  an  unconditional  promise 
or  order^^  to  pay  a  sum  certain'^^  in  money^^     (3)     Must  be 

2  Neg.  Inst.  Law,  §  126,  where  all  upon  or  citing  the  Law  are  grouped. 
cases  directly  or  indirectly  bearing  ®^  Phoenix  Bank  v.  Hussey,  12 
upon  or  citing  the  Law  are  grouped.  Pick.  483. 

3  Armstrong  v.  Am.  Exchange  ''  Neg.  Inst.  Law,  §  1,  where  all 
Bank,  133  U.  S.  433;  Phoenix  Bank  cases  directly  or  indirectly  bearing 
V.  Hussey,  12  Pick.  483 ;  Holliday  upon  or  citing  the  Law  are  grouped. 
V.  McDougall,  20  Wend.  81 ;  Com-  «  Brown  v.  Butchers'  Bank,  6  Hill 
mercial  Bank  of  Ky.  v.  Varnum,  49  443 ;  Reed  v.  Roark,  14  Tex.  325. 

N.  Y.  269 ;  Mason  v.  Dousay,  35  111.  »  McCall  v.   Taylor,  34  L.  J.   R. 

424;  Ticonic  Bank  v.   Stacpole,  41  C.   P.  365;   Cadillac  State  Bank  v. 

Me.  302.  Cadillac    Stave   and    Heading    Co., 

-^Lenning  v.  Ralston,  23  Pa.  9t.  129  Mich.  15. 

137;    Strawbridge    v.    Robinson,    5  ^^  White  v.  Cushing,  88  Me.  339 ; 

Gilman  (111.)  472;  Riggin  V.  Collier,  Iron    City    Bank    v.    McCord,    139 

6  Mo.  568 ;  Yale  v.  Ward's  Ex'r,  30  Pcnn.  St.  52.                                . 

Tex.  17.  11  Smith  v.  Clopton,  4  Tex.  109 ; 

'  Bank   of   U.    S.   v.    Daniel,    12  Parsons  v.  Jackson,  99  U.  S.  440. 

Peters,    32 ;    Commercial    Bank    v.  ^2  Auerbach  v.   Prichett,  58   Ala. 

Varnum,  49  N.  Y.  269.  451  ;   Quincy  v.   Merritt,    11   Hump. 

6  Neg.  Inst.  Law,  §  129,  where  all  (30   Tenn.)    439;   First   Nat.   Bank 

cases  directly  or  indirectly  bearing  v.  Slette,  67  Minn,  425. 


§  41  FORMAL  AND  ESSENTIAL  REQUISITES.  45 

payable  on  demand}^  or  at  a  fixed  or  determinable  future  time.^"^ 
(4)  Must  be  payable  to  order  or  to  bearer ;^^  (5)  Where  the 
instrument  is  addressed  to  a  draivec,  he  must  be  named  or  other- 
wise indicated  therein  zvith  reasonable  certainty. "'^^ 

This  section  has  some  minor  changes  in  it  in  a  few  of  the 
states. 

There  is  also  another  provision  in  the  Law  providing  that  :*'' 
"The  instrument  need  not  follouf  the  language  of  this  act,  but 
any  terms  are  sufficient  which  clearly  indicate  an  intention  to 
conform  to  the  requirements  hereof." 

§  41.  Must  be  in  writing.  As  pointed  out  above,  the  instru- 
ment must  be  in  writing.  When  writing  is  spoken  of,  it  is  not 
meant  merely  that  which  has  been  written  with  a  pen  or  pencil. 
It  includes  also  that  which  is  in  print  or  has  been  printed.  The 
word  instrument  implies  that  which  has  been  reduced  to  writing. 
Therefore,  the  words  negotiable  instruments  themselves  indicate 
that  which  has  been  reduced  to  writing.  In  order  to  be  nego- 
tiable there  must  be  a  writing  of  some  kind,  else  there  would  be 
an  absence  of  the  thing  to  be  negotiated  or  passed  from  hand 
to  hand.  The  reason  a  promissory  note  or  bill  of  exchange  must 
be  in  writing  is  clear,  that  is,  the  instrument  is  currency,  and 
''could  not  run  on  crutches." 

So  the  whole  of  the  bill  or  note  must  be  expressed  in  writing. 
If  it  is  complete  on  its  face,  the  general  rule  is  that  no  evidence 
of  a  verbal  agreement  made  at  the  time,  qualifying  its  terms, 
can  be  admitted.  Contemporaneous  written  agreements  are  ad- 
missible for  the  purpose  of  controlling  the  effects  of  the  instru- 
ment as  between  immediate  parties  and  those  having  notice. 
Parol  evidence  is  generally  admissible  as  between  the  parties,  to 
show  their  real  relations  to  each  other,  and  if  there  be  a  latent 
ambiguity  to  explain  it.  And,  in  general,  parol  evidence  is 
admissible  between  the  original  parties  to  show  fraud,  accident, 
or  mistake  in  the  creation  of  the  instrument,  or  the  failure  (entire 
or  partial)   of  consideration.** 

iSAldous  V.  Cornwell,  L.  R.  3  Q.  23  Ind.  4,  85  Am.  Dec.  445;  Smur 

B.  573;  Collins  v.  Trotter,  81  Mo.  v.   Forman,   1   Ohio  272;   Maule  v. 

278;  Hall  v.  Toby,  110  Pa.  St.  318;  Crawford,  14  Hun.  193. 

Messmore  v.  Morrison,  172  Pa.  St.  ^®  Peto  v.  Reynolds,  9  Exch.  410; 

300;  Porter  v.  Porter,  51  Me.  376;  Watrous     v.     Halbrook,     39    Tex. 

Jones  V.  Brown,  11  Ohio  St.  601.  572. 

^*  Mattison   v.    Marks,   31    Mich.  *''  Neg.  Inst.  Law,  §  10,  where  all 

421 ;    Walker    v.    Woolen,    54    Ind.  cases  directly  or  indirectly  bearing 

164.  upon  or  citing  the  Law  are  grouped. 

*5  Sherman  Bank  v.  Apperson,  4  ^^  See  Chapters  XXV  and  XXVI 

Fed.  25 ;  Musselman  v.  McElhenny,  on  Evidence. 


46  NEGOTIABLE   INSTRUMENTS.  §§  42-43 

It  has  been  decided  many  times  that  if  any  discrepancy  or 
ambiguity  exists  between  the  figures  and  the  words  indicating 
the  amount  called  for  by  the  instrument,  the  words^**  are  to  con- 
trol. The  figures  constitute  no  part  of  the  note  or  bill,  but  are 
inserted  merely  for  convenience  of  reference. 

§  42.  As  to  style  and  material.  The  law  does  not  require 
any  particular  form  or  style  as  to  a  promissory  note  or  bill  of 
exchange,  yet  it  does  not  seem  that  it  would  be  wise  to  depart 
from  the  approved  forms  in  vogue  among  merchants.  The  law 
looks  to  the  substance  of  the  transaction  rather  than  the  form, 
and  if  the  intention  of  the  parties  as  to  assuming  the  obligation 
of  drawers  and  makers  of  negotiable  instruments  can  be  deter- 
mined, the  law  will  give  them  force  and  effect  regardless  of  the 
form.  There  is  no  arbitrary  rule  governing  the  material  upon 
which  the  instrument  should  be  written.  It  may  be  written  upon 
parchment,  cloth,  leather  or  any  other  substitute  for  paper.  It 
may  be  written  either  with  a  pencil  or  with  ink.^®  The  perma- 
nence and  security  of  ink  as  compared  to  a  writing  in  pencil 
makes  the  ink  preferable. 

§  43.  The  date.  A  date  in  a  bill  or  note  is  not  necessary.^* 
The  Negotiable  Instruments  Law  provides  that  "the  validity  mid 
negotiable  character  of  an  instrument  are  not  affected  by  the 
fact  that  it  is  not  dated."^^ 

It  is  of  no  consequence  on  what  portion  of  the  paper  a  date 
is  written,  but  it  is  usually  written  in  the  upper  right-hand  corner 
of  the  instrument.  If  dated,  it  will  be  presumed  to  have  been 
executed  on  the  day  it  bears  date.^^  That  is,  "-where  the  in- 
strument or  an  acceptance  or  any  indorsement  thereon  is  dated, 
such  date  is  deemed  prima  facie  to  be  the  true  date  of  the  mak- 
ing, drawing,  acceptance,  or  indorsement,  as  the  case  may  be."^* 

If  there  be  no  date,  it  will  be  considered  as  dated  at  the  time 
it  was  issued,^^  and  parol  evidence  is  admissible  to  show  from 

1^  Saunderson  v.   Piper,   5   Bing.  23  Anderson  v.   Weston,  8  Scott, 

N.    C.    425 ;    Hears   v.    Graham,    8  583 ;  Maybury  v.  Berkery,  102  Mich. 

Blackf.   (Ind.)   144.  126;  Hill  v.  Dunham,  7  Gray  543; 

20  Geary  v.  Physic,  5  Barn.  &  Wagner  v.  Kenner,  2  Rob.  (La.) 
Cress.  (Eng.)  234;  Reed  v.  Roark,  120. 

14  Tex.  325,  65  Am.  Dec.  127.  24Neg.  Inst.  Law,  §  11,  where  all 

21  Husbrook  v.  Wilder,  1  Pin  cases  directly  or  indirectly  bearing 
(Wis.)  643;  Mich.  Ins.  Co.  v.  Leav-  upon  or  citing  the  Law  are  grouped, 
enworth,  30  Vt.  11.  25  Pasmore  v.  North,  13  East  517; 

22Neg.   Inst.  Law,   §  6,   subd.   1,      Brewster    v.    McCardel,    8    Wend, 
where   all   cases   directly   or   indi-      478;  Bayley  v,  Taber,  5  Mass.  286. 
rectly  bearing   upon   or  citing  the 
Law  are  grouped. 


§  44  FORMAL  AND  ESSENTIAL  REQUISITES.  47 

what  time  an  undated  instrument  was  intended  to  operate,  or 
(if  a  date  appears)  to  show  that  there  was  a  mistake  in  the  date. 
So  an  instrument  may  be  ante-dated  or  post-dated. 

''The  instrument  is  not  invalid  for  the  reason  only  that  it  is 
ante-dated  or  post-dated,  provided  this  is  not  done  for  an  illegal 
or  fraudulent  purpose.  The  person  to  rvhoni  an  instrument  so 
dated  is  delivered  acquires  the  title  thereto  as  of  the  date  of 
delivery."^^ 

The  above  section  of  the  Law  contemplates  instruments  ante- 
dated or  post-dated  by  the  parties  in  accordance  with  a  mutual 
agreement  to  that  effect.^*'* 

Where  a  blank  has  been  left  on  the  instrument  for  the  date, 
it  may  in  some  cases  be  filled  in  by  the  holders.  Thus,  "where 
an  instrument  expressed  to  he  payable  at  a  fixed  period  after 
date  is  issued  undated,  or  zvhere  the  acceptance  of  an  instrument 
payable  at  a  fixed  period  after  sight  is  undated,  any  holder  may 
insert  therein  the  true  date  of  issue  or  acceptance,  and  the  instru- 
ment shall  be  payable  accordingly.  The  insertion  of  a  wrong  date 
does  not  avoid  the  instrument  in  the  hands  of  a  subseque^it  holder 
in  due  course;  but  as  to  him,  the  date  so  inserted  is  to  be  regarded 
as  the  true  date."'^'^ 

The  insertion  of  a  wrong  date  in  an  undated  instrument,  by 
one  having  knowledge  of  the  true  date  of  issue,  will  avoid  the 
instrument  as  to  him,  but  an  innocent  third  party  may  enforce 
the  same  notwithstanding  the  improper  date.^'* 

§  44,  The  signature.  It  is  immaterial  in  what  part  of  the 
instrument  the  name  appears,  whether  at  the  top,  in  the  middle, 
or  at  the  bottom.  Anything  from  which  it  will  appear  that  a 
person  intended  to  make  the  instrument  his  own  is  sufficient.^* 
As  long  as  the  signature  or  emblem  of  the  drawer  or  maker  ap- 
pears anywhere  upon  the  instrument,  it  is  deemed  prima  facie 
evidence  of  his  intention  to  be  bound  by  its  obligation.*^ 

It  is  immaterial  whether  the  writing  is  in  pencil  or  ink,  al- 
though as  a  matter  of  permanence  and  security,  ink  is,  of  course, 
preferable.^**     And  the  name  may  be  printed  or  typewritten  as 

2«  Neg.  Inst.  Law,  §  12,  where  all  28  Lampkin  v.   State,   105  Ala.   1, 

cases  directly  or  indirectly  bearing  16    So.    575>    Irvin    v.    Sterne,    25 

upon  or  citing  the  Law  are  grouped.  Ga.    223,    71    Am.    Dec.    204 ;    Dow 

26a  Bank  of  Houston  v.  Day,  145  Law   Bank  v.    Godfrey,    126   Mich. 

Mo.  App.  410,  122  S.  W.  756.  521,   85   N.   W.    1075,   86   Am.   St. 

27  Neg.  Inst.  Law,  §  13,  where  all  Rep.  559. 

cases  directly  or  indirectly  bearing  29  Neg.  Inst.  Law,  §  17,  and  cases 

upon  or  citing  the  Law  are  grouped.  there  cited. 

27a  Bank    of    Houston    v.    Day,  soReed  v.   Roark,   14  Tex.  329; 

supra.  Geary  v.  Physic,  5  Barn  &  C.  234. 


48  NEGOTIABLE    INSTRUMENTS.  §  44 

well  as  written,  though,  in  such  cases,  it  cannot  prove  itself,  and 
must  be  shown  to  have  been  adopted  and  used  by  the  party  as 
his  signature.^^  The  name  may  be  written  in  script  or  Roman 
letters,  and  made  with  a  pen  or  pencil,  rubber  stamp  or  type,  or 
it  may  be  printed,  engraved,  photographed  or  lithographed,  in 
fact,  in  any  form  so  long  as  the  signer  has  adopted  and  issued 
the  signature  as  his  own.^**  If  another  sign  the  name  of  the 
party  in  his  presence  and  at  his  request,  it  is  the  same  as  if  he  did 
it  himself  ;^^  and  if  another  sign  the  party's  name  by  verbal  or 
other  authority,  it  is  suffcient.  The  full  name  may  be  written; 
and  at  least  the  surname  should  appear,  and  generally  does.  But 
this  is  not  indispensable — the  initials  are  sufficient,  and  any 
mark  which  the  party  uses  to  indicate  his  intention  to  bind  him- 
self will  be  as  effectual  as  his  signature,  whether  there  be  a  cer- 
tificate of  witnesses  on  the  instrument  or  not.^^  And  "the  signa- 
ture of  any  party  may  be  made  by  a  duly  authorised  agent.  No 
particular  form  of  appointment  is  necessary  for  this  purpose; 
and  the  authority  of  the  agent  may  be  established  as  in  other 
cases  of  agency."^* 

The  Kentucky  Act  requires  such  agent  to  be  authorized  in 
writing. 

The  above  section  permits  proof  of  the  ostensible  authority  of 
the  agent  to  act ;  but  what  shall  constitute  sufficient  proof  of  such 
authority  is  left  to  the  common  law^** 

''A  signature  by  'procuration'  operates  as  notice  that  the  agent 
has  but  a  limited  authority  to  sign,  and  the  principal  is  bound 
only  in  case  the  agent  in  so  signing  acted  within  the  actual  limits 
of  his  authority."^ 

The  words  "per  procuration"  have  a  special  technical  signifi- 
cance and  are  seldom  if  ever  used  in  this  country.  They  are 
an  express  intimation  of  a  special  and  limited  authority;  and  a 
person  taking  a  bill  so  drawn,  accepted  or  indorsed,  is  bound  to 
inquire  into  the  extent  of  the  authority.*** 

31  Pennington  v.  Baehr.  48  Cal.  443.  See  note  14  L.  R.  A.  693.  and 
565 ;  Lexington  v.  Union  Nat.  Bank.      22  L.  R.  A.  372. 

75  Miss.  1,  22  So.  291 ;  Weston  v.  34  Neg.  Inst.  Law,  §  19,  where  all 

Myers,  33  111.  424.  cases  directly  or  indirectly  bearing 

sia  Weston  v.  Myers,  33  111.  424.  upon  or  citing  the  Law  are  grouped. 

Note  7  A.  L.  R.  672.  34a  Grant   County   State   Bank  v» 

32  Crumrine  v.  Crumrine,  14  Ind.  N.  W.  Land  Co.,  28  N.  D.  479,  150 
App.  641 ;  43  N.  E.  322 ;   Kennedy  N.  W.  736. 

V.  Graham,  9  Ind.  App.  624,  35  N.  35  Ngg.  Inst.  Law,  §  21,  where  all 

E.  925.  cases  directly  or  indirectly  bearing 

33  Signing  by  mark.  Merchants  upon  or  citing  the  Law  are  grouped. 
Bapk  V.  Spicer,  6  Weiid.   (N.  Y.)  35a  Bj.ym^^^    Purvis   &   Bryant   v. 


§  45  FORMAL  AND  ESSENTIAL  REQUISITES.  49 

"Where  a  signature  is  forged  or  made  without  the  authority 
of  the  person  whose  signature  it  purports  to  he,  it  is  wholly  in- 
operative, and  no  right  to  retain  the  instrument,  or  to  give  a  dis- 
charge therefor,  or  to  enforce  payment  thereof,  against  any  party 
thereto,  can  be  acquired  through  or  under  such  signature,  unless 
the  party  against  whom  it  is  sought  to  enforce  such  right  is  pre- 
cluded from  setting  up  the  forgery  or  ivant  of  authority.'''^ 

The  Negotiable  Instrument  Law  also  provides : 

"No  person  is  liable  on  the  instrument  whose  signature  does 
not  appear  thereon,  except  as  herein  otherwise  expressly  pro- 
vided. But  one  zvho  signs  in  a  trade  or  assumed  name  will  be 
liable  to  the  same  extent  as  if  he  had  signed  in  his  ozmi  name."^^* 

One  may  become  a  party  to  a  negotiable  instrument  by  any 
designation  he  desires,  provided  it  be  used  as  a  substitute  for 
his  name  and  he  intends  to  be  bound  by  it.^*"* 

§  45.  Must  be  promise  or  order  to  pay.  In  order  that  the 
instrument  contain  a  promise  it  is  not  necessary  to  use  the  word 
promise.  But  while  it  is  not  necessary  to  use  that  particular 
word,  it  has  been  held  that  the  instrument  must  contain  an  ex- 
press promise.^"  The  instrument  contains  an  express  promise 
whenever  it  contains  an  expression  equivalent  to  the  word  promise. 
It  has  been  held  that  where  a  certain  time  for  payment  has  been 
expressed  in  the  instrument,  or  the  words  "on  demand"  are  used, 
the  instrument  contains  a  promise.  Example,  "Due  A.  B.  $76.50 
on  demand,"38  or  "Pay  to  A.  B.  $76.50  on  Dec.  24,  1922."3» 
The  words  "Value  received,'"***  or  "to  be  accountable,"**  do  not 
import,  nor  are  they  equivalent  to  a  promise  to  pay.  In  a  bill 
of  exchange  it  is  no  more  necessary  that  the  word  order  should 
be  used  than  it  is  that  the  word  promise  should  be  used  in  a 
promissory  note.'*^    Any  words  which  are  equivalent  to  an  order 

Quebec  Bank  (1893)   (England),  A.  Lockwood,   40   Conn.   349,    16   Am. 

C.  170,  179.  Rep.  40. 

36  Neg.  Inst.  Law,  §  23,  where  all  39  Cowan  v.  Hollack,  9  Colo.  572, 
cases  directly  or  indirectly  bearing  13  Pac.  700;  Kendall  v.  Lewis,  10 
upon  or  citing  the  Law  are  grouped.  Ky.  L.  Rep.  362. 

3««  Neg.  Inst.  Law,  §  18,  where  all  40  st.  Vrain  Stone  Co.  v.  Den- 
cases  directly  or  indirectly  bearing  ver,  N.  &  P.  R.  Co.,  18  Colo.  211, 
upon  or  citing  the  Law  are  grouped.  32  Pac.  827. 

ss"  Brown  v.  Butcher's  and  Dro-  «  Hyne  v.  Dewdney,  21  L.  J.  Q. 

ver's  Bank,  6  Hill  (N.  Y.)  443.  B.  278.    But  see  Hegeman  v.  Moon, 

37  Smith    V.    Bridges,    1    111.    18;  131  N.  Y.  462. 

Hegeman  v.  Moon,  131   N.  Y.  462,  42  Enison   v.   Collingridge,  67   E. 

30  N.  E.  487;  Taylor  v.  Steele,  16  Q   L.   570;   Rufif   v.   Webb,    1    Esp. 

M.  &  W.  665.  129,   5   Rev.   Rep.   722, ;   Bresenthall 

38  Smith  V  Allen,  5  Day  (Conn.)  v.  Williams,  1  Dew  (Ky.),  329,  85 
337;     Kimball     v.     Huntington,     10  Am   Dec  629 

Wend.    (N.    Y.)    675;    Currier    v." 


50  NEGOTIABLE    INSTRUMENTS.  §46 

or  which  show  the  drawer's  will  that  the  money  should  be  paid 
are  sufficient  to  make  the  instrument  a  bill  of  exchange.  A  bill 
of  exchange  is  something  more  than  the  mere  asking  of  a  favor. 
It  is  in  its  very  nature  an  instrument  demanding  a  right.  Hence 
a  mere  request  or  supplication  made  or  authority  given  to  pay 
a  certain  amount  of  money  has  been  held  not  to  be  a  bill.'*^  The 
following  would  be  a  good  bill:  "Mr.  Smith  will  much  oblige 
Mr.  Jones  by  paying  John  Brown,  or  order,  on  account  $50.00." 
The  words  by  paying  are  held  sufficient  to  import  an  order  to 
pay.'*^ 

§46.  Must  be  payable  to  order  or  bearer.  By  the  Nego- 
tiable Instruments  Law  "bearer  means  thf  person  in  possession 
of  a  bill  or  note  which  is  payable  to  bearer."'*^ 

However,  it  is  not  essential  that  the  words  to  order  or  to 
bearer  be  used  so  as  to  make  the  instrument  negotiable,  although 
they  are  the  simplest  words  and  the  ones  most  frequently  used.^* 
The  words  to  A  or  holder  and  to  A  and  his  assigns  are  equiva- 
lent words  which  will  render  the  instrument  negotiable.*''  These 
words  of  negotiability  may  be  dispensed  with  and  the  expression, 
"This  is  and  shall  be  negotiable,"  may  be  inserted  in  the  instru- 
ment, which  expression  makes  the  paper  fully  negotiable.**  The 
instrument  may  also  be  made  negotiable  by  using  the  words  "to 
the  order  of  A."*^  But  if  the  instrument  reads  "to  the  bearer, 
A/'  it  is  not  negotiable,  because  the  expression,  "to  the  bearer," 
is  only  descriptive  of  A,  and  there  are  no  words  of  negotiability.^® 

The  Negotiable  Instruments  Law  sets  down  certain  rules  as  to 
when  an  instrument  is  held  payable  to  order  and  also  when 
held  payable  to  bearer: 

"The  instrument  is  payable  to  order  zuhere  it  is  drawn  payable 
to  the  order  of  a  specified  person  or  to  him  or  to  his  order.     It 

43  Woolley  V.  Sargent,  8  N.  J.  L.  47  Putnam  v  .Crymes.  1  McMuIl 
262,  14  Am.  Dec.  419;  Little  v.  9,  36  Am.  Dec.  250;  Wilson  County 
Slackford,  M.  &  M.  171,  31  Rev.  v.  Third  Nat.  Bank,  103  U.  S.  770; 
Rep.  726,  22  E.  C.  L.  498;  Russell  Dutcliess  Co.  Ins.  Co.  v.  Hach- 
V.   Powell,   14  M.  &  M.  418,  14  L.  field,  1  Hun  676. 

J.  Exch.  269.  48  Raymond  v.  Middleton,  29  Pa. 

44  Ruff  V.  Webb,  1  Esp.  129,  5  St.  529;  Cudahy  Packing  Co.  v. 
Rev.  Rep.  723.  Sioux   Nat.   Bank,  75  Fed.  473,  21 

43  Neg.   Inst.   Law,  §   191,   where  C.  C.  A.  428. 

all  cases  directly  or  indirectly  bear-  49  Wittey  v.  Mich.  Mut.  etc.  Co.. 

ing    upon    or    citing    the    Law    are  123  Ind.  411,  24  N.  E.  141 ;  Howard 

grouped.  v.    Palmer,   64   Me.   86;    Stevens   v. 

46  Wilson    County  v.   Third   Nat.  Gregg,  86  Ky.  461,  12  S.  W.  775. 

Bank,  103  U.  S.  770:  United  States  30  leaver  v.  Scott,  32  la.  22. 
V.  White,  2  Hill  (N.  Y.)  59,  Z7  Am. 
Dec.  374. 


§  47  FORMAL  AND  ESSENTIAL  REQUISITES.  ,     51 

may  be  draum  payable  to  the  order  of:  {!)  A  payee  zvho  is 
not  maker,  drawer  or  drawee;  or  (2)  the  drawer  or  maker;  or 
(3)  the  drawee;  or  (4)  two  or  more  payees  jointly ;  or  (5)  one 
or  some  of  several  payees;  or  (d)  the  holder  of  an  office  for  the 
time  being. 

"Where  the  instrument  is  payable  to  order,  the  payee  must 
be  named  or  otherwise  indicated  therein  with  reasonable  cer- 
tainty?^ 

The  last  clause  of  the  above  section  of  the  Law  changes  the 
old  rule  of  law.  Thus,  when  a  note  was  drawn  payable  to  order, 
but  with  an  unfilled  blank  for  the  name  of  the  payee  and  nego- 
tiated in  that  condition,  any  bearer  who  came  by  it  regularly  can 
no  longer  fill  the  blank  and  recover  thereon.^^^  The  Illinois  Act 
adds  after  subsection  6  the  following:  "7.  An  instrument  pay- 
able to  the  estate  of  a  deceased  person  shall  be  deemed  payable 
to  the  order  of  the  administrator  or  executor  of  his  estate." 

As  to  when  an  instrument  is  held  payable  to  bearer,  the  Nego- 
tiable Instruments  Law  provides : 

"The  instrument  is  payable  to  bearer:  (1)  When  it  is  ex- 
pressed to  be  so  payable;  or  (2)  when  it  is  payable  to  a  person 
named  therein  or  bearer;  or  (3)  when  it  is  payable  to  the  order 
of  a  fictitious  or  non-existing  person,  and  such  fact  was  known 
to  the  person  making  it  so  payable ;  or  (4)  when  the  name  of  the 
payee  does  not  purport  to  be  the  name  of  any  person;  or  (5)  when 
the  only  or  last  indorsement  is  an  indorsement  in  blank."^^ 

The  Illinois  Act  makes  some  changes  in  the  above  section. 

§  47.  Must  be  certain  as  to  promise  or  order  to  pay.  If  the 
instrument  is  a  bill,  it  must  contain  a  certain  direction  to  pay^* — 
if  it  is  a  note,  a  certain  promise  to  pay.^^  As  stated  heretofore, 
a  bill  is,  in  its  nature,  the  demanding  of  a  right,  not  the  mere 
asking  of  a  favor,  and  therefore  a  supplication  made  or  authority 
given  to  pay  an  amount  is  not  a  bill.  The  language:  "Please 
to  send  $10.00  by  bearer,  as  I  am  so  ill  I  cannot  wait  upon  you," 
is  held  not  to  be  a  bill.*^^ 

A  promissory  note  must  contain  a  certain  promise  to  pay.  If 
over  and  above  the  mere  acknowledgment  of  debt,  there  may 

51  Neg.  Inst.  Law,  §  8,  where  all  v.  Cook  (District  of  Columbia),  96 
cases  directly  or  indirectly  bearing      S.  E.  484. 

upon  or  citing  the  Law  are  grouped.  ^'^  Gillian   v.    Myers,    31    111.    525 ; 

5i»  Tower  v.   Stanley,   220  Mass.  Knowlton  v.  Cooley,  102  Mass.  233. 

429,  107  N.  E.  1010.  54  Smith    v.    Bridges,    1    111.    18; 

52  Neg.  Inst.  Law,  §  9,  where  all  Forward  v.  Thompson,  12  U.  C.  I. 
cases  directly  or  indirectly  bearing  B.  103 ;  Taylor  v.  Steele,  16  M.  & 
upon  or  citing  the  Law  are  grouped.  W.  665. 

Union  National  Bank  of  Columbia         ^^  King  v.  Ellor,  1  Teach.  323. 


I 


52  NEGOTIABLE    INSTRUMENTS.  §  48 

be  collected  from  the  words  used  a  promise  to  pay  it,  the  instru- 
ment may  be  regarded  as  a  promissory  note.'* 

The  Negotiable  Instruments  Law  provides : 

"An  instrument  is  payable  on  demand:  (1)  Where  it  is  ex- 
pressed to  be  payable  on  demand,  or  at  sight,  or  on  presenta- 
tion; or  (2)  in  which  no  time  for  payment  is  expressed.  Where 
an  instrument  is  issued,  accepted  or  indorsed  when  overdue,  it  is, 
as  regards  the  person  so  issuing,  accepting  or  indorsing  it,  pay- 
able on  demand  "^"^ 

§  48.  Must  be  certain  as  to  amount.  It  is  also  a  requisite  to 
the  negotiability  of  an  instrument  that  it  shall  call  for  the  pay- 
ment of  a  definite  and  certain  sum,'^  and  not  for  unliquidated 
damages.  The  amount  to  be  paid  or  the  amount  which  the  paper 
represents  should  be  stated  plainly  on  the  face  of  the  instru- 
ment, and  like  the  denomination  of  money  must  be  stated  in 
the  body  of  the  instrument  or  it  will  be  defective,  unless  it 
has  been  left  blank  and  express  or  implied  authority  given  to 
fill  it  up.  The  amount  is  customarily  written  in  the  margin  also, 
but  this  is  held  to  be  no  part  of  the  instrument,  and  made  simply 
for  convenience  of  reference,  and  the  statement  in  the  body  of 
the  instrument  controls,  and  should  they  vary  any  holder  may 
change  the  marginal  figures  to  conform  to  the  amount  as  written 
in  the  body  of  the  paper.''*  Unless  required  by  statute  to  be 
written  in  words,  the  amount  may  be  stated  in  the  body  of  the 
instrument  in  figures.  Abbreviations  and  characters  which  have 
well  defined  meanings  may  be  employed. 

There  is  some  conflict  of  authority  as  to  whether  if  there  be 
added  to  the  amount,  "with  exchange,"®"  or  "with  current  ex- 
's Smith  V.  Bridges,  1  111.  18;  Smith,  1  R.  I.  398,  53  Am.  Dec. 
Forward  v.  Thompson.  12  U.  C.  I.  652;  Rockville  Nat.  Bank  v.  Second 
B.  103;  Taylor  v.  Steele,  16  M.  &  Nat.  Bank,  69  Ind.  479,  35  Am. 
W.  665.  Rep.  236. 

^~  Neg.  Inst.  Law,  §  7,  where  all  As  to  when  marginal  figures  may 

cases  directly  or  indirectly  bearing      be    referred    to   see :      Sweetzer   v. 

upon  or  citing  the  Law  are  grouped.       French,     13     Mete.     (Mass.)     262; 

58Gaar     v.     Louisville     Banking      Petty  v.  Fleischel,  31  Tex.  169,  98 

Co.,    11   Bush.    (K)'.)    180,   21    Am.      Am.  Dec.  524 

Rep.  209;  Kendall  v.  Galvin,  15  Me.  o  Clark   v.    Skeen,  61    Kan.   526, 

131,  32  Am.  Dec.  141 ;  Port  Huron  60  Pac.  327,  78  Am.  St.  Rep.  337, 
First  Nat.  Bank  V.  Carson,  60  Mich.  49  L.  R.  A.  190;  Hastings  v. 
432,  27  N.  W.  589.  As  to  effect  of  Thompson,  54  Minn.  184,  55  N.  W. 
marginal  letters  or  figures  in  bill  or  968,  40  Am.  St.  Rep.  315,  21  L. 
note  otherwise  blank  as  to  amount,  R.  A.  178.  Contra,  Culbertson  v. 
see  note  2  L.  R.  A.  (N.  S.)  879.  Nelson,  93  la.   187,  61   N.  W.  854, 

59  Neg.  Inst.  Law,  §  17,  sub.  1,  57  Am.  St.  Rep.  266,  27  L.  R.  A. 
and    cases   there   cited;    Smith    v.      222. 


§  48  FORMAL  AND  ESSENTIAL  REQUISITES.  53 

change  on  another  place,"**  the  commercial  character  of  the 
paper  is  or  is  not  impaired.  The  weight  of  authority  is  that  it 
is  not,  as  that  is  capable  of  definite  ascertainment  and  so  the 
amount  to  be  added  is  certain,  and  as  set  out  below  the  Nego- 
tiable Instruments  Law  makes  such  paper  negotiable. 

A  stipulation  as  to  interest  does  not  make  the  amount  uncer- 
tain.®2  It  might  be  stated  here,  by  way  of  parenthesis,  that  it 
is  a  general  rule  of  commercial  law  that  where  a  note  is  made 
payable  with  interest,  without  specifying  the  rate,  or  the  time 
from  which  the  interest  is  to  be  computed,  the  note  carries  inter- 
est from  the  date  of  its  complete  execution  or  its  issue,  at  a  legal 
rate  fixed  by  law.*^ 

The  provisions  in  notes,  payable  in  part  payment  or  install- 
ments, to  the  efifect  that  if  any  one  of  the  installments  is  not 
paid  as  agreed,  all  installments  or  the  whole  sum  shall  become 
due  and  payable,  does  not  destroy  the  negotiability  of  the  note, 
and  such  notes  are  quite  common.®"*  The  provision  that  the  in- 
terest shall  be  paid  at  stated  intervals,  and  if  not  paid  the  entire 
sum  shall  become  due,  is  also  common,  and  does  not  afifect  the 
negotiability  of  the  paper.  There  is  likewise  a  conflict  as  to 
whether  by  adding  the  words,  "with  reasonable  attorney's  fees," 
the  negotiability  of  an  instrument  is  destroyed.  The  better 
opinion  is  that  they  do  not.®^  Instruments  with  such  words  are 
not  like  contracts — to  pay  money  and  do  some  other  things. 
They  are  simply  for  the  payment  of  a  certain  sum  of  money 
at  a  certain  time,  and  the  additional  stipulations  as  to  attorney's 
fees  can  never  go  into  efifect  if  the  terms  of  the  bill  or  note  are 
complied  with.  They  are,  therefore,  incidental  and  ancillary  to 
the  main  engagement,  intended  to  assure  its  performance  or  to 
compensate  for  trouble  and  expense  entailed  by  its  breach. 

61  Smith  V.  Kendall,  9  Mich.  241,  ingshead  v.  Stuart,  8  N.  D.  35,  11 

80  Am.  Dec.  83.  N.  W.  89,  42  L.  R.  A.  659. 

«2  Neg.  Inst.  Law,  §  2,  where  all  «5  Bowie  v.  Hall,  69  Md.  433,  16 

cases  directly  or  indirectly  bearing  Atl.  64,  9  Am.   St.  Rep.  433,   1   L. 

upon  or  citing  the  Law  are  grouped.  R.  A.  546;   Bank  of  Commerce  v. 

Kirkwood  v.  Hastings  First  Nat.  Fuqua,  11    Mont.  285,  28  Pac.  291, 

Bank,  40  Neb.  484,  58  N.  W.  1016,  28  Am.   St.   Rep.  461,  14  L.  R.  A. 

42  Am.  St.  Rep.  683,  24  L.  R.  A.  444.  588.     As  to  validity   of  agreement 
See  note  2  A.  L.  R.  139.  to  pay  attorney's   fees,  see  55  Am. 

«3Salazar    v.    Taylor,    18    Colo.  St.  Rep.  438-441,  444;  see  also  notes 

538,  33  Pac.  369 ;  Belford  v.  Beatty,  7  L.  R.  A.  445,   1  L.  R.  A.  547,  3 

145  111.  414,  34  N.  E.  254.  L.  R.  A.  51. 

64 Roberts  v.  Snow,  27  Neb.  425,  Contra,  National   Bank  of  Com- 

43  N.  W.  241 ;  Wilson  v.  Campbell,  merce  v.   Feeney,   9   S.   D.   550,   70 
110  Mich.  580,  68  N.  W.  278;  Hoi-  N.  W.  874,  40  L.  R,  A.  7Z2. 


54  NEGOTIABLE    INSTRUMENTS.  §  49 

The  Negotiable  Instruments  Law  fully  covers  all  such  stipu- 
lations by   providing-  that   "the  sum  payable   is   a  sum  certain 
mthin  the  meaning  of  this  act,  although  it  is  to  be  paid: 
(i)      With  interest;  or 

"(2)     By  stated  installments;  or 

"(3)  By  stated  installments,  with  a  provision  that  upon  de- 
fault in  payment  of  any  installment  or  of  interest,  the  zvhole 
shall  become  due ;  or 

"(4)  With  exchange,  whether  at  a  fixed  rate  or  at  the  current 
rate;  or 

"(5)  With  costs  of  collection  or  an  attorney's  fee,  in  case 
payment  shall  not  be  made  at  maturity."^^ 

Some  changes  have  been  made  in  some  jurisdictions  in  some 
of  the  parts  of  the  above  section. 

§  49.  Must  be  certain  as  to  time  of  payment.  The  instru- 
ment must  be  payable  without  conditions  and  at  all  events  in 
order  to  be  negotiable.'^'' 

If  the  order  or  promise  be  payable  provided  terms  mentioned 
are  complied  with ;  as,  for  instance,  that  a  certain  receipt  be 
produced  by  a  certain  time,^^  it  is  not  a  negotiable  bill  or  note ; 
and  likewise  if  payable  provided  a  certain  ship  shall  arrive;®* 
or  provided  the  maker  shall  live  a  certain  time,^"  or  upon  any 
contingency.  "An  instrument  payable  upon  a  contingency  is  not 
nei^otiable,  and  the  happening  of  the  event  does  not  cure  the 
defectr''^ 

If  the  time  must  certainly  come,  although  the  particular  day 
is  not  mentioned,  the  instrument  is  regarded  as  negotiable,  as 
the  fact  of  payment  is  certain.  If  the  instrument  is  payable  at, 
or  within  a  certain  time  after,  a  man's  death,  it  is  sufficient, 
because  the  event  must  occur.''^    ''An  instrument  is  payable  at  a 

66Neg.  Inst.  Law,  §  2,  where  all  (Mass.)   220;   The  Lykus,  36  Fed. 

cases  directly  or  indirectly  bearing  919. 

upon  or  citing  the  Law  are  grouped.  ''*  Kelley  v.  Hemmingway,  13  111. 

e^Harrell    v.    Marston,    7    Rob.  604;   Rice  v.   Rice,   43   N.  Y.  App. 

(La.)  34;  New  Windsor  First  Nat.  Div.  458,  60  N.  Y.  S.  97. 

Bank  v.   Bynum,   84   N.    C.   24,   37  "^^  Neg.  Inst.  Law,  §  4,  last  part, 

Am.    Rep.   604;    Mahoney   v.    Fitz-  where    all    cases    directly    or    indi- 

patrick,  133  Mass.  151,  43  Am.  Rep.  rectly   bearing    upon    or    citing   the 

502.  Law  are  grouped. 

<5**  Mason    v.    Metcalf,    4    Baxt.  ''2  Garrigus     v.     Home     Frontier 

(Tenn.)  440.  etc.  Missionary  Society,  3  Ind.  App. 

But  see,  Kirkwood  v.  First  Nat.  91,  28  N.  E.  1009,  50  Am.  St.  Rep. 

Bank,  40  Neb.  484,  58  N.  W.  1016.  262;  Hegeman  v.  Moon,  131  N.  Y. 

42  Am.   St.  Rep.  683,  24  L.  R.   A.  462,   30  N.   E.   487;   Carnwright  v. 

444.  Gray,  127  N.  Y.  92,  27  N.  E.  835,  24 

«5>  Grant     v.     Wood,     12     Gray  Am.  St.  Rep.  424,  12  L.  R.  A.  845. 

See  note  2  A.  L,  R,  1471, 


§  50  FORMAL  AND  ESSENTIAL  REQUISITES.  55 

determinable  future  time  zvithin  the  meaning  of  this  act,  which 
is  expressed  to  be  payable: 

"{!)     At  a  fixed  period  after  date  or  sight;  or 

"{2)  On  or  before  a  iixed  or  determinable  future  time  speci- 
fied therein;  or 

"(3)  On  or  at  a  fixed  period  after  the  occurrence  of  a  speci- 
fied event  which  is  certain  to  Imp  pen,  though  the  time  of  hap- 
pening be  uncertain.'"*^ 

'  In  a  few  decisions  a  note  or  bill  made  payable  "on  or  before" 
a  stated  date  has  been  held  non-negotiable,  but  the  great  majority 
of  decisions  declare  such  an  instrument  to  be  negotiable,  since 
the  legal  rights  of  the  holder  are  clear  and  certain,  and  the 
instrument  being  due  at  a  time  fixed  and  not  before,  the  maker 
has  a  mere  option  to  pay  in  advance  of  the  legal  liability  if  he 
sees  fit.'"'* 

If  a  bill  or  note  is  made  payable  expressly  or  impliedly  out 
of  a  particular  fund  it  is  not  negotiable  according  to  the  law  mer- 
chant, because  there  may  be  no  such  fundJ'^  "An  unqualified 
order  or  promise  to  pay  is  unconditional,  though  coupled  zmth  an 
indication  of  a  particidar  fund  out  of  zvhich  reimbursement  is 
to  be  made,  or  a  particular  account  is  to  be  debited  zvith  the' 
amount.  But  an  order  or  promise  to  pay  out  of  a  particidar 
fund  is  not  unconditional."'^ 

An  order  on  a  saving  bank,  "Pay  C,  or  order,  three  hundred 
dollars,  or  what  may  be  due  on  my  deposit  book  No.  1,  page  632," 
is  payable  out  of  a  particular  fund,  and  therefore  not  negotiable 
under  the  statute.''** 

§  50.  As  to  place  of  payment.  The  purpose  of  a  certain 
place  of  payment  being  set  out  in  the  instrument  is  to  fix  the 
place  at  which  the  holder  must  present  the  bill  of  exchange  or 
note  for  payment.  This  is  a  very  important  feature  of  the  in- 
strument when  we  come  to  consider  the  liability  of  sureties  and 
indorsers.     If  no  place  is  mentioned,  presentment  must  be  made 

'^SNeg.  Inst.  Law,  §  4,  where  all  41    Am.    Rep.    82;    Thompson    v. 

cases  directly  or  indirectly  bearing  Wheatland  Mercantile  Co.,  10  Wyo. 

upon  or  citing  the  Law  are  grouped.  86,  66   Pac.   595.     As   to   reference 

'^4  Walker    v.    Woolen,    54    Ind.  to  account  or  fund  as  affecting  ne- 

164;  Charlton  v.  Reed,  61  Iowa  166,  gotiability,  see  note  8  L.  R.  A.  (N. 

16   N.   W.    64,   47   Am.    Rep.    808;  S.)  2.31;  see  also  notes  35  L.  R.  A. 

Ernst  V.   Steckman,  74  Pa.   St.   13,  647  and  22  U.  S.  L.  Ed.  161. 
15  Am.  Rep.  542.     See  also  note  11  ''^Neg.  Inst.  Law,  §  3,  where  all 

L.  R.  A.  748.  cases  directly  or  indirectly  bearing 

"^^  Turner  v.  Peoria  etc.  Ry.  Co.,  upon  or  citing  the  Law  are  grouped. 
95  111.  134,  35  Am.  Rep.  144 ;  Miller  ^Ca  National  Savings  Bank  v.  Ca- 

V.  Poage,  56  la.  96,  8  N.  W.  799,  ble,  73  Conn.  568. 


56  NEGOTIABLE    INSTRUMENTS.  §51 

at  the  place  of  business  of  the  primary  obligor.'''^  If  he  has 
no  place  of  business,  presentment  must  then  be  made  at  his  resi- 
dence.''** Another  purpose  of  having  a  certain  place  of  payment 
set  out  in  the  instrument  is  to  determine  what  law  shall  govern 
as  to  the  condition  and  manner  of  payment.  As  a  general  rule 
it  is  not  necessary  to  the  negotiability  of  the  instrument  that  a 
place  of  payment  be  designated.'^®  But  it  is  now  required  by 
statute  in  some  of  the  states. 

The  Negotiable  Instruments  Law  provides  that  "the  validity 
and  negotiable  character  of  an  instrument  are  not  affected  by  the 
fact  that  it  does  not  specify  the  place  where  it  is  drawn  or  the 
place  where  it  is  payable. "^^ 

§  51.  Must  be  payable  in  money.  Another  essential  requi- 
site of  a  bill  of  exchange  or  promissory  note  is  that  the  medium 
of  payment  must  be  money ;  that  is,  the  direction  or  promise  in 
such  instrument  must  be  to  pay  in  money.**  If  the  instrument 
calls  for  the  payment  of  goods,  or  is  in  the  alternative,  as  for 
the  payment  of  a  sum  of  money  or  "to  issue  stock,"  it  is  not 
negotiable  and  becomes  a  mere  simple  contract.**  It  has  been 
held,  however,  that  if  the  instrument  calls  for  the  payment  ot 
goods  or  money,  giving  the  holder  the  option  to  choose,  it  is  in 
effect  payable  in  money  and  so  negotiable.  So  if  the  instrument 
be  expressed  to  be  payable  "in  work,"*^  or  in  any  other  article 
than  money,  as,  for  instance,  "an  ounce  of  gold,"*^  it  becomes  a 
special  contract,  and  by  the  law  merchant  loses  its  character  as 
commercial  paper.  Thus  it  has  been  held  that  if  the  instrument 
be  to  pay  money,  and  also  "to  deliver  up  horses  and  a  wharf,"** 
or  "to  pay  money  and  take  up  a  certain  outstanding  note,"  it  is 
not  a  negotiable  note  *^ 

77  Biglow  V.  Kellar,  6  La.  Ann.  85  Ind.  503 ;  Chandler  v.  Calvert,  87 

59,   54  Am.   Dec.   555;    Merrick   v.  Mo.   App.  368.     As  to  payment  in 

Burlington  etc.  Plank  Road  Co.,  11  money  only,  see  note  3  L.  R.  A.  50. 

la.   74;   Haber  v.   Brown,   101   Cal.  82  Pridgcn    v.    Cox,   9  Tex.   367; 

445,  35  Pac.  1035.  Corbitt  v.  Stonemetz,  15  Wis.  170; 

7S  Stivers  v.  Prentice.  3  B.  Hon.  Markley  v.   Rhodes,   59  la.   57,   12 

(Ky.)    461;    Shamburgh    v.    Cem-  N.  W.  775. 

magere,  10  Mart.   (La.)   18;  Pack-  83  Bothick  v.   Purdy,  3   Mo.   82; 

ard  V.  Lyon,  5  Duer.  (N.  Y.)  82.  McClelland  v.  Coffin,  93  Ind.  456; 

79  Kendall  v.  Galvin,  15  Me.  131,  Ransom  v.  Jones,  2  111.  291. 

32  Am.  Dec.  141;  Spears  v.  Bond,  84  Roberts  v.   Smith,  58  Vt.  492, 

79  Mo.  467.  4  Atl.  709,  56  Am.  Rep.  567. 

80Neg.  Inst.  Law,  §  6,  sub.  div.  85  Martin  v.  Chantry,  2   Strange 

3,  where  all  cases  directly  or  indi-  1271. 

rectly   bearing  upon   or   citing   the  86  Cook  v.   Saterlee,  6  Cow.  108. 

Law  are  grouped.  But  see  Hodges  v.  Shulen  22  N.  Y, 

81  Killan  v.  Schoeps,  26  Kan.  310,  114. 
40  Am.  Rep.  313 ;  Johnson  v.  Griest, 


§  51  FORMAL  AND  ESSENTIAL  REQUISITES.  57 

But  it  is  held  that  "an  unqualified  order  or  promise  to  pay  is 
unconditional  though  coupled  with  a  statement  of  the  transaction 
ivhich  gives  rise  to  the  instrument."^' 

The  most  frequent  instances  of  such  notes  are  notes  given  in 
payment  of  the  purchase  price  of  goods  and  chattels.*''* 

So  also  an  instrument  in  terms  and  form  a  negotiable  promis- 
sory note  does  not  lose  that  character  because  it  recites  that  the 
maker  has  deposited  collateral  security  for  its  payment,  which 
he  agrees  may  be  sold  in  a  specified  manner.**  Thus  it  seems  well 
settled  that,  although  it  may  appear  on  the  face  of  the  note  that 
its  payment  is  secured  by  collaterals  in  personal  property,  or 
mortgage  of  real  property,  yet  if  otherwise  in  proper  form,  it 
is  negotiable. 

The  Negotiable  Instruments  Law  covers  this  and  many  similar 
provisions  by  the  following  section : 

"An  instrument  zvhich  contains  an  order  or  promise  to  do 
any  act  in  addition  to  the  payment  of  money  is  not  negotiable. 
But  the  negotiable  character  of  an  instrument  otherwise  nego- 
tiable is  not  affected  by  a  provision  which: 

",{!)  Authorizes  the  sale  of  collateral  securities  in  case  the 
instrument  be  not  paid  at  maturity;  or 

"(2)  Authorizes  a  confession  of  judgment  if  the  instrument 
be  not  paid  at  maturity;  or 

"(3)  Waives  the  benefit  of  any  lazv  intended  for  the.  ad- 
vantage or  protection  of  the  obligor;  or 

"(4)  Gives  the  holder  an  election  to  require  something  to  be 
done  in  lieu  of  payment  of  money. 

"But  nothing  in  this  section  shall  validate  any  provision  or 
stipulation  otherwise  illegal."^^ 

IlHnois,  Kentucky,  Wisconsin  among  other  states  make  some 
changes  in  section  5  of  the  Law  above  set  out.  The  object  of 
the  last  sentence  of  this  section  is  to  prevent  any  inference  of 
an  intent  to  validate  any  agreement  or  stipulation  set  out  in  the 
section,  where  by  any  statute  or  settled  policy  of  the  state,  the 
same  would  be  illegal. 

It  is  uniformly  held  that  a  power  of  attorney  to  confess  judg- 

s^Neg.  Inst.  Law,  §  3,  subd.  2.  Am.    St.    Rep.    824;    De    Hass    v. 

where  all  cases  directly  or  indirectly  Dibert,   70   Fed.   227,   17   C.    C.   A. 

bearing  upon  or  citing  the  Law  are  79,  30  L.  R.  A.  189;  Carroll  Bank 

grouped.  v.    Taylor,   67   la.    572,    25    N.    W. 

873  Chicago    Railway    Equipment  810. 
Co.   V.   Merchants'   Nat.    Bank,    136  89  Neg    Inst.  Law,  §  5.  where  all 

U.  S.  268.  cases  directly  or  indirectly  bearing 

88  Vallev  Nat.  Bank  v.  Crowell.  upon  or  citing  the  Law  are  grouped. 
148   Pa.   St.  284,  23  Atl.   1068,  33 


58  NEGOTIABLE   INSTRUMENTS.  §  51 

merit  must  be  strictly  construed,  and  whether  the  power  can  be 
executed  for  the  benefit  of  a  holder  of  a  note  other  than  the 
payee  must  depend  upon  the  language  of  the  power  itself.^*  If 
the  note  is  in  itself  perfect,  without  conditions,  it  may  remain 
negotiable  although  the  power  of  the  attorney  to  confess  judg- 
ment may  not,  by  its  terms,  operate  in  favor  of  an  indorsee  or 
transferee  of  the  note.'*^ 

A  stipulation  authorizing  a  confession  of  judgment  if  the  in- 
strument is  not  paid  at  maturity  is  recognized  as  valid  in  many 
jurisdictions.  In  others  it  is  not  recognized  as  valid.  It  is  stated 
by  the  court  in  one  jurisdiction  that  it  is  the  acknowledged  public 
policy  of  that  state  not  to  recognize  powers  of  confession  in 
promissory  notes,  and  that  it  seemed  to  be  the  public  policy  as 
declared  by  the  statute  in  that  state  in  respect  to  confessions  of 
judgment  requiring  that  in  order  to  be  a  valid  execution  of  such 
power,  there  must  at  the  time  of  its  execution  be  an  affidavit 
made."^* 

"The  validity  and  negotiable  character  of  an  instrument  are 
not  affected  by  the  fact  that  it  does  not  specify  the  value  given, 
or  that  any  value  has  been  given^  therefor.  But  nothing  in  this 
section  shall  alter  or  repeal  any  statute  requiring  in  certain  cases 
the  nature  of  the  consideration  to  he  stated  in  the  instrument. "^^ 

Thus  it  is  often  required  when  notes  are  given  for  a  patent 
or  some  right  therein  that  the  instrument  should  state  the  nature 
of  the  consideration.  "A  promissory  note  or  other  negotiable  in- 
strument, the  consideration  of  which  consists  wholly  or  partly 
of  the  right  to  make,  use  or  sell  any  invention  claimed  or  repre- 
sented by  the  vendor  at  the  time  of  sale  to  be  patented,  must 
contain  the  words,  'given  for  a  patent  right,'  prominently  and 
legibly  written  or  printed  on  the  face  of  such  note  or  instrument 
above  the  signature  thereto ;  and  such  note  or  instrument  in  the 
hands  of  any  purchaser  or  holder  is  subject  to  the  same  defenses 
as  in  the  hands  of  the  original  holder ;  but  this  section  does  not 
apply  to  a  negotiable  instrument  given  solely  for  the  purchase 
price  or  the  use  of  a  patented  article."''^     Some  states  as  New 

80  Cushman  v.  Welsh,  19  Ohio  St.  cases  directly  or  indirectly  bearing 

536;    Manufacturers    and    Mcchan-  upon  or  citing  the  Law  are  grouped. 

ics   Bank  v.    St.   John,    5   Hill    (N.  As  to  a  note  not  indicating  the  na- 

Y.)    497;    Spence    v.    Emerine,    46  ture  of  its  consideration  as  required 

Ohio  St.  433,  21  N.  E.  866,  15  Am.  by  statute  see  note  10  L.  R.  A.  (N. 

St.  Rep.  634;  Marsden  v.  Soper,  11  S.)  842. 

Ohio  St.  503.  •»»  Neg.  Inst.  Law,  §  330  of  N.  _Y. 

91  Osborn    v.    Howley.    19    Ohio  law,  where  all  cases  directly  or  in- 

130.  directly  bearing  upon  or  citing  the 

»i»  Irose  V.  Balla.  181  Ind.  491.  Law  are  grouped. 

®*  Neg.  Inst.  Law,  %  6,  where  all 


§  51  FORMAL  AND  ESSENTIAL  REQUISITES,  59 

York  and  Ohio  have  made  this  provision  as  to  patent  notes  a 
part  of  the  Negotiable  Instruments  Law^  while  many  other  states 
have  such  a  law  as  a  separate  statute. 

The  term  money  properly  includes  all  legal  tender.®'*  Though 
the  word  "currency"  includes  bank-notes,  which  are  not  legal 
tender,  yet  it  is  held  that  certificates  of  deposit,  notes,  bills,  bonds, 
checks  and  the  like,  payable  in  "currency,"  or  in  "current  funds 
of  this  state,"  "current  Ohio  bank-notes,"  etc.,  constitute  good 
commercial  paper,  and  are  really  payable  in  money,  as  the  term 
used  is  but  a  common  expression  used  to  indicate  current  legal 
tender.'**^ 

The  property  of  being  legal  tender  is  not  necessarily  inherent 
in  money ;  it  generally  belongs  no  more  to  inferior  coin  than  to 
paper  money.  Legal  tender  is  that  kind  of  money  which  the 
law  compels  a  creditor  to  accept  in  payment  of  his  debt,  when 
tendered  by  the  debtor  in  the  right  amount.^^  Foreign  gold  or 
silver  coins  are  not  legal  tender.**"  The  gold  and  silver  coins 
of  the  United  States  and  the  United  States  notes  are  lawful  money 
and  legal  tender  in  the  payment  of  all  debts,  public  and  private.®* 

"The  validity  and  negotiable  character  of  an  instrument  are 
not  affected  by  the  fact  that  it  designates  a  particular  kind  of 
current  tnoney  in  which  payment  is  to  be  niade."^^ 

But  if  the  instrument  is  made  payable  in  the  paper  or  cur- 
rency of  a  particular  bank,  specifically  and  absolutely,  and  with- 
out reference  to  the  currency  or  value  of  the  paper,  it  is  held 
not  to  be  for  the  payment  of  money  and  is  not  negotiable.-^ 

An  instrument  payable  in  "current  funds"  is  negotiable.** 

It  has  been  held  that  it  is  necessary  that  the  instrument  should 
express  the  specific  denomination  of  money  when  it  is  payable 
in  the  money  of  a  foreign  country,  in  order  that  the  courts  may 
be  able  to  ascertain  its  equivalent  value ;  otherwise  it  is  not 
negotiable. 


a 


»4  Jones   V.    Overstreet,   4   T.    B.  »« United    States    Revised    Stat- 

Mon.    (Kv.)    547;    Mann   v.    Mann,  utes,  §  3585. 

1  Johns  Ch.  (N.  Y.)  236.  »»  Neg.    Inst.   Law,   §   6,   subd.   5 

85  Telford  v.  Patton,  144  ITI.  611,  and  cases  there  cited. 

22>  N.  E.  1119;  Butler  v.  Paine,  8  i  Bonnell   v.   Covington,   7   How. 

Minn.    324;    Phelps    v.    Town,    14  (Miss.)    322;    Whiteman    v.    Chid- 

Mich.    374;    ("Current    Ohio    Bank  ress,  6  Humph.    (Tenn.)    303;   Fry 

Notes")  ;    Swetland    v.    Creigh,    15  v.    Rousseau,    3    McLean    (U.    S.) 

Ohio  118;  Bull  v.  Bank.  123  U.  S.  106,  9  Fed.  Cas.  No.  5,141;  Alitchell 

105.     There  is  much  conflict  on  the  v.  Walker,  4  Ark.  145. 

above  point,  however.  ^^  Millikan      v.      Security      Trust 

'♦^  Black's    Law    Die;    Martin    v.  Company,  —  Ind. —,  118  N.  E.  568. 

Bolt,    17   Ind.   App.    444,    46   N.    E.  2  Thompson   v.    Sloan,  23   Wend. 

151.  (N.  Y.)  71.    But  see  Hogue  v.  Wil- 

^  United    States    Revised    Stat-  liamson,  85  Te.x.  553.  22  S.  W.  580, 

utes,  §3584.  34  Am.  St.  Rep.  823,  20  L.  R.  A. 


60  NEGOTIABLE   INSTRUMENTS.  §  52 

Where  an  instrument  is  made  payable  generally  in  the  money 
of  a  foreign  country,  without  specifying  the  kind  or  denomina- 
tion of  the  coin  or  money,  so  that  payment  may  be  made  in  our 
own  coin  of  equivalent  value  as  determined  by  the  par  of  ex- 
change, it  is  not  negotiable,  according  to  a  leading  case  in  New 
York  upon  this  question.^  This  is  not  the  invariable  rule,  for  in 
a  Michigan  case  a  note  payable  in  "Canada  currency"  was  held 
negotiable,  and  the  New  York  case  already  referred  to  was  dis- 
approved."* 

§  52.     Must  be  necessary  parties.  The  name  of  the  maker  of 

a  note  or  the  drawee  of  a  bill  should  appear  on  the  instrument. 
In  the  case  of  the  note  it  is  important,  as  it  is  the  maker  who  is 
liable  thereon  ;**  and  in  case  of  the  bill  the  drawee's  name  must 
be  written  in  order  to  bind  the  party  accepting." 

The  bill  must  be  addressed  to  some  person,  except  that : 

(a)  If  the  drawee  can  be  otherwise  sufficiently  identified  from 
the  bill  it  is  sufficient ;  and'^ 

(b)  An  unaddressed  bill  accepted  or  a  bill  accepted,  where 
the  drawer  and  acceptor  are  one  and  the  same  person,  probably 
is  to  be  treated  as  a  promissory  note,  and  is  negotiable.® 

The  bill  or  note  must  point  out  some  person  to  whom  the  money 
is  to  be  paid.® 

The  following  are  the  common  rules  concerning  the  nomination 
of  payees: 

(a)  The  payee  of  an  instrument,  except  one  payable  to  bearer, 
must  be  a  person  in  being,  natural  or  legal,  and  ascertained,  at 
the  time  of  issue.*® 

481;  Black  v.  Ward,  27  Mich.  193,  35  Ala.  476;  Culver  v.  Marks,  122 

15  Am.  Rep.  162.  Ind.  554,  23  N.  E.  1086,  17  Am.  St. 

3  Thompson  v.   Sloan,   33   Wend.  Rep.  377,  7  L.  R.  A.  489;  Rice  v. 
(N.  Y.)  71.  Ragland,  10  Humph.    (Tenn.)    545, 

4  Black  V.  Ward,  27  Mich.  193.  15  53  Am.  Dec.  737. 

Am.  Rep.  162.  sgUss      v.      Burnes,      McCahon 

5  Union  Nat.  Bank  v.  Forstall,  (Kan.)  97;  Funk  v.  Babbitt,  156 
41  La.  Ann.  113,  6  So.  32;  Keck  v.       111.  408,  41  N.  E.  166. 

Sedalia  Brewing  Co.,  22  Mo.  App.  ®  Brown  v.  Oilman,  13  Mass.  158; 

187;  Ferris  v.   Bond,  4  B.   &  Aid.  Secy.     v.     Stale     Bank,     3     Sneed 

679,  23  Rev.  Rep.  443,  6  E.  C.  L.  (Tenn.)  558,  67  Am.  Dec.  579. 

651.  io\yayman  v.  Torreyson,  4  Nev. 

«Funk    V.    Babbitt,    156   111.    408,  124;  U.  S.  v.  Coffeyville  First  Nat. 

41  N.  E.  166 ;  Watrous  v.  Holbrook,  Bank,  82  Fed.  410 ;  New  v.  Walker, 

39  Tex.   572;   McPherson  v.  John-  108  Ind.  365,  9  N.  E.  386,  58  Am. 

ston,  3  Brit.  Col.  465.  Rep.  40;  7ddy  v.  Bond,  19  Me.  461, 

7  Ala.  Coal  Min.  Co.  v.  Brainard,  36  Am.  Dec.  767. 


§  52  FORMAL  AND  ESSENTIAL  REQUISITES.  61 

(b)  Where  the  payee  and  maker  or  drawer  are  the  same  per- 
son, the  instrument  is  not  issued  until  after  its  indorsement  and 
delivery.** 

(c)  The  payee  may  be  a  fictitious  or  non-existing  person,  but 
the  instrument  is  then  construed  as  payable  to  bearer,  and  title 
thereto  is  made  by  estoppel.*^ 

"A  bill  may  be  addressed  to  two  or  more  drawees  jointly, 
whether  they  are  partners  or  not;  but  not  to  two  or  more  drawees 
in  the  alternative  or  in  succession. "'^^ 

"Where  in  a  bill  the  drawer  and  drawee  are  the  same  person, 
or  where  the  drazvee  is  a  fictitious  person,  or  a  person  not  having 
capacity  to  contract,  the  holder  may  treat  the  instrument,  at  his 
option,  either  as  a  bill  of  exchange  or  a  promissory  note."''-* 

"The  drawer  of  a  bill  and  any  indorser  may  insert  thereon 
the  name  of  a  person  to  whom  the  holder  may  resort  in  case  of 
need;  that  is  to  say,  in  case  the  bill  is  dishonored  by  non-accept- 
ance or  non-payment.  Such  person  is  called  the  referee  in  case 
of  need.  It  is  in  the  option  of  the  holder  to  resort  to  the  referee 
in  case  of  need  or  not  as  he  tnay  see  ftt.^^ 

A  bill  or  note  may  be  executed  by  one  person  or  by  a  number 
of  persons.  When  executed  by  but  one,  it  is  called  a  several 
note.  When  executed  by  two  or  more,  it  is  either  joint,  or 
joint  and  several,  according  to  its  wording.  Thus,  if  in  a  note 
signed  by  two  or  more,  the  plural  number  is  used  in  referring 
to  them  as  "we  promise  to  pay,"  it  is  held  to  be  a  joint  note.** 
While  if  in  the  same  note  the  singular  number  is  used,  as  "I 
promise  to  pay,"  then  the  note  is  considered  as  joint  and  sev- 
eral, since  this  expression  indicates  an  intention  to  make  it  a  joint 
and  several  note."  So  the  expression,  "we  or  either  of  us,"  is 
held  to  make  a  note  joint  and  several.** 

^*  Norfolk  Nat.  Bank  v.   Griffin,  ing    upon    or    citing    the    Law    are 

107  N.  C.  173,  11  S.  E.  1049.  22  Am.  grouped. 

St.  Rep.  868;  Ewan  v.  Brooks-Wa-  ^^  Neg.   Inst.  Law,  §   131,  where 

terfield  Co.,  55  Ohio  St.  596,  45  N.  all  cases  directly  or  indirectly  bear- 

E.    1014,  60  Am.   St.   Rep.   719,   35  ing   upon    or    citing    the    Law    are 

L.  R.  A.  786.  grouped. 

iSKohn  V.  Watkins,  26  Kan.  691,  i«  Harrow    v.    Dugan,     6     Dana 

40  Am.  Rep.  336;  Shaw  v.  Brown,  (Ky.)   341;  Lafourche  Transp.  Co. 

128  Mich.  573.  87  N.  W.  757 ;  Phil-  v.  Pugh,  52  La.  Ann.  1517,  27  So. 

lips  V.   Mercantile  Nat.   Bank,   140  958;   Peaks  v.   Dexter,  82   Me.  85, 

N.  Y.  556,  35  N.  E.  982,  37  Am.  St.  19  Atl.  100. 

Rep.  596,  23  L.  R.  A.  584.  *''  Dow  Law  Bank  v.  Godfrey,  126 

.  13  Neg.   Inst.  Law,   §   128,  where  Mich.  521,  85  N.  W.  1075,  86  Am. 

all  cases  directly  or  indirectly  bear-  St.    Rep.    559;    Warren    First   Nat. 

ing    upon    or   citing    the    Law    are  Bank  v.   Fowler,  36   Ohio   St.   524, 

grouped.  38  Am.  Rep.  610. 

i4Neg.   Inst.  Law,  §   130,   where  18  Pogue   v.    Clark,   25    111.    333; 

all  cases  directly  or  indirectly  bear-  Harvey  v.  Irvine,  11  la.  82;  Harris 


62  NEGOTIABLE    INSTRUMENTS.  §  53 

The  Negotiable  Instruments  Law  provides ;  "*  *  *  Where 
an  instrument  containing  the  words  7  promise  to  pay  is  signed 
by  two  or  more  persons,  they  are  deemed  to  be  jointly  and  sever- 
ally liable  thereon."^^'^ 

§53.  The  delivery.  By  the  Negotiable  Instruments  Law 
"delivery  means  transfer  of  possession,  actual  or  constructive, 
from,  one  person  to  another."^^ 

An  undelivered  bill  or  note  is  inoperative,  because  delivery  is 
essential  to  the  final  completion  of  every  written  contract.  Until 
delivery,  the  contract,  is  revocable.  Delivery  means  transfer  of 
possession  with  intent  to  transfer  title,  and  is  of  two  kinds: 
(1)  The  manual  passing  of  the  instrument  itself  ;  and  (2)  some 
act  manifesting  intent  to  transfer  right  of  possession  while  the 
possession  of  the  instrument  is  actually  with  another. 

It  has  been  held  that  by  depositing  a  note  in  the  mail  with 
the  intent  that  it  shall  be  transmitted  to  the  payee  in  the  usual 
way  the  said  party  will  be  in  control  over  it  and  the  delivery  is  in 
legal  contemplation  completed.*®* 

"Where  an  incomplete  instrument  has  not  been  delivered  it  will 
not  if  completed  and  negotiated,  tvithout  authority,  be  a  valid  con- 
tract in  the  hands  of  any  holder,  as  against  any  person  whose  sig- 
nature was  placed  thereon  before  delivery."^** 

A  negotiable  instrument  must  be  complete  and  perfect  when 
it  is  issued,  or  there  must  be  authority  reposed  in  some  one  after- 
ward to  supply  anything  needed  to  make  it  perfect.*®" 

This  section  of  the  law  rather  concerns  delivery  as  between 
immediate  parties.  Thus  we  might  say  that  delivery  of  a  nego- 
tiable instrument  is  essential  in  order  to  create  any  liability  as 
between  the  immediate  parties  to  the  instrument.  This  section 
then  does  not  refer  to  the  delivery  to  a  bona  fide  purchaser  for 
value  without  notice.  This  section  and  the  one  following  in  the 
Law  and  also  following  in  this  text  should  be  considered  to- 
gether. In  order  to  avoid  confusion  as  to  matters  relating  to 
delivery  considered  in  a  later  chapter  these  two  sections  will  be 
briefly  discussed.    The  other  section  provides  as  follows: 

V.   Coleman  etc.   White  Lead   Co.,  37  Am.  St.  Rep.  458,  459;  sae  also 

58  111.  App.  366.  note  6  L.  R.  A.  470. 

18a  Neg.  Inst.  Law,  §  17,  subdiv.  7,  ^^  Canterbury  v.  Sparta  Bank,  91 

where    cases    directly    or    indirectly  Wis.  53,  64  N.  W.  311,  30  L.  R.  A. 

bearing  upon  or  citing  the  Law  are  845. 

grouped.  ^^  Neg.  Inst.  Law,  §  15,  where  all 

i»Neg.  Inst.  Law,  §   191,  where  cases  directly  or  indirectly  bearing 

all  cases  directly  or  indirectly  bear-  upon  or  citing  the  Law  are  grouped, 

ing   upon   or    citing    the    Law    are  20a  Davis  Sewing  Machine  Co.  v. 

grouped.     As  to  delivery,  see  note  Best,  105  N.  Y.  59. 


§  53  rORMAL  AND  ESSENTIAL  REQUISITES.  63 

"Every  contract  on  a  negotiable  instrument  is  incomplete  and 
revocable  until  delivery  of  tfie  instrument  for  the  purpose  of 
giving  effect  thereto.  As  between  immediate  parties,  and  as  re- 
gards a  remote  party  other  than  a  holder  in  dm  course,  the  deliv- 
ery, in  order  to  be  effectual,  must  be  made  either  by  or  under  the 
authority  of  the  party  making,  drawing,  accepting,  or  indorsing, 
as  the  case  may  be;  and  in  such  case  the  delivery  may  be  shown 
to  have  been  conditional,  or  for  a  special  purpose  only,  and  not 
for  the  purpose  of  transferring  the  property  in  the  instrument. 
BM  where  fhe  instrument  is  in  the  hands  of  a  holder  in  due 
course,  a  valid  delivery  thereof  by  all  parties  prior  to  him  so 
as  to  make  them  liable  to  him  is  conclusively  presumed.  And 
where  the  instrument  is  no  longer  in  the  possession  of  a  party 
whose  signature  appears  thereon,  a  valid  and  intentional  delivery 
by  him  is  presumed  until  the  contrary  is  proved."^^ 

Some  jurisdictions  have  made  some  changes  in  this  section  of 
the  Law.  In  North  Carolina  the  words  "accepting  or"  between 
the  words  "drawing"  and  "indorsing"  in  the  second  sentence  are 
omitted.  In  Kansas  the  third  sentence,  which  provides  for  a 
conclusive  presumption  of  delivery  in  favor  of  a  holder  in  due 
course,  is  omitted.  In  South  Dakota  the  sentence  beginning  with 
the  word  "But"  and  ending  with  the  word  "presumed"  is  omitted 
and  the  following  sentence  substituted:  "An  indorsee  of  a 
negotiable  instrument  in  due  course,  acquires  an  absolute  title 
thereto,  so  that  it  is  valid  in  his  hands,  notwithstanding  any  pro- 
vision of  law  making  it  generally  void  or  voidable,  and  not- 
withstanding any  defect  in  the  title  of  the  person  from  whom  he 
acquired  it." 

The  section  of  the  Law  is  declaratory  largely  of  the  preponder- 
ance of  authority  prior  to  its  adoption  in  the  various  jurisdic- 
tions; that  is,  that  one  who  had  purchased  for  value,  in  good 
faith,  in  the  usual  course  of  business,  and  before  maturity,  a 
negotiable  instrument  complete  upon  its  face,  and  rot  avoided  by 
forgery  or  statutory  prohibition,  had  good  title  in  the  person  from 
whom  he  had  taken  it,  even  though  such  person  might  have  ac- 
quired it  by  fraud,  by  theft  or  by  robbery.  Some  jurisdictions 
had  held  that  a  bona  fide  holder  could  not  recover  because  taken 
away  from  the  maker  without  his  consent  and  had  never  been  de- 
livered by  him  to  any  one  for  any  purpose ;  and  others  had  held 
that  the  maker  or  drawer  was  not  liable  in  any  such  case,  whether 
completed   or  incompleted,  unless  it   could  be  shown  that  the 

21  Neg.  Inst.  Law,  §  16,  where  all      As  to  stolen  paper  see  note  13  U.  S 
cases  directly  or  indirectly  bearing      L.  Ed.  266. 
upon  or  citing  the  Law  are  grouped. 


64  NEGOTIABLE   INSTRUMENTS.  §§  54-55 

possession   of    the    undelivered    instrument   had   been    obtained 
through  his  culpable  negligence. 

The  above  section  of  the  Law  provides  that  under  certain  cir- 
cumstances the  delivery  may  be  shown  to  have  been  conditional. 
This  was  the  rule  in  most  jurisdictions  before  the  adoption  of 
the  Law  and  parol  evidence  of  such  a  condition  was  not  deemed 
an  attempt  to  vary  or  contradict  the  written  contract.*^  Neither 
the  Negotiable  Instruments  Law  nor  the  Statute  of  Frauds  re- 
quires that  a  contract  of  conditional  delivery  shall  be  in  writing,^' 

§  54.  Value  received.  Value  received  is  not  necessary  to  be 
expressed  in  a  negotiable  instrument.^*  Although  these  words 
are  well  nigh  universal  in  negotiable  bills  and  notes,  they  are  in 
no  wise  necessary  to  them.  Their  omission  is  unimportant,  be- 
cause the  negotiable  instrument  itself  imports  a  consideration.** 

"The  validity  and  negotiable  character  of  an  instrument  are 
not  affected  by  the  fact  that  it  does  not  specify  the  value  given,  or 
that  any  value  has  been  given  therefor."^^ 

§  55.  As  to  the  agreement  controlling  the  operation.  There 
are  two  kinds  of  agreements  which  control  the  operation  of  bills 
and  notes,  which  are  designated  as  memoranda  on  the  face  or 
back  of  the  instrument^*  and  collateral  or  independent  agree- 
ments.^'' The  advantage  of  having  a  memorandum  on  the  bill 
or  note  is  that  it  will  furnish  actual  or  constructive  notice  to  all 
subsequent  holders,  whereby  it  will  control  the  operation  or 
character  of  the  instrument,^^  whereas  a  collateral  agreement 
can  only  control  the  operation  or  character  of  the  instrument 
as  to  those  parties  who  have  received  actual  notice  of  its  exist- 
ence.    OInly  such  memorandum  as  does  actually  afifect  the  char- 

22  Niblack  V.  Sprague,  200  N.  Y.  where  all  cases  directly  or  irtdi- 
390;  Hodge  v.  Smith,  130  Wis.  326.  rectly  bearing  upon  or  citing  the 
Contra,  —  Ind.  — .  Law  are  grouped. 

22a  Norman  v.  McCarthy,  56  Colo.  2«  Specht    v.    Beindorf.    56    Neb, 

290.  553,  76  N.  W.  1059,  42  L.  R.  A.  429; 

23  Carnwright  v.  Gray,  127  N.  Y.  Nat.  Bank  of  Commerce  v.  Feeney, 
92,  27  N.  E.  835,  24  Am.  St.  Rep.  12  S.  D.  156,  80  N.  W.  186,  76  Am. 
424,  12  L.  R.  A.  845 ;  Hubble  v.  St.  Rep.  594,  46  L.  R.  A.  732. 
Fogartie,  3  Rich.  (S.  C.)  413,  45  27  Babbitt  v.  Moore,  51  N.  J.  L. 
Am.  Dec.  775;  Clarke  v.  Marlow,  229,  17  Ah.  99;  Wood  v.  Ridgeville 
20  Mont.  249,  50  Pac.  713.  See  College,  114  Ind.  320,  16  N.  E.  619; 
note  12  L.  R,  A.  846.  Murphy  v.  Farley,  124  Ala.  279,  27 

24  Jones  V.  Berryhill,  25  la.  289;  So.  442;  Wooters  v.  Foster,  1  Tex. 
Kendall  v.   Galvin,   IS   Me.   T31,  32  App.  Civ.  Cas.  700. 

Am.  Dec.  141  ;  Carnwright  v.  Gray.  28  \Yait  v.  Pomeroy,  20  Mich.  425, 

127  N.  Y.  92,  27  N.  E.  835,  24  Am.  4  Am.  Rep.  345 ;  Farmers  Bank  v. 

St.  Rep.  424,  12  L.  R.  A.  845.  Ewing,   78   Ky.   264,    39   Am.   Rep. 

25Neg.  Inst.  Law,  §  6,  stiM.  2,  231. 


§  55  FORMAL  AND  ESSENTIAL  REQUISITES.  65 

acter  and  control  the  operation  of  the  instrument  will  be  con- 
sidered to  be  a  part  of  the  bill  or  note. 

Nor  can  the  memorandum  be  treated  as  a  part  of  the  bill  or 
note  where  it  is  so  ambiguous  and  repugnant  to  the  other  con- 
tents that  parol  evidence  is  necessary  to  explain  its  import,  or 
where  the  agreement  is  repugnant  to  the  assignment  or  transfer 
of  the  instrument.^®  Where  the  memorandum  is  added  to  the 
bill  or  note  after  its  negotiation,  with  the  consent  of  both  parties, 
it  will  constitute  a  part  of  the  instrument,  controlling  its  opera- 
tion, but  if  it  is  added  without  the  consent  of  all  the  parties,  it 
will  be  an  alteration  which  will  invalidate  the  bill  or  note.'^ 
Collateral  agreements  entered  into  contemporaneously  with  the 
execution  and  negotiation  of  the  instrument  must  be  in  writing 
in  order  to  be  valid  and  control  the  operation  of  such  bill  or 
note.^^  Subsequent  agreements  which  change  the  terms  of  bills 
and  notes  already  delivered  must  be  based  upon  a  sufficient 
consideration  and  be  fully  executed  or  performed  in  order  to 
control  the  operation  of  the  instrument  as  to  all  parties  who  have 
notice  of  the  collateral  agreement.^*  The  most  common  collateral 
agreement  is  that  of  renewing  the  bill  or  note.  If  the  renewal 
is  contemporaneous  with  the  instrument  it  must  be  in  writing; 
and  if  subsequent  it  must  be  supported  by  a  sufficient  consider- 
ation.^ 

A  note  which  contains  a  statement  to  the  effect  that  the  maker 
has  deposited  collateral  security  for  its  payment  does  not  thereby 
lose  its  character  of  negotiability  nor  does  the  fact  that  a  note 
is  received  with  collaterals  afifect  such  negotiability.^ 

The  Negotiable  Instruments  Law  provides ;  "  *  *  *  But 
the  negotiable  character  of  an  instrument  otherwise  negotiable 
is  not  affected  by  a  provision  zvhich:  1.  Authorises  the  sale  of 
collateral  securities  in  case  the  instrument  be  not  paid  at  ma- 
turity/'^*^ 

This  and  other  matters  as  to  collateral  security  are  more  fully 
discussed  in  a  subsequent  chapter  of  this  work. 

29  Way  V.  Batchelder.  129  Mass.  33  Lime  Rock  Bank  v.  Mallett,  34 

361 ;  Leland  v.  Parriott,  35  la.  454.  Me.  547,  56  Am.  Dec.  673 ;  Central 

SOTuckerman  v.  Hartwell,  3  Me.  Bank  v.   Willard,   17   Pick.   150,  28 

147,  14  Am.  Dec.  225.  Am.  Dec.  284. 

31  Noell   V.    Gains,   68   Mo.   649;  ^4  Qjifo^d  v.  Minneapolis  etc.  Ry. 

Polo  Mfg.  Co.  V.  Parr.  8  Neb.  379,  Co.,  48  Minn.   560,   51   N.   W.  658, 

30  Am.  Rep.  830.  31  Am.  St.  Rep.  694;  Valley  Bank 

33  Dow  V.  Tuttle,  4  Mass.  414,  3  v.  Crowell.  148  Pa.  St.  284,  23  Atl. 

Am.  Dec.  226;  Allen  v.  Furbish,  4  1068,  33  Am.  St.  Rep.  824. 

Gray  504,  64  Am.  Dec.  87.  ***  Neg.  Inst.  Law,  §  5,  subd.  1. 


56  NEGOTIABLE    INSTRUMENTS.  §§  56-56a 

§  56.  Days  of  grace.  As  to  days  of  grace  the  Negotiable  In- 
struments Law  provides:^ 

"Every  negotiable  instrument  is  payable  at  the  time  fixed 
therein  without  grace.  When  the  day  of  maturity  falls  upon 
Sunday,  or  a  holiday,  the  instrument  is  payable  on  the  next  suc- 
ceeding business  day.  Instruments  falling  due  or  becoming  pay- 
able on  Saturday  are  to  be  presented  on  the  next  succeeding 
business  day,  except  that  instruments  payable  on  demand  may,  at 
the  option  of  the  holder,  be  presented  for  payment  before  tivelve 
o'clock  noon  on  Saturday  when  that  entire  day  is  not  a  holiday."  *** 

Many  of  the  states  have  made  changes  in  the  above  section  of 
the  Law  and  the  different  readings  should  be  consulted  in  Part  III 
of  this  work  v/here  all  the  changes  are  set  out  under  this  section. 

Where  such  lav/  is  not  in  force  grace  is  a  short  period  of  time, 
extended  by  the  written  law  to  instruments  not  payable  on  de- 
mand,^^  to  enable  the  parties  to  provide  payment.  It  arose  before 
the  age  of  steam,  when  communication  was  slow  and  often  diffi- 
cult. It  is  said  to  have  been  a  mere  matter  of  indulgence  at 
first,  at  the  holder's  election.  The  rule  is  peculiar  to  the  law 
merchant ;  and  since  the  reason  for  it  has  mostly  ceased,  it  has 
been  abolished  by  statute  in  most  jurisdictions. 

Days  of  grace  are  days  added  to  the  nominal  time  of  payment 
of  all  bills  or  notes  except  those  impliedly  or  expressly  payable 
on  demand,  and  are  computed  by  excluding  the  day  of  date  and 
including  the  day  of  payment.^'  When  granted  at  all  they  are 
usually  for  three  days.  But  as  stated  above  days  of  grace  have 
been  abolished  by  statute  in  most  jurisdictions. 

§  56a.  As  to  payable  at  a  bank.  It  is  provided  in  the  Nego- 
tiable Instruments  Law  as  follows:  "Where  the  instrument  is 
made  payable  at  a  bank  it  is  equivalent  to  an  order  to  the  bank 
to  pay  the  same  for  the  account  of  the  principal  debtor  thereon."^'^'' 

It  will  be  noted  that  a  few  of  the  states  have  omitted  this 
section  among  them  being,  Illinois,  Kansas,  Nebraska  and  South 
Dakota.  In  Missouri  and  New  Jersey  amendments  have  been 
made.     There   was   a   conflict  of   authority   as    :o  the   right  or 

35  Neg.  Inst.  Law,  §  85.  where  all  Thompson    v.    Ketchum,    8   Johns, 

cases  directly  or  indirectly  bearing  (N.  Y.)    190,  5  Am.  Dec.  332. 

upon  or  citing  the  Law  are  grouped  ^^  Thomas      v.       Shoemaker,      6 

See  also  notes  5  U.  S.  L.  Ed.  215  Watts  (Pa.)  179;  Tassell  v.  Lewis, 

and  6  U.  S.  L.  Ed.  512.  1  Ld.  Raym.  743. 

.35a  Neg.  Inst.  Law,  §  85.  ^'^  Neg.  Inst.  Law,  §  87,  where  all 

3«  Davenport  First  Nat.  Bank  v.  cases  directly  or  indirectly  bearing 

Price,    52    la.    750,    3   N.    W.    639 ;  upon  or  citing  the  Law  are  grouped. 


§§  57-58  FORMAL  AND  ESSENTIAL  REQUISITES.  6/^ 

authority  of  a  bank  to  do  this  before  the  adoption  of  the  Nego- 
tiable Instruments  Law. 

§  57.  As  to  stamps.  It  seems  that  the  first  stamp  duties 
were  those  levied  by  Holland  in  1624  for  the  purpose  of  raising 
revenues  for  the  prosecution  of  war  against  Spain.  The  first 
stamp  duties  levied  in  England  were  in  1694  and  were  employed 
to  wage  war  against  France.  Some  of  the  states  of  the  Union 
have  at  different  periods  passed  an  Act  imposing  stamp  duties  on 
certain  negotiable  instruments.  The  first  Act  of  a  similar  nature 
passed  by  the  Federal  Government  was  in  1862  during  the  war 
of  the  rebellion.**  This  Act  imposed  a  tax  upon  deeds,  bills, 
notes,  checks   and  other  evidences   of   indebtedness.^® 

This  act  was  subsequently  repealed  from  which  time  no  stamp 
duties  on  these  instruments  were  required  until  1898  when  the 
War  Revenue  Act  was  passed.  This  act  imposed  a  stamp  tax 
upon  bills  of  exchange,  promissory  notes,  money  orders,  certifi- 
cates of  deposit,  warehouse  receipts,  bills  of  lading  and  other 
evidences  of  indebtedness.  In  1901  this  act  was  repealed  except 
as  to  bills  of  exchange  and  in  1902  it  was  repealed  as  to  these. 

The  present  law  is  the  Act  of  October  22nd,  1914,  and  contains 
no  provision  as  in  some  of  the  previous  acts  making  an  unstamped 
instrument  void.*** 

This  matter  is  more  fully  considered  in  a  later  section  of  this 
work  39" 

§  58.  As  to  blanks.  Frequently  bills  of  exchange  and  prom- 
issory notes  are  executed  in  blank  and  delivered  to  another  to  fill 
in  and  negotiate,  either  for  his  own  benefit  or  that  of  the  maker. 
The  person  to  whom  these  instruments  are  delivered  in  blank 
with  authority  to  fill  the  blanks  is  constituted  the  agent  of  the 
maker  or  principal.'*®  There  is  no  need  of  a  second  delivery  by 
the  maker  after  the  blanks  have  been  filled  because  the  validity 
of  the  paper  after  its  completion  will  relate  back  to  the  delivery 
by  the  maker  or  drawer.  It  may  be,  however,  that  the  authority 
of  the  person  to  whom  the  instrument  is  delivered  is  limited  to 
filling  the  blanks  in  a  particular  way,  and  in  such  case,  if  he 
exceeds  his  express  authority,  of  course  neither  he  nor  any  holder, 
with  knowledge  that  the  authority  has  been  exceeded,  can  re- 

38  U.  S.  Rev.  Stat,  at  L..  432.       '  39b  See  §  141. 

39  Jones  V.  Jones,  38  Cal.  584;  ^ORadlich  v.  Dall,  54  N.  Y.  234; 
Merchants  Nat.  Bank  v.  Boston  etc.  Winter  v.  Poole,  104  Ala.  580,  16 
Bank,  10  Wall.  (U.  S.)  604,  19  L.  So.  543;  Market  etc.  Nat.  Bank  v. 
Ed.  1008;  Pugh  v.  McCormick,  14  Sargent,  85  Ale.  349,  27  Atl.  192, 
Wall    (U.  S.)  361,  20  L.  Ed.  789.  35  Am.  St.  Rep.  376.    See  also  note 

39«  Cole  v.  Ralph,  252  U.  S.  286.         1  L.  R.  A.  648. 


68  NEGOTIABLE   INSTRUMENTS.  §  59 

cover.'**  But  any  one  purchasing  the  instrument  as  filled  in,  in 
reliance  upon  its  terms,  would  be  protected.  Moreover,  a  bona 
fide  purchaser  is  protected,  and  may  enforce  the  instrument  as 
filled  in  even  if  he  had  knowledge  that  the  instrument  had  been 
delivered  in  its  imperfect  state,  for  he  may  rely  upon  the  appar- 
ent authority  of  the  person  to  whom  it  was  delivered  to  fill  in 
the  blank  as  he  sees  fit,  and  as  against  such  a  holder  the  fact  that 
the  actual  authority  was  exceeded  is  no  defense.^ 

The  Negotiable  Instruments  Law  states : 

"Where  the  instrument  is  zvanting  in  any  material  particular, 
the  person  in  possession  thereof  has  a  prima  facie  authority  to 
complete  it  by  filling  up  the  blanks  therein.  And  a  signature  on 
a  blank  paper  delivered  by  the  person  making  the  signature  in 
order  that  the  paper  may  be  converted  into  a  negotiable  instru' 
ment  operates  as  a  prima  facie  authority  to  fill  it  up  as  such  for 
any  amount.  In  order,  hozvever,  that  any  such  instrument  when 
completed  may  be  enforced  against  any  person  who  became  a 
party  thereto  prior  to  its  completion,  it  must  be  Ulled  up  strictly 
in  accordance  with  the  authority  given  and  within  a  reasonable 
time.  But  if  any  such  instrument,  after  completion,  is  negotiated 
to  a  holder  in  due  course,  it  is  valid  and  effectual  for  all  purposes 
in  his  hands,  and  he  may  enforce  it  as  if  it  had  been  filled  up 
strictly  in  accordance  zvith  the  authority  given  and  within  at 
reasonable  time.'"^^ 

The  authority  under  this  section  is  only  to  complete  the  in- 
strument, for  while  there  is  an  authority  to  fill  up  blanks  in  order 
to  make  the  instrument  complete  as  such,  there  is  no  authority 
to  insert  a  special  agreement  not  essential  to  the  completeness  of 
the  instrument.*'* 

§  59.  As  to  instruments  bearing  a  seal.  The  mere  attaching 
a  seal  to  the  instrument  does  not  necessarily  make  it  a  sealed 
instrument.  In  addition  to  this  there  must  be  some  reference  in 
the  instrument,  itself,  to  the  seal  to  bring  it  within  the  purview 
of  sealed  instruments.** 

41  Clower  V.  Wynn,  59  Ga.  246;  43  Neg.  Inst.  Law,  §  14,  where  all 
Wagner  v.  Deidrich,  50  Mb.  484;  cases  directly  or  indirectly  bearing 
McCoy  V.  Gilmore,  7  Ohio  268.  upon  or  citing  the  Law  are  grouped. 

42  Farmers  Bank  v.  Garten,  34  43a  Weyerhouser  v.  Dunn,  100  N. 
Mo.    119;    Merritt    v.    Boyden,    191  Y.  150. 

111.  136,  60  N.  E.  907,  85   A:m.   St.  44  Woodman  v.  York  etc.  Ry.  Co.. 

Rep.  246;  Market  etc.  Bank  v.  Sar-  50  Me.  549;  Royal  Bank  v.  Grand 

gent,   85   Me.   349,  27   Atl.   192,   35  Junction    Ry.    etc.    Co.,    100    Mass. 

Am.    St.   Rep.   376.     See   notes   16  444,  97  Am.  Dec.  115.    As  to  effect 

U.  S.  L.  Ed.  323  and  13  L.  R.  A.  of  seal  see  note  35  L.  R.  A.  605. 
(N.  S.)  490. 


§  60  FORMAL  AND  ESSENTIAL  REQUISITES.  69 

"The  validity  and  negotiable  character  of  an  instrument  are 
not  affected  by  the  fact  that  it  bears  a  seal.'"^ 

§  60.     The  several  parts  of  a  foreign  bill  called  a  set.    The 
following  is  a  common  form  of  foreign  bill  of  exchange  in  a  set : 


8 


Troy,  N.  Y.,  U.  S.  A.,  August  31,  1922. 
First.     Exchange  for  London. 

Thirty  days  after  sight  of  the  First  of  Exchange 
(Second  and  Third  Unpaid)  pay  to  the  order  of 
JOHN  BALES  Three  Hundred  Pounds  Sterling,  value 
received  and  charge  the  same  to  account  of 

ORNAN  BARKER. 
To  Green  &  Co., 

London,  Eng. 


8 


Troy,  N.  Y.,  U.  S.  A.,  August  31,  1922. 
Second.     Exchange  for  London. 

Thirty  days  after  sight  of  this  Second  of  Exchange 
(First  and  Third  Unpaid)  pay  to  the  order  of  JOHN 
BALES  Three  Hundred  Pounds  Sterling,  value  re- 
ceived and  charge  the  same  to  account  of 

ORNAN  BARKER. 
To  Green  &  Co.^ 

London,  Eng. 


8 


Troy,  N.  Y.,  U.  S.  A.,  August  31,  1922. 
Third.     Exchange  for  London. 

Thirty  days  after  sight  of  this  Third  of  Exchange 
(First  and  Second  Unpaid)  pay  to  the  order  of  JOHN 
BALES  Three  Hundred  Pounds  Sterling,  value  re- 
ceived and  charge  the  same  to  account  of 

ORNAN  BARKER. 
To  Green  &  Co., 

London,   Eng. 


^Neg.  Inst.  Law,  §  6,  subd.  4,      rectly  bearing  upon   or  citing  the 
where   all   cases   directly   or   indi-      Law  are  grouped. 


70  NEGOTIABLE   INSTRUMENTS.  §  60 

In  order  to  avoid  delay  and  inconvenience  which  may  result 
from  the  loss  or  miscarriage  of  a  foreign  bill,  it  is  a  common 
custom,  particularly  in  bills  drawn  on  Europe  and  other  distant 
countries,  for  the  drawer  to  issue  several  copies  of  the  bill  as 
above,  which  are  called  a  set  of  exchange,  and  together  con- 
stitute one  bill. 

"Where  a  hill  is  drawn  in  a  set,  each  part  of  the  set  being 
numbered  and  containing  a  reference  to  the  other  parts,  the 
whole  of  the  parts  constitute  one  bill.'"^^ 

Either  copy  of  the  bill  may  be  negotiated,  and  when  any  one 
of  them  is  accepted  and  paid,  all  others  are  extinguished,  even 
against  bona  Ude  purchasers,  so  far  as  the  drawer  is  concerned, 
although  the  payee  is  liable  to  each  person,  to  whom  he  has  trans- 
ferred a  copy  of  the  bill.'*'^  The  drawee  should  accept  only  one 
of  the  copies,  and  pay  the  amount  of  the  bill,  when  the  part 
which  he  has  accepted  is  presented  for  payment.  If  he  accepts 
more  than  one  copy,  he  will  be  liable  to  bona  Ude  purchasers  on 
as  many  copies  on  which  he  has  written  his  acceptance.**  But 
any  copy  may  be  presented  for  acceptance,  and  the  drawee  may 
accept  any  copy. 

"Where  two  or  more  parts  of  a  set  are  negotiated  to  different 
holders  in  due  course,  the  holder  whose  title  first  accrues  is  as 
between  such  holders  the  true  owner  of  the  bill.  But  nothing  in 
this  section  affects  the  rights  of  a  person  who  in  due  course 
accepts  or  pays  the  part  first  presented  to  him."^^ 

"Where  the  holder  of  a  set  indorses  two  or  more  parts  to 
different  persons  he  is  liable  on  every  such  part,  and  every 
indorscr  subsequent  to  him  is  liable  on  the  part  he  has  himself 
indorsed  as  if  such  parts  were  separate  bills. "^^ 

"The  acceptance  may  be  written  on  any  part,  and  it  must  be 
written  on  one  part  only.  If  the  drawee  accepts  more  than  one 
part,  and  such  accepted  parts  are  negotiated  to  different  holders 
in  due  course,  he  is  liable  on  every  such  part  as  if  it  were  a 
separate  bill."^^ 

"When  the  acceptor  of  a  bill  drazvn  in  a  set  pays  it  iiithout 
requiring  the  part  bearing  his  acceptance  to  be  delivered  up  to 

46  Kfeg.  Inst.  Law,  §  178,  where  all  ing    upon    or    citing   the    Law   are 

cases  directly  or  indirectly  bearing  grouped, 

upon  or  citing  the  Law  are  grouped.  ^®  Neg.   Inst.   Law,    §    180,   where 

4''^  Riggin  V.  Collier,  6  Mo.  568;  all  cases  directly  or  indirectly  bear- 
Yale  V.  Ward,  30  Tex.  17.  ing    upon    or    citing   the    Law    are 

48  Wright  V.  McFall,  8  La.  Ann.  grouped. 

120;  Holdsworth  v.  Hunter,  10  B.  ^i  Neg.   I^st.  Law,   §    181,   where 

&  C.  449.  all  cases  directly  or  indirectly  bear- 

49  Neg.  Inst.  Law,  §  179,  where  ing  upon  or  citing  the  Law  are 
all  cases  directly  or  indirectly  bear-  grouped. 


§  60 


FORMAL  AND  ESSENTIAL  REQUISITES. 


71 


him  and  that  part  at  maturity  is  outstanding  in  the  hands  of  a 
holder  in  due  course,  he  is  liable  to  the  holder  thereon."^^ 

"Except  as  herein  otherwise  provided,  where  any  one  part  of 
a  bill  drawn  in  a  set  is  discharged  by  payment  or  otherwise  the 
whole  bill  is  discharged. "^^  _-^-^ 


MNeg.  Inst.  Law,  §  182,  where 
all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped. 


53Neg.  Inst.  Law,  §  183,  where 
all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped. 


,(!:-' 


^^V 


V 


1 


y 


CHAPTER  VII. 
CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

§61.  Meaning  of  term.  §68.  Want  or  failure  of  considera- 

62.  Consideration  in  general.  tion. 

63.  Necessity  of  consideration.  69.  Between    ^hom    question     of 

64.  Presumption  of  consideration.  consideration         may         be 

65.  Sufficiency  of  consideration.  raised. 

66.  Inadequacy  of  consideration.  70.  As  to  accommodation  paper. 

67.  Illegal,   immoral,  and  fraudu- 

lent considerations. 

§  61.  Meaning  of  term.  In  general,  consideration  means  in- 
ducement to  a  contract,  that  is,  the  cause,  motive,  price  or  im- 
pelling influence  which  induces  a  contracting  party  to  enter  into 
a  contract.    It  means  the  reason  or  material  cause  of  a  contract.* 

That  is,  by  consideration  is  meant  a  benefit  or  gain  of  some 
kind  to  the  party  making  the  promise,  or  a  loss,  detriment  or 
injury  of  some  kind  to  the  party  to  whom  the  promise  is  made.* 

§  62.  Consideration  in  general.  The  Negotiable  Instru- 
ments Law  provides : 

"Value  is  any  consideration  sufficient  to  support  a  simple  con- 
tract. An  antecedent  or  pre-existing  debt  constitutes  value;  and 
is  deemed  such  ivhether  the  instrument  is  payable  on  demand  or 
at  a  future  time."^ 

Valuable  consideration  may,  "in  general  terms,  be  said  to  con- 
sist either  in  some  right,  interest,  profit  or  benefit,  accruing  to  the 
party  who  makes  the  contract,  or  some  forbearance,  detriment, 
loss,  responsibility,  or  act,  or  labor,  or  service,  on  the  other  side. 
And,  if  either  of  these  exists,  it  will  furnish  a  sufficient  valuable 

1  Roberts  v.  City  of  New  York,  Dunan,  91  Md.  144,  46  Atl.  347,  50 
5  Abb.   Prac.   41,  49;   Streshley  v.      L.  R.  A.  401. 

Powell,  51  Ky.   (12  B.  Mon.)    178,  3Neg.  Inst.  Law,  §  25,  where  all 

180.  cases  directly  or  indirectly  bearing 

2  Eastman  v.  Miller,  113  la.  404,  upon  or  citing  the  Law  are  grouped. 
85  N.  W.  635 ;   St.  Marks  Church  As  to  antecedent  debt  as  considera- 
V.  Teed,  120  N.  Y.  583,  24  N.  E.  tion,  see  note  1  Am.  St.  Rep.  136. 
1014,    1015;    Chicora    Fert.    Co.   v. 

72 


§  62  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS.  IZ 

consideration  to  sustain  the  making  or  indorsing  of  a  promissory 
note  in  favor  of  the  payee  or  other  holder."* 

So  there  may  be  sufficient  consideration  to  support  a  note, 
although  the  payee  does  not  actually  give  anything  of  value  to 
the  promisor,  it  will  be  sufficient  if  there  is  any  damage  or  detri- 
ment to  the  payee,  although  no  actual  benefit  accrued  to  the 
promisor.'*" 

In  general  a  valuable  consideration  as  applied  to  the  law  of 
commercial  paper  is  any  consideration  sufficient  to  support  a 
simple  contract.  Thus  a  cross  acceptance,^  the  forbearance  of  a 
debt  of  a  third  person,^  the  compromise  of  a  disputed  liability'^ 
or  a  debt  barred  by  the  statute  of  limitations,^  are  held  to  con- 
stitute a  valuable  consideration. 

Where  a  person  has  a  valid  and  subsisting  right  or  interest  in 
property,  a  waiver  or  release  thereof  is  a  sufficient  consideration 
for  a  promissory  note  made  to  such  person.^ 

If  a  claim  is  clearly  illegal  and  unfounded  and  no  proceedings 
have  been  instituted  thereon,  a  note  given  in  settlement  thereof  is 
however  without  consideration.^**  If  there  be  any  reasonable 
doubt  about  the  validity  of  the  claim,  a  compromise  thereof  is  a 
sufficient  consideration  for  a  note,  and  in  an  action  on  such  a 
note  the  invalidity  of  the  claim  compromised  cannot  be  asserted.** 
Ignorance  of  the  maker's  rights  in  respect  to  an  alleged  liability 
will  not  affect  the  validity  of  a  note  given  on  account  of  such 
liability.*^  A  note  given  by  the  treasurer  of  a  corporation  in 
consideration  of  the  discharge  of  a  disputed  claim  against  such 
corporation  is  valid.*'  . 

The  Negotiable  Instruments  Law  provides,  as  above  set  out, 
that  an  antecedent  or  pre-existing  debt  is  a  valuable  considera- 
tion in  support  of  a  bill  or  note  when  the  bill  is  received  in 
absolute  payment  of  the  original  debt,  yet  if  received  for  nothing 

4  Story     on     Promissory     Note,  ^  Sykes  v.  Laferry,  27  Ark.  407; 
§    186;    Currie   v.    Misa,   L.    R.    10      Bradbury  v.  Blake,  25  Me.  397. 
Exch.  153,  162.  lo  Bullock  v.  Ogden,  13  Ala.  346; 

4aAbleman  v.  Haehnel,  57  Ind.  Tucker  v.  Ronk,  43  la.  80;  Fuller 
App.  15,  103  N.  E.  869.  v.  Green,  64  Wis.  159,  24  N.  W.  907, 

5  Backus  V,   Spalding,   116  Mass.      54  Am.  Rep.  600. 

418 ;  Dockray  v.  Dunn,  Z1  Me.  442.  "  Tyson    v.    Woodruff,    108    Ga. 

«  Thompson  v.  Gray,  (yZ  Me.  376 ;  368,  33  S.  E.  981 ;  Keefe  v.  Vogle, 

Harris  v.   Harris,    180   111.    157,   54  36   la.   87;    Easton   v.   Easton,    112 

N.  E.  180.  Mass.  438. 

'"Wyatt   V.    Evins,    52   Ala.   285;  la  Bennett  v.  Ford,  47  Ind.  264; 

Jones  V.   Ritterhouse,  87  Ind.  348;  Daily  v.  Jessup,  72  Mo.  144;  Mory 

Feeter  v.  Weber,  78  N.  Y.  334.  v.  Laird,  108  la.  670,  11  N.  W.  835. 

^Way   V.    Sperry,   6   Cush.   238;  13  National   Bank   v.    Foster,    85 

Giddings  v.  Giddings,  51  Vt.  227.  Hun  Zl^,  32  N.  Y.  S.  1031. 


74  NEGOTIABLE   INSTRUMENTS.  §62 

but  a  conditional  payment,  the  holder's  rights  will  be  determined 
by  a  subsequent  rule  governing  the  bills  taken  as  collateral 
security.  In  some  jurisdictions  as  in  Illinois  the  above  section  of 
the  statute  is  changed  to  read  as  follows:  "An  antecedent  or 
pre-existing  claim,  whether  for  money  or  not,  constitutes  value 
where  an  instrument  is  taken  either  in  satisfaction  therefor  or  as 
security  therefor,  and  is  deemed  such,  whether  the  instrument  is 
payable  on  demand  or  at  a  future  time." 

While  in  some  other  jurisdictions,  as  in  Wisconsin,  the  statute 
provides  that  the  "'antecedent  or  pre-existing  debt"  must  be  dis- 
charged, extinguished  or  extended"  and  adds :  "But  the  indorse- 
ment or  delivery  of  negotiable  paper  as  collateral  security  for  a 
pre-existing  debt,  without  other  consideration,  and  not  in  pur- 
suance of  an  agreement  at  the  time  of  delivery,  by  the  maker, 
does  not  constitute  value."  A  promissory  note  given  by  the 
maker,  in  exchange  for  a  promissory  note  given  by  the  payee,  is 
for  a  valuable  consideration,  and  is  in  no  sense  an  accommoda- 
tion paper,  although  made  for  the  mutual  accommodation  of  the 
parties.^^  A  consideration  founded  on  love  and  affection,  as  that 
naturally  existing  between  husband  and  wife,  father  and  son, 
etc.,  or  upon  gratitude,  is  known  as  a  good  consideration,  as 
distinguished  from  a  valuable  consideration,  and  is  not  of  itself 
sufficient  to  support  the  obligation  of  a  bill  or  note  as  between 
the  original  parties  thereto,^^  and  the  promise  to  pay  an  already 
existing  debt,  or  the  actual  payment  thereof,  is  not  "value"  within 
the  meaning  of  the  above  section  of  the  statute.-*'^* 

A  note  may  be  given  for  services  to  be  rendered,  and  upon 
the  rendition  of  the  services  the  consideration  becomes  complete 
and  will  be  sufficient  to  sustain  the  validity  of  the  note  even  if 
the  services  are  not  equal  in  value  to  the  amount  of  the  note. 
Services  rendered  out  of  kindness,  and  without  expectation  of 
reward,  although  of  value,  are  not  a  sufficient  consideration  to 
support  a  note.*®  But  the  consideration  is  not  affected  by  the 
fact  that  the  services  were  rendered  without  an  express  promise 
to  pay.*'^ 

14  Farber  v.  National  Forge  Co.,  ^^a  Morris  County  Brick  Co.  v. 
140    Ind.   54,    39   N.    E.   249 ;   Wil-      Austin,  79  N.  J.  Law,  273. 

liams  V.  Banks,  11  Md.  198;  Backus  i«  Miller  v.   AIcKenzie,  95  N.  Y. 

V.  Spalding,   116  Mass.  418.  575,  47  Am.  Rep.  85;  Coe  v.  Smith, 

15  Fink  V.  Cox,  18  Johns.  (N.  Y.)  1  Smith  (Ind.)  88;  Mitcherson  v. 
145,  9  Am.  Dec.  191  ;  In  re  Camp-  Dozier,  7  J.  J.  Marsh  (Ky.)  53y 
bell  Estate,  7  Pa.   St.  100,  47  Am.  22  Am.  Dec.  116. 

Dec.    503 ;    Kerns'    Estate,    171    Pa.  ^^  Root  v.  Strang,  77  Hun  14,  28 

St.  55,  33  Atl.  129.  N.  Y.  S.  273 ;  Gramwell  v.  Mosley. 

11  Gray  173. 


§  62  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS.  75 

An.  agreement  to  marry,  which  is  afterward  fulfilled,  is  a  suf- 
ficient consideration  for  a  note  made  by  the  intended  husband  ;** 
and  notes  given  for  establishing  such  public  institutions  as 
churches,  schools  and  hospitals,  are  supported  by  a  sufficient  con- 
sideration.*'^* So  when  a  number  of  persons  subscribe  an  instru- 
ment, whereby  they  agree  to  pay  certain  sums  of  money,  severally, 
to  be  expended  in  the  erection  of  a  college  building,  their  mutual 
promises  constitute  a  sufficient  consideration  for  the  promise  of 
each.*^''  And  it  has  been  held  that  while  notes  which  are  given 
by  one  or  more  persons  to  any  corporation  or  other  legal  person, 
or  any  trustees  by  way  of  voluntary  subscription,  to  raise  a  fund 
to  promote  an  object,  may  be  open  to  the  defense  of  want  of 
consideration,  yet  the  instruments  are  enforceable^ if  it  appears 
that  the  donee  has,  prior  to  any  revocation,  entered  into  engage- 
ments or  made  expenditures  based  on  such  promises,  so  that  he 
must  suffer  loss  or  injury  if  the  note  is  not  paid.*®" 

Cross-notes,  bills  or  checks  are  good  consideration  for  each 
other;  such  are  given  for  the  mutual  accommodation  of  the 
parties  thereto,  or  of  one  of  them,  in  which  the  maker  and  payee 
of  one  are  respectively  the  payee  and  maker  of  the  other,  and  a 
similar  relationship  exists  as  between  acceptors  of  cross-bills  of 
exchange  or  the  makers  of  cross-checks.**'' 

An  agreement  or  promise  to  make  a  gift  in  the  future,  not 
being  based  upon  a  valuable  consideration,  is  not  enforceable, 
even  when  put  in  the  form  of  a  promissory  note  ;  ***  thus  gift  notes 
are  not  supported  by  sufficient  consideration ;  the  donor's  own 
note  or  bill  of  exchange  is  not  a  good  subject  or  gift  either  infer 
invos  or  causa  mortis.  Such  a  gift  is  but  a  promise  to  pay  a  sum 
certain  at  a  future  day  and  cannot  be  enforced  either  at  law  or  in 
equity.*®*  A  mere  moral  obligation  is  not  a  sufficient  considera- 
tion to  support  a  promissory  note  between  the  parties  to  such 
obligation.^"  Forbearance  to  prosecute  a  legal  claim  is  a  suffi- 
cient consideration  to  support  a  promissory  note.^* 

IS  Wright   V.    Wright,    54   N.    Y.  *s«'  American    National    Bank    v. 

437;    Prescott   v.    Ward,    10    Allen  Patterson,  145  La.  — ,  82  So.  218,  7 

(Mass.)   203;  Blanshaw  v.  Russell,  A.  L.  R.  1563. 

52  N.  Y.  S.  963.  See  note  in  7  A.  L.  R.   1563,  at 

*8a  Johnston  v.  The  Wabash  Col-  p.  1569. 

lege,  2  Ind.  555.  19  Williams    v.    Forbes,    114    111. 

IS"  Higcot  V.  The  Trustees  of  In-  167,    28    N.    E.    463 ;    Johnston    v. 

diana    Asbury    Universitv,    53    Ind.  Griest,    85    Ind.    503 ;    Ricketts    v. 

326.                                     '  Scothcrn,  57  Neb.  51,  77  N.  W.  365. 

Note  in  52  L.  R.  A.  (N.  S.)  220.  i»a  Harmon  v.  James,  7  Ind.  263. 

*^"'  Beatty's     Estate     v.     Western  -**  Nightingale    v.    Barney,    4    G. 

College    of    Toledo,    Iowa,    177    III.  Greene   Cla.)    106;  Nash  v.  Russell, 

280.  52  N.  E.  432,  69  A.  S.  R.  242,  5  Barb.  (N.  Y.)  556. 

42  L.  R.  A.  797.  21  Anstell  v.  Rice,  5  Ga.  472 ;  Jen- 


76  .  NEGOTIABLE    INSTRUMENTS.  §  62 

Receiving  a  bill  or  note  as  security  for  a  debt^^  or  forbearance 
to  sue  upon  a  present  claim  or  debt,^^  or  the  dismissal  of  a  pend- 
ing suit,*'*  or  the  surrender  of  a  prior  valid  note,*'^  or  becoming 
a  surety,**  or  giving  an  extension  of  time  to  an  imputed  debtor,*'^ 
or  doing  any  act  at  the  request  of  the  drawer,  indorser,  or  ac- 
ceptor, will  be  sufficient  consideration  for  a  bill  or  note.  An 
extension  of  time  upon  an  indebtedness  is  sufficient  consideration 
for  a  promissory  note  given  as  collateral  therefor.** 

A  fluctuating  balance  may  form  a  consideration  for  a  bill  or 
note.***  As  where  bills  or  notes  are  deposited  as  a  security  for 
the  balance  of  an  account  current,  the  successive  balances  form 
a  shifting  consideration  for  the  bill  or  note.^"  But  where  the 
account  has  been  settled  or  transferred  prior  to  the  execution  of 
the  note,  the  consideration  of  course  fails,  and  the  note  is  in- 
valid.^^  ; 

The  Negotiable  Instruments  Law  provides: 

"Where  the  holder  has  a  lien  on  the  instrument,  arising  either 
from  contract  or  by  implication  of  law,  he  is  deemed  a  holder 
for  value  to  the  extent  of  his  lien.^^* 

One  who  has  taken  a  negotiable  instrument  as  collateral 
security  has  a  lien  upon  it  and  is  within  the  terms  of  the  last 
named  section  of  the  statute.^" 

The  holder  of  collateral  security,  that  is,  the  pledgee  is,  in 
general,  entitled  to  recover  the  full  amount  due  on  the  instru- 
ment, with  liability  to  account  for  the  surpl.us  to  the  pledgor,'^" 

nison  v.  Stafford,  1  Cush.   (Mass.)  Burton,  64  Vt.  387,  24  Atl.  769,  16 

168,  48  Am.  Dec.  55  ;  Lavell  v.  Frost,  L.    R.   A.   664 ;    Whelan    v.    Swain, 

16  Mont.  93,  40  Pac.  146.  132  Cal.  389,  64  Pac.  560. 

23  Youngs  V.  Lee,  12  N.  Y.  551 ;  28  Ballard  v.  Burton,  64  Vt.  387, 
Bank  of  Rochester  v.  Bentley,  27  24  Atl.  769,  16  L.  R.  A.  664 ;  Brain- 
Minn.  87,  6  N.  W.  422;  Allaire  v.  ard  v.  Harris,  14  Ohio  107,  45  Am. 
Hartshorne,  21  N.  J.  L.  665.  Dec.  525. 

23  Worcester  Nat.  Bank  v.  Chee-  29  Perse    v.    Hirst,    10    B.    &    C. 

nev,  87  111.  602.  (Eng.)    122;  Richards  v.  Macv,  14 

24Wyatt  V.   Evins,   52   Ala.  285;  M.  &  W.  (Eng.)  484. 

Brown    v.    Ladd,    144    Mass.    310;  softwood   v.    Crowdie,    1    StarE 

10     N.     E.     839;     Spielberger     v.  (Eng.)   483. 

Thompson,  131  Cal.  55.  63  Pac.  132.  31  Johnson   v.   Mitchell,   14  Colo. 

25  Youngs  V.  Lee,  12  N.  Y.  551;  227,  23  Pac.  452;  First  Nat.  Bank 
Stevens  v.  Campbell,  13  Wis.  375 ;  v.  Henry,  156  Ind.  1,  58  N.  E.  1057. 
Bank  of  Rochester  v.  Bentley,  27  3ia  jsj^g  1^5^  l^j^^  §  27  and  cases 
Minn.  87,  6  N.  W.  422;  Whelan  v.  cited. 

Swain,  132  Cal.  389,  64  Pac.  560.  3ib  Bruster  v.    Shrader,  26  Misc. 

26  Harrell  v.  Tenant,  30  Ark.  684 ;  Rep.  (N.  Y.)  480;  Wilkins  v.  Usher, 
Pauly   V.    Murray,    110   Cal.    13,   42       133  Ky.  696. 

Pac.  313;  Gay  v.  Mott,  43  Ga.  252.  SicCamden     National     Bank     v. 

27  Brainerd    v.    Harris,    14    Ohio      Fries-Breslin  Co.,  214  Pa.  St.  395. 
107,  45  Am.  Dec.  525;  Ballard  v. 


§  63  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS.  71 

but  if  the  pledgor  could  not  recover  upon  the  instrument,  then 
the  extent  of  the  recovery  will  be  limited  to  the  amount  of  the 
debt  due  to  the  pledgee;  and  even  though  the  principal  obliga- 
tion is  not  due  at  the  time  of  bringing  suit  on  the  collateral, 
the  pledgee  has  a  right  to  enforce  the  collection  of  the  col- 
latteral.3" 

§  63.  The  necessity  of  consideration.  By  the  common  law  a 
promise  made  without  consideration  was  invalid,  and  in  order  to 
enforce  any  contract,  it  was  necessary  to  aver  and  prove  a  con- 
sideration. 

The  most  ancient  exception  to  this  rule  was  made  in  reference 
to  a  promise  under  seal,  the  solemn  act  of  the  party  in  attaching 
a  seal  to  the  evidence  of  his  contract  being  regarded  as  importing 
or  excusing  a  consideration  and  estopping  him  from  denying  it. 
The  necessities  of  trade  soon  produced  another  relaxation  of 
the  rule ;  and  by  the  usage  and  custom  of  merchants,  bills  of 
exchange  and  promissory  notes  came  to  be  regarded  as  prima 
facie  evidence  of  consideration :  and  peculiar  qualities  were  ac- 
corded to  them  which  were  possessed  by  no  other  securities  for 
debt. 

It  is  presumed  that  every  negotiable  instrument  was  given 
upon  a  valuable  consideration,  and  words  acknowledging  receipt 
of  consideration  are  not  essential  to  the  validity  of  the  paper. 

If  the  instrument  sued  on  is  negotiable,  it  is  unnecessary  to 
aver  or  prove  consideration,  for  it  is  imported  and  presumed  from 
the  fact  that  it  is  a  negotiable  instrument.*^  But  if  the  paper 
does  not  possess  the  quality  of  negotiability,  it  does  not,  per  se, 
import  a  consideration,**  and  it  must  be  averred  and  proved 
unless  it  be  stated  on  its  face  that  it  was  given  for  "value  re- 
ceived," or  contains  some  other  equivalent  expression,  in  which 
case  it  would  be  prima  facie  evidence  of  consideration.*'* 

As  between  the  immediate  parties  to  a  negotiable  instrument, 
an  actual,  valid  and  valuable  consideration  cannot  be  dispensed 
with.**^    In  such  case  the  presumption  as  to  the  validity  and  value 

sid  Elk  Valley  Coal  Co.  v.  Third  ^*  Conrad   Seipp  Brewing  Co.  v. 

Nat.  Bank,  157  Ky.  617.  McKittrick,  86  Mich.  191,  48  N.  W. 

32  Germania  Bank  v.  Michaud,  62  1086 ;  Averett  v.  Brooker,  15  Gratt. 

Minn.  459,  65  N.  W.  70,  54  Am.  Sf  163,    76    Am.    Dec.    203 ;    Cowee    v. 

Rep.  653,  30  L.  R.  A.  286;  Adams  Cornell,  75  N.  Y.  91,  31  Am.  Rep. 


V.  HackeU,  27  N.  H.  289,  59  Am 
Dec.  376;  Perot  V.  Cooper,  17  Colo 
80,  28  Pac.  391,  31  Am.  St.  Rep.  258 
*3  Bristol  V.  Warner,  19  Conn.  7 
Siddle  V.  Anderson,  45  Pa.  St.  464;  ran,  55  Pa.  St.  59 
Averett  v.  Booker,  15  Gratt.  (Va.) 
163,  76  Am.  Dec.  203. 


428;  Rowland  v.  Harris,  55  Ga.  141. 

ssCatlin  v.  Home,  34  Ark.  169; 

Roberts  v.  Million,  17  Kv.  L.  Rep. 

599,  32  S.  W.  320:  Hildeburn  v.  Cur- 


78  NEGOTIABLE   INSTRUMENTS.  '  §  64 

of  the  consideration  only  affects  the  proof ;  the  burden  of  proof 
being  thereby  shifted  from  the  person  to  whom  the  instrument 
is  payable  to  the  person  who  is  liable  thereon.^^  In  seeking  to 
recover  on  a  simple  contract,  it  is  a  general  rule  that  the  plain- 
tiff must  allege  and  prove  that  the  contract  was  made  on  a  valu- 
able consideration.  But  to  this  rule  commercial  paper  is  an 
exception.  It  would  seem  then  that  as  between  a  promisor  and 
a  promisee  of  a  promissory  note,  or  the  drawer  and  drawee  of  a 
bill  of  exchange,  a  lack  of  legal  consideration  would  be  a  good 
defense  in  an  action  on  such  note  or  bill.^''  As  between  imme- 
diate parties,  the  ordinary  rules  of  contracts  as  to  consideration 
prevail,  such  as  that  the  consideration  must  be  valuable^*  as  dis- 
tinguished from  merely  good,^''*  that  it  need  not  be  entirely 
adequate,***  and  that  it  must  not  be  illegal.** 

§  64.  Presumption  of  consideration.  Bills  of  exchange  and 
promissory  notes  like  simple  contracts  under  seal  or  executed 
pursuant  to  a  statute,  import  a  consideration.*^  The  presump- 
tion of  a  consideration  is  of  much  importance  in  business  trans- 
actions, and  should  not  be  lightly  disregarded  in  favor  of  those 
who  have  carelessly,  or  by  being  unduly  confiding,  set  afloat  com- 
mercial paper.*^^  There  are  some  decisions  which  hold  that  a  non- 
negotiable  instrument  does  not  import  a  consideration  unless  it 
is  so  declared  by  statute.*^  Some  other  decisions  hold  that  a 
non-negotiable  instrument  also  imports  a  consideration.** 

3«  Stevens     v.     McLachlan,     120  denhack,  48  Ohio  St.  177,  26  N.  E. 

Mich.  285,  79  Am.  Dec.  627 ;  New-  979,  29  Am.  St.  Rep.  540. 

ton  V.  Newton,  11  Tex.  508,  14  S.  *!  Ketchum   v.    Scribner,   1    Root 

W.    157;    Dalrymple   v.    Wyker,   60  (Conn.)    95;   Parsons  v.  Randolph, 

Ohio  St.   108,  53  N.  E.  713;   Perot  21  Mo.  App.  353;  Brisbane  v.  Les- 

V.  Cooper,  17  Colo.  80,  28  Pac.  391,  tarjette,  1  Bay  (S.  C.)   113. 

31  Am.  St.  Rep.  258.  *2  Brown   v.   Johnson   Bros.,    135 

37  Fisher  v.  Salmon,  1  Cal.  413.  Ala.  608,  Z2>  So.  683;  Byrd  v.  Ber- 
54  Am.  Dec.  297;  Kelley  v.  Guy,  116  trand,  7  Ark.  32;  Fuller  v.  Hutch- 
Mich.  43,  74  N.  W.  291;  Williams  ins,  10  Cal.  523.  70  Am.  Dec.  746; 
V.  Culver,  30  Oreg.  375,  48  Pac.  365.  Carnwright  v.  Gray,  127  N.  Y.  92, 

38  Irwin  V.  Lombard  Uni.,  56  27  N.  E.  835,  24  Am.  St.  Rep.  424. 
Ohio  St.  9,  36  L.  R.  A.  239,  60  Am.  12  L.  R.  A.  845.  See  note  5  U.  S.  L. 
St.  Rep.  239,  46  N.  E.  63 ;  Holt  v.  Ed.  87. 

Robinson,   21    Ala.    106 ;    Currie   v.  42a  Lassas    v.    McCarty,    47    Ore. 

Misa,  L.  R.  10  Exch.  153.  474. 

3»  Pierce  v.  Walton,  20  Ind.  App.  "^3  Tibbets  v.  Thatcher,  14  Ind.  86. 

66,  53  N.  E.  309 ;  Potter  v.  Grade,  **  Carnwright  v.  Gray,  127  N.  Y. 

58  Ala.  313,  29  Am.  Rep.  748.  92,  27  N.  E.  835,  24  Am.  St.  Rep. 

40Cowee  v.  Cornell.  75  N.  Y.  91,  424,    12    L.    R.    A.    845;    Caples    v. 

31  Am.  Rep.  428 :  Whcelock  v.  Bar-  Branham,  20  Mo.  244.  64  Am.  Dec. 

ney,  27  Ind.  462 ;  Kitchen  v.  Lou-  183 ;  Arnold  v.  Sprague,  34  Vt.  402. 


§  65  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS.  79 

In  those  jurisdictions  where  it  has  been  held  that  these  instru- 
ments import  a  consideration  it  is  unnecessary  to  use  the  words 
"Value  received."'*®  These  words  are  surplusage  and  their  omis- 
sion does  not  in  any  way  affect  the  legal  import  of  the  paper,  or 
weaken  the  presumption  that  it  was  given  for  value.^®*  But  in 
case  of  a  non-negotiable  instrument,  they  are  important,  for  they 
amount  to  a  prima  facie  admission  that  the  instrument  was  issued 
for  a  sufficient  consideration.'**"  If  these  words  are  included  in 
the  bill  or  note,  the  maker's  or  other  person's  right  to  defend  on 
the  ground  of  want  of,  failure  of,  or  illegality  of  consideration  is 
not  affected.'** 

"Every  negotiable  instrument  is  deemed  prima  facie  to  have 
been  issued  for  a  valuable  consideration:  and  every  person  whose 
signature  appears  thereon  to  have  become  a  party  thereto  for 
valuer'''^ 

§  65.  Sufficiency  of  consideration.  Any  act  of  the  maker 
from  which  the  acceptor  derives  a  benefit  or  from  which  the 
maker  may  sustain  any  detriment  or  inconvenience,  is  a  sufficient 
consideration  to  support  a  promise.'**  If  there  is  no  fraud  in  the 
transaction  the  fact  that  the  consideration  is  not  equal  to  the 
obligation  incurred  is  no  defense.***  In  such  case  if  the  consid- 
eration is  not  wanting  at  the  time  the  obligation  is  incurred  and 
does  not  fail  in  any  part  thereof  afterwards,  it  is  sufficient.  If 
that  which  was  given  as  a  consideration  for  a  promissory  note  is 
worthless  it  has  been  held  that  the  maker  cannot  avail  himself  of 
it  as  a  defense.'*®  But  if  the  worthlessness  of  the  thing  given 
in  consideration  for  the  note  consists  in  a  defect  of  title  it  may 
be  used  as  a  defense.'^ 

§  66.  Inadequacy  of  consideration.  It  is  not  necessary  that 
the  consideration  should  be  adequate  to  the  obligation  incurred 

45  Salazar  v.  Taylor,  18  Colo.  538,  49  Miller  v.  McKcnzie,  95  N.  Y. 

2)2,  Pac.  369;   Stacker  v.   Hewitt,  2  575;    47    Am.    Rep.    85;    Boggs    v. 

111.  207.  Wann,     58     Fed.     681;     Root     v. 

45aMcLeod   V.   Hunter,  29  Misc.  Strange,   77  Hun   14,   28   N.   Y.   S. 

(N.  Y.)  559.  273,  59  N.  Y.   St.  258;   Kitchen  v. 

^^  Owen  V.  Blackburn,  161  App.  Loudenback,    48    Ohio    St.    177,   26 

Div.    (N.    Y.)    827;    DuBosque    v.  N.  E.  979,  29  Am.  St.  Rep.  540. 
Munroe.  169  App.  Div.  (N.  Y.)  821.  50  Bryant  v.  Pember,  45  Vt.  487; 

46Bruyn  v    Russell,  60  Hun  290,  Lester  v.   Webb,   5  Allen    (Mass.> 

14  N.  Y.  S.  591;  Perley  v.  Perley,  45;  Ried  v.  Prentiss,  1  N.  H.  174, 

144  Mass.  104,  10  N.  E.  726.  8  Am.  Dec.  50. 

47  Neg.  Inst.  Law,  §  24,  and  cases  51  Prjsbie  v.  Hoffnagle,  11  Johns, 
there  cited.  (N.  Y.)   50;  Crawford  v.  Beard,  4 

48  Holt  V.  Robinson,  21  Ala.  106,  J.  J.  Marsh.  (Ky.)  187;  Scudder 
56  Am.  Dec.  240;  Holley  v.  Adams,  v.  Andrews,  2  McLean  (U.  S.)  464, 
16  Vt.  206,  42  Am.  Dec.  508.  21  Fed.  Cas.  No.  12,564. 


80  NEGOTIABLE    INSTRUMENTS.  §  67 

in  order  that  the  parties  may  be  bound.^^  The  only  essential 
element  in  this  respect  is  that  the  consideration  must  be  a  valuable 
one.^*  Thus  in  an  action  upon  a  promissory  note  given  as  the 
price  of  real  or  personal  property,  it  will  not  avail  as  a  defense 
to  the  note  that  the  property  conveyed  was  inadequate  for  the 
amount  of  the  note.'^^  The  mere  fact  that  a  bargain  is  hard  and 
unreasonable  will  not  induce  even  a  court  of  equity  to  interfere. 
The  law  presumes  that  a  man  is  capable  of  managing  his  own 
affairs  and  the  fact  as  to  whether  or  not  his  bargains  are  wise 
or  unwise  is  not  a  proper  question  for  either  a  legal  or  equitable 
tribunal.  While  inadequacy  of  consideration  is  not  of  itself  a 
sufficient  ground  for  either  legal  or  equitable  relief  yet  it  may 
be  shown  as  evidence  of  fraud.  Ordinarily  the  mere  fact  of  in- 
adequacy of  consideration  has  very  little  weight,  when  standing 
alone,  but  coupled  with  other  elements  tending  to  show  fraud  it 
becomes  a  very  material  factor  of  constructive  fraud.'^^ 

It  has  been  generally  held  that  a  note  for  a  patent  right  which 
is  of  no  value,  either  because  it  is  useless  or  because  the  patent  is 
void,  is  without  consideration  and  therefore  not  enforceable.'** 
The  fact  that  the  vendor  believed,  at  the  time  of  the  sale,  that 
the  patent  was  valid  is  not  material.^'^  It  should  be  noticed,  in 
this  connection,  that  an  invention  which  is  not  useful  cannot  be 
patented,  and  therefore  a  patent  for  a  useless  invention  is  void. 
If  an  invention  is  useful,  in  the  sense  that  it  may  be  applied  to 
some  practical  or  beneficial  purpose,  it  is  patentable,  and  the  de- 
gree of  its  utility  or  practical  value  does  not  affect  the  validity  of 
the  patent.  If  there  is  a  valid  patent,  in  this  sense,  the  court 
will  not  inquire  into  the  adequacy  of  the  consideration.^^ 

§  67.  Illegal,  immoral  and  fraudulent  consideration.  Where 
the  consideration  is  illegal  in  whole  or  in  part  it  is  a  defense 
against  the  entire  note  while  in  the  hands  of  an  immediate  party 
or  one  who  is  not  a  bona  fide  holder  for  value  without  notice. 

52Anstell    V.    Rice.    5    Ga.    472;  S.  E.  799;  Green  v.  Lowry,  38  Ga. 

Boggs  V.  Wann,  58  Fed.  681 ;  Cowee  548;  Abbe  v.  Newton,  19  Conn.  20. 

V.  Cornell,  75  N.  Y.  91,  31  Am.  Rep.  ^Gjilson  v.  Catling,  60  Ark.  114, 

428.  29  S.  W.  35;  Mooklar  v.  Lewis,  40 

53  Holt  V.  Robinson,  21  Ala.  106,  Ind.  1 ;  Rowe  v.  Blanchard,  18  Wis. 

56  Am.  Dec.  240;  Holley  v.  Adams,  441,  86  Am.  Dec.  783. 

16  Vt.  206,  42  Am.  Dec.  508.  57  Lester     v.     Palmer,     4     Allen 

54 Johnson   V.   Titus,   2    Hill    (N.  (Mass.)   145. 

Y.)    606;    Barnum    v.    Barnum,    8  58  Nash  v.  Lull,  102  Mass.  60,  3 

Conn.  469,  21  Am.  Dec.  689 ;  Perley  Am.  Rep.  435 ;  Hil^reth  v.  Turner, 

V.  Balch,  23  Pick.   (Mass.)  283,  34  17    m.    184;    Harmon    v.    Bird,    22 

Am.  Dec.  56.  Wend.  (N.  Y.)   113. 

55  Jones  V.  Degge,  84  Va.  685,  5 


§  68  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS.  81 

Common  law  considerations  are  illegal  which  ( 1 )  violate  the  rules 
of  religion  or  morality,  or  (2)  are  such  as  contravene  public 
policy.'*'*'  Many  acts  in  themselves  immoral  are  made  by  statute 
illegal  considerations  for  the  support  of  commercial  paper.  A 
note  given  for  future  illicit  cohabitation  is  invalid,*®  although  if 
it  be  given  in  consideration  of  past  cohabitation  it  is  enforce- 
able.®^ A  note  by  a  husband  to  his  wife,  upon  the  promise  of  the 
wife  to  withdraw  all  opposition  to  proceedings  for  divorce  insti- 
tuted by  him,  is  founded  upon  an  illegal  consideration.®^ 

A  distinction  is  to  be  made  between  a  consideration  simply 
illegal  and  one  which  by  statute  expressly  makes  the  bill  void. 
In  the  former  case  a  bona  Ude  transferee  may  recover,  though 
not  in  the  latter.®* 

When  the  consideration  for  commercial  paper  is  clearly  fraudu- 
lent it  is  a  good  defense  against  an  immediate  party  or  a  remote 
party  unless  he  is  an  innocent  holder  for  value.®"*  If  the  instru- 
ment is  yet  in  the  hands  of  a  party  with  notice  a  court  of  law 
will  compel  its  surrender,  or  restrain  its  negotiation  until  the 
question  of  fraud  is  settled.** 

§  68,  Want  or  failure  of  consideration.  Want  or  failure  of 
consideration  is  only  a  defense  as  against  an  immediate  party  or 
as  against  a  remote  party  who  is  not  a  holder  for  value.®®  It  is 
not  a  defense  against  a  remote  holder  for  value. 

As  between  the  original  parties  to  a  bill  or  note  want  of  con- 
sideration then  is  a  good  defense,  and  this  is  so  although  the 
words  *'for  value  received"  are  contained  in  the  instrument.®'' 
This  want  of  consideration  may  be  total  or  partial ;  in  the  former 
case  it  affects  the  entire  validity  pro  fanto.^^     So  also  a  failure 

59  Scott  V.   Magloughlin,   133   111.  ^^  Angier  v.  Brewster,  69  Ga.  362 ; 

33,    24    N.    E.    1030;    Hamilton    v.  Hickson  v.  Early,  62  S.  C.  42,  39  S. 

Scull,  25  Mo.  165,  69  .\m.  Dec.  460;  E.  782;  Von  Windisch  v.  Klaus,  46 

Powell  V.  Inman,  52  N.  C.  28.  Conn.  433. 

«OMassey   v.    Wallace,   32    S.    C.  «5Zeigler  v.  Beasley,  44  Ga.  56; 

149,  10  S.  E.  937 ;  Potter  v.  Gracie,  Moeckly  v.   Gorton,  78  la.  202,  42 

58  Ala.  303,  29  Am.  Rep.  748.  N.  W.  648;  Streissguth  v.  Kroll,  86 

61  Brown  v.  Kinsey,  81  N.  C.  245;  Minn.  325,  90  N.  VV.  577;  King  v. 

People  V.  Hayes,  140  N.  Y.  484,  35  Baker,  1  Yerg.  450. 

N.  E.  951.  e«Whitt  v.   Blount,   124  Ga.  671, 

«2  Sayles  v.  Sayles.  21  N.  H.  312,  53  S.   E.  205 ;   Homer  v.  Johnston, 

53  Am.  Dec.  208;  Bend  v.  Bend,  65  5  Miss.    (6  How.)    698;    Fellers   v. 

Cal.  354,  4  Pac.  229.  Penrod,  57  Neb.  463,  77  N.  W.  1085. 

«3  Wheeler   v.    Russell,   17   Mass.  67  Morton  v.  Stone,  67  N.  H.  367, 

258;  Vanmeter  v.  Spurrier,  94  Ky.  29  Atl.  845. 

22,    21    S.    W.    337 ;    Whitman    v.  6S  r^ss  Lumber  Co.  v.  Muscupi- 

Freese,  23  Me.  185.  abe  L.  &  W.  Co.,  120  Cal.  521,  52 


82  NEGOTIABLE    INSTRUMENTS.  §    69 

of  consideration  is,  in  most  jurisdictions,  deemed  a  valid  defense 
in  an  action  on  a  note  or  bill.  But  there  is  more  difficulty  as  to 
a  partial  failure  of  consideration ;  in  such  a  case  the  rule  seems 
to  be  that  unless  the  facts  are  such  that  the  amount  to  be  de- 
ducted because  of  the  partial  failure  can  be  definitely  computed, 
or  unless  the  amount  is  liquidated  or  in  the  nature  of  a  certain 
debt,  such  partial  failure  of  consideration  will  constitute  no  de- 
fense.®**  There  are  many  jurisdictions,  however,  where  a  par^ 
tial  failure  of  consideration  is  permitted  as  a  valid  defense,  al- 
though the  amount  be  unliquidated,''**  and  in  some  jurisdictions 
such  partial  failure  is  declared  a  defense  by  statute.'^-^ 

"Absence  or  failure  of  consideration  is  matter  of  defense  as 
against  any  person  not  a  holder  in  due  course;  and  partial  failure 
of  consideration  is  d  defense  pro  tanto,  whether  the  failure  ts  an 
ascertained  and  liquidated  amount  or  otherwise.'"''^ 

So  under  the  express  terms  of  the  above  section  of  the  statute 
failure  of  consideration  is  not  a  defense  as  against  a  bona  fide 
holder  for  value  but  as  against  any  person  not  a  holder  In  due 
course  the  question  of  consideration  is  always  open  even  though 
the  instrument  itself  is  prima  facie  evidence  of  the  considera- 
tion.''^* 

§  69.     BetrtA^een   v^^hom   question   of   consideration   may   be 

raised.  As  a  general  rule  the  want  or  failure  of  consideration 
can  only  be  raised  as  between  the  immediate  parties.'^^  This 
question  may  also  be  raised  against  any  purchaser  of  the  instru- 
ment who  takes  it  with  notice  of  such  want  or  failure  of  the  con- 
sideration,'"'* unless  he  acquires  title  from  a  bona  Me  purchaser 
for  value.  In  the  case  of  the  indorsement  of  an  instrument  the 
question  of  consideration  for  the  indorsement  may  be  raised  as 

Pac.    995,    65    Am.    St.    Rep.    186 ;  ^2  Neg.  Inst.  Law,  §  28,  and  cases 

Journal  Printing  Co.  v.  Maxwell,  1  there  cited. 

Pennew.    (Del.)    511,   43   Atl.   615;  72a -patum    v.    Commercial    Bank, 

Wadsworth     v.     Smith,     10     Shep.  185   Ala.   249;    Anthony   v.    Valen- 

(Me.)    500;    Brown   v.   Roberts,   90  tine,  130  Mass.  119. 

Minn.  314,  96  N.  W.  793.  73  Wynne  v.  Whisenant.  27  Ala. 

6»  Pulsifer  V.  Hotchkiss,  12  Conn.  \6 ;  Risley  v.   Gray,  98  Cal.  40,  32 

234;    Allen    v.    Bank    of   U.    S.,   20  Pac.  884;  Storm  Lake  etc.  Bank  v. 

N.  J.  L.  620;  Lloyd  v.  Jewell,  1  Me.  Felt,   100  la.  680,  69  N.   W.   1057; 

352,  10  Am.  Dec.  7Z.  Fitch  v.  Redding,  4  Sandf.  (N.  Y.) 

70Wentworth  v.  Dows,  117  Mass.  130. 

14.  ''4JJUSS  Lumber  etc.  Co.  v.  Mus- 

71  Schuchman  v.   Knoebel,  27  111.  rupiabe  Land  etc.  Co.,  120  Cal.  521, 

175;  Webster  v.  Parker,     Ind.  185;  52  Pac.  995,  65  Am.  St.  Rep.   186; 

Martin   v.   Iron   Works,   Fed.   Cas.  Skinner  v.   Raynor,  95   la.   536,  64 

No.  9,157.  N.  W.  601 ;  Hale  v.  Aldafifer,  5  Kan. 

App.  40,  5  Pac.  194. 


§  70  CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS.  83 

between  the  indorser  and  indorsee.''^  In  a  bill  of  exchange  the 
want  or  failure  of  consideration  may  be  shown  in  an  action 
brought  by  the  payee  against  the  drawer,  by  the  indorsee  against 
the  payee,  or  by  the  drawer  against  the  acceptor,  but  not  in  an 
action  between  the  payee  and  acceptor^* 

The  Negotiable   Instruments   Law   states: 

"Where  value  has  at  any  time  been  given  for  the  instrument, 
the  holder  is  deemed  a  holder  for  value  in  respect  to  all  parties 
who  became  such  prior  to  that  time.'"^^^ 

§  70.  As  to  accommodation  paper.  The  following  provision 
is  found  in  the  Negotiable  Instruments  Law: 

"An  accommodation  party  is  one  zvho  has  signed  the  instru- 
ment as  maker,  drawer,  acceptor  or  indorser,  without  receiving 
value  therefor,  and  for  the  purpose  of  lending  his  name  to  some 
other  person.  Such  a  person  is  liable  on  the  instrument  to  a 
holder  for  value  notunthstanding  such  holder  at  the  time  of  taking 
the  instrument  knew  him  to  be  only  an  accommodation  party/"''' 

The  mercantile  credit  of  parties  is  frequently  loaned  to  others 
by  the  signature  of  their  names  as  drawer,  acceptor,  maker,  or 
indorser  of  a  bill  or  note,  to  raise  money  upon,  or  to  use  otherwise 
for  their  benefit.''^  Such  instruments  are  termed  accommodation 
paper.  An  accommodation  bill  or  note,  then,  is  one  to  which  the 
accommodation  party  has  put  his  name,  without  consideration, 
for  the  purpose  of  accommodating  some  other  party  who  is  to 
use  it,  and  is  expected  to  pay  it.'"'*  Between  the  accommodating 
and  accommodated  parties,  the  consideration  may  be  shown  to  be 
wanting,  but  when  the  instrument  has  passed  into  the  hands  of  a 
third  party  for  value,  and  in  the  usual  course  of  business,  it 
cannot  be.  But  if  the  holder  has  notice  of  defenses,  the  accom- 
modation party  may  set  up  any  defense  which  would  avail  the 
party  accommodated,  as  to  set  ofif  a  debt  due  from  the  holder 
to  the  party  accommodated.     Until  an  accommodation  bill  has 

■^5  Shanklin   v.    Cooper,   8   Blkfd.  cases  directly  or  indirectly  bearing 

(Ind.)    41 ;    Larrabee  v.    Fairbanks,  upon  or  citing  the  Law  are  grouped. 

24  Me.  363,  41  Am.  Dec.  389 ;  Mar-  ^8  Dunn   v.   Weston,   71    Me.  270 

tin    V.    Kercheval,   4    McLean    (U.  36  Am.  Rep.  310;  Lenheim  v.  Wil- 

S.)  117,  16  Fed.  Cas.  No.  9,163.  marding,  55  Pa.  St.  73.     As  to  na- 

''6  Hoffman   v.   Bank  of   Milwau-  ture  of  contract  on  accommodation 

kee,   12  Wall.    191  ;   Hunt  v.  John-  paper,    see    note    31    Am.    St.    Rep. 

ston,  96  Ala.  130,  11  So.  387;  Mer-  745. 

rill  V.  Packer,  80  la.  543,  45  N.  W.  ''ttjeffeson  Co.  v.  Burlington  etc. 

1076.  Ry.  Co.,  66  la.  385,  16  N.  W.  561 ; 

76a  jsjeg   jnst.  Law,  §  26  and  cases  Oilman   v.   Henry,   53   Wis.  465,   10 

there  cited.  N.  W.  692 ;  Vitkovitch  v.  Kleinecke, 

"  Neg.  Inst,  Law,  §  29,  where  all  33  Tex.  Civ.  App.  20,  75  S.  W.  544. 


84  NEGOTIABLE    INSTRUMENTS.  §  70 

been  negotiated  the  accommodation  party  may  rescind  his  obliga- 
tion and  demand  the  recall  of  the  instrument  or  the  cancellation 
of  his  signature.  The  consideration  given  by  a  holder  for  value 
of  accommodation  paper  makes  the  paper  enforceable  against  all 
parties  to  it,  and  in  some  jurisdictions  this  is  true  even  where  the 
paper  has  been  negotiated  after  due.^'* 

It  is  a  well  established  rule  that  a  promissory  note  given  by 
the  maker,  in  exchange  for  a  promissory  note  given  by  the  payee, 
is  for  a  valuable  consideration,  and  is  in  no  sense  an  accommoda- 
tion paper,  although  made  for  the  mutual  accommodation  of  the 
parties.*^  And  this  is  so  though  the  note  given  in  exchange  Is 
worthless.*^  And  it  has  been  held  that  an  indorsement  of  X's 
note  by  Y  to  Z  is  a  good  consideration  for  a  note  from  Z  to  Y, 
and  it  is  no  defense  to  Z's  note  that  he  failed  to  recover  against 
X  on  the  note  indorsed  to  him  by  Y.*^ 

The  words  "without  receiving  value  therefor"  in  the  section  of 
the  statute  above  set  out  refer  to  the  instrument  itself,  and  not 
to  the  loan  of  the  name  by  way  of  accommodation.^^* 

An  accommodation  indorser  has  the  right  to  retract  his  in- 
dorsement at  any  time  before  the  paper  is  negotiated  for  his 
mdorsement  and  his  continuing  to  be  so  are  alike  voluntary  until 
rights  arise  by  the  negotiation  to  third  parties.^^'' 

80  French   v.   Bank  of   Columbia,  ■*^2  j^jce  v.  Grange,  131  N.  Y.  149, 

4  Cranch  141 ;  Stephens  v.  Monon-  30  N.  E.  46. 

gahela   Nat.   Bank.  88  Pa.   St.   157,  S3  Luke     v.     Fisher,     10     Cush. 

32  Am.  Rep.  438;   Pray  v.  Rhodes,  (Mass.)  271.     As  to  power  of  cor- 

42  Minn.  93,  43  N.  W.  838;  Clark  poration    to    issue    accommodation 

V.    Thayer,    IDS    Mass.    216,    7   Am.  paper,   see  nat   in   9  L.   R.   A.    (N. 

Rep.  511.  S.)  193. 

s*  Backas  v.  Spalding,   116  Mass.  ^^^^  Morris    County    Brick   Co.    v. 

418 ;  Farber  v.  Nat.  Forge  Co.,  140  Austin..  79  N.  J.  Law,  273. 

Ind.  54,  39  N.  E.  249;  Williams  v.  «3b  Bg^kley    v.     Tinsley,    88    Vt 

Banks,  11  Md.  198.  1001. 


CHAPTER  VIII. 


SUBDIVISION  A— ACCEPTANCE  OF  BILLS. 


§  71.  Meaning  of  term. 

72.  Object  of  acceptance. 

73.  Form   of   acceptance. 

74.  Nature    and    effect    of    accep- 

tance. 

75.  According  to  tenor  of  bill. 

76.  Delivery. 

77.  Acceptance  of  incomplete  bill. 

78.  Varieties     of     acceptance — In 

general. 

79.  Varieties     of     acceptance — As 

to    terms — General     accep- 
tance. 

80.  Varieties     of     acceptance — As 

to   terms — Qualified   accep- 
tance. 

81.  Varieties     of     acceptance — As 

to  form — In  general. 

82.  Varieties     of     acceptance — As 

to   form — Written. 


83.  Varieties     of     acceptance — As 

to  form — Parol. 

84.  Varieties  ,oi    acceptance — As 

to  mode  of  proof — Express. 

85.  Varieties     of     acceptance — As 

to  mode  of  proof — Implied. 

86.  Acceptance  of  bills  drawn  in 

sets. 

87.  Revocation  of  acceptance. 

88.  What  bills  must  be  presented 

for  acceptance. 

89.  By  and  to  whom  presentment 

should  be  made. 

90.  Time  of  presentment. 

91.  Place  of  presentment. 

92.  Presentment  excused. 

93.  Acceptances     for     honor,     or 

supra  protest. 


§  71.  Meaning  of  term.  The  acceptance  of  a  bill  of  exchange 
is  the  act  by  which  the  person  on  whom  a  bill  of  exchange  is 
drawn  (called  the  drawee)  assents  to  the  request  of  the  drawer 
to  pay  it,  or,  in  other  words,  engages,  or  makes  himself  liable,  to 
pay  it  when  due.^ 

As  stated  in  the  Negotiable  Instruments  Law : 

"The  acceptance  of  a  bill  is  the  signiiication  of  the  drazvee  of 
his  assent  to  the  order  of  the  draiver.'^^ 

The  presumption  is  that  every  bill  of  exchange  is  drawn  on 
account  of  some  indebtedness  from  the  drawee  to  the  drawer,  and 
that  the  acceptance  is  an  appropriation  of  the  funds  of  the  latter 
in  the  hands  of  the  former;  and  the  rule  of  law  is  not  unjust 
that  prevents  the  acceptor  from  setting  up  a  want  of  funds  of 


1  Swope  V.  Ross,  40  Pa.  St.  186, 
80  Am.  Dec.  567;  Kimbark  v.  Car 
etc.  Co.,  103  111.  App.  632 ;  Wolcott 
V.  Van  Santvoord,  17  Johns.  (N. 
Y.)  248,  8  Am.  Dec.  396. 


2  Neg.  Inst.  Law,  §  132,  where  all 
cases  directly  or  indirectly  bearing 
upon  or  citing  the  Law  are  grouped. 


85 


86  NEGOTIABLE   INSTRUMENTS.  §  71 

the  drawer  in  his  hands,  since  it  was  his  duty  before  he  accepted 
the  bill  to  find  out  whether  he  owed  the  drawer  that  amount. 
The  payee  or  other  holder  of  the  bill  had  no  means  of  knowing 
how  the  fact  was  as  it  was  in  the  knowledge  of  the  drawee  and 
the  payee  or  holder  proceeding  on  the  bill  had  a  right  to  assume 
that  the  drawee  would  not  accept  the  bill  unless  he  had  sufficient 
funds  of  the  drawer  to  make  good  the  acceptance.*' 

§  72.     Object  of  acceptances.     Acceptance  applies  only  to 

bills  of  exchange,  foreign  and  inland,  for  the  law  of  presentment 

for  acceptance  and  of  acceptance  can  have  no  application  to  a 

,  negotiable  contract,  where,  from  its  nature,  there  is  or  can  be  no 

acceptor. 

The  Negotiable  Instruments  Law  provides  that: 

"A  hill  of  itself  does  not  operate  as  an  assignment  of  the  funds 
in  the  hands  of  the  drawee  available  for  the  payment  thereof, 
and  the  drawee  is  not  liable  on  the  bill  unless  and  until  he  ac- 
cepts the  same."^ 

Thus  the  drawee  of  a  bill  is  not  bound  as  a  party  to  the  bill 
until  he  has  accepted  it,*  or  agreed  previously  to  pay  it,*^  and 
cannot  be  sued  by  the  holder  of  the  instrument,  though  he  has 
funds  in  his  hands  sufficient  to  cover  the  bill,®  except  where  the 
bill  constitutes  an  equitable  assignment  of"  the  funds  drawn 
against.''  So  due  presentment  for  acceptance  by  the  holder  is  a 
condition  precedent  to  the  exercise  of  rights  against  the  other 
parties  to  the  instrument  arising  when  the  bill  is  dishonored  by 
non-acceptance.  The  object  of  acceptance  then  is  to^bind  the 
drawee  and  make  hirrTan  actuaT^iid  boun^JParty  to  the  injtr.u- 
metrrwtucinie  is  nofTiiiLil  he  lias"accepted.  For  until  there  has 
beefrigTrgcceptance  the-dr'awee  isrTIg3e£^no_obngaHoir_wl^^ 
iipon  the~Wr^itself: — HeThayHiave  inliis  possession  funds  be- 
longlhg  to  th^^itrawer,  but  that  is  a  different  obligation  from  that 
which  appears  upon  the  face  of  the  instrument,  and  until  he 
does  accept  either  in  writing  or  verbally,  he  is  under  no  obliga- 

2ajarvis  v.  Wilson,  46  Conn.  90,  (U.   S.)    66;   Lindley  v.   Waterloo 

Boill  V.  Tuttle,  81  N.  Y.  454.  First   Nat.   Bank,   76  Iowa  629,  41 

3Neg.    Inst.    Law,    §127.    where  N.  W.  381,  14  Am.  St.  Rep.  254; 

all  cases  directly  or  indirectly  bear-  Dull    v.    Bricker,    70    Pa.    St.   255; 

ing   upon    or    citing    the    Law    are  Neg.    Inst.    Law,    §223    (135). 

grouped.  ^  Rockville  Nat.   Bank  v.  Lafay- 

4  Pickle  V.   Muse.   88  Tenn.   380.  ette  etc.  Bank,  69  Ind.  479,  35  Am. 

12  S.  W.  919,  17  Am.  St.  Rep.  900.  Rep.   236;   Schuchardt   v.   Hall,   26 

7  L.  R.  A.  93;  Poole  v.  Carhart,  71  Md.  590,  11  Am.  Rep.  514. 

la.  Z7,  32  N.  W.   16;   Imp.   Co.  v.  ^  Brill  v.   Tuttle,  81    N.  Y.   454; 

Erwin,  66  Kan.  261,  71  P.  521.  Torrance  v.  Bank  of  British  North 

6  Coolidge  V.    Payson,  2   Wheat.  Am.,  L.  R.  5  P.  C.  246. 


§  73  ACCEPTANCE   OF   BILLS.  87 

tion  to  the  parties  upon  the  bill  of  exchange.  Thus,  the  purpose 
of  acceptance  is  to  create  liability  on  the  part  of  the  drawee  of 
the  bill.  By  accepting  he  agrees  to  pay  according  to  the  terms 
of  the  bill,  that  is,  his  contract,  after  he  writes  his  acceptance  or 
verbally  makes  the  acceptance,  is  on  the  bill  itself. 

Until  the  bill  has  been  accepted  the  drawer  is  the  primary  debtor 
and  after  acceptance  the  drawee  or  acceptor  is  the  principal  debtor 
and  the  drawer  becomes  secondarily  liable.''^ 

The  presemption  arising  from  acceptance  that  the  acceptor  holds 
funds  of  the  drawer  may  be  rebutted.'^''  A  complaint  which  fails 
to  allege  a  written  acceptance  of  a  bill  of  exchange  does  not  state 
a  cause  of  action  against  the  drawee ;  '^'^  but  a  plea  that  the  drawee 
"agreed  to  pay  the  order"  is  sufficient.'^'' 

§  73.  Form  of  acceptance.  By  the  Negotiable  Instruments 
Law  the  acceptance  must  be  written,  signed  by  the  drawee  and 
must  contain  an  express  or  implied  promise  to  pay  in  money. 
The  provisions  are  as  follows : 

"The  acceptance  must  be  in  writing  and  signed^  by^JhE^draiii^. 
It  must  not  express  that  the  drawee  will  perform  his  promise  by 
any  other  means  than  the  payment  of  money."^ 

"The  holder  of  a  bill  presenting  the  same  for  acceptance  may 
require  that  the  acceptance  be  written  on  the  bill,  and  if  such 
request  is  refused,  may  treat  the  bill  as  dishonored."^ 

As  the  statute  requires  the  acceptance  to  be  in  writing,  the 
fact  that  it  was  so  given  must  be  pleaded.'"^^ 

"^^  Clayton  Town  Site  Co.  v.  Clay-  ^  Neg.    Inst.    Law,    §  132,    where 

ton   Drug   Co.,   20   N.   M.    185,    147  all  cases  directly  or  indirectly  bear- 

Pac.  460.  ing   upon    or    citing    the    Law    are 

T^"  Dickerson  v.  Turner,  15  Ind.  4.  grouped. 

7°  Wadhams  v.  Portland  Ry.  Co.,  ^  Neg.    Inst.    Law,    §  133,    where 
27  Wash.   86,   79   Pac.   597.  all  cases  directly  or  indirectly  bear- 
Contra  :    Faircloth-Byrd   Mercan-  ing    upon    or    citing    the    Law    are 
tile  Co.  V.  Adkinson.  167  Ala.  344,  grouped. 
52  So.  419.  "^^  Wadhams  v.  Portland  Ry.  Co., 

'■d  Boonsdall  v.  Waftemeyer,   142  37  Wash.  86,  79  Pac.  597. 
Fed.  Rep.  415,  73  C.  C  A.  515. 


88 


NEGOTIABLE    INSTRUMENTS. 


§73 


Below  is  a  form  of  acceptance  written  on  an  instrument 


> 


Chicago,  III.,  December  1,  1922. 

}  ,_g !2 Thirty  days  afterdate- « / 

ijPfl§.  t^hc  order  of  John  Matlock 

oOm  Hundred  and  Twenty — , Dollars 

g«    Valued  received,  and  charge  the  sam^  to  account  of 


'iO^ 


^Td^onald  Morris, 
14        Jamestozmi,  N.  Y. 


HENRY  HAMILTON. 


The  usual  mode  of  making  an  acceptance  is  by  writing  the 
word  "accepted"  and  subscribing  the  drawee's  name  as  above, 
but  the  drawee's  signature  alone  is  sufficient. 

The  acceptance  may  be  made  while  the  bill  is  still  incomplete/® 
but  is  usually  made  a  reasonable  time  after  execution.  The 
holder  may  require  that  the  date  of  acceptance  be  written  on  the 
bill  so  it  will  appear  from  the  face  of  the  instrument  when  it  is 
due.i^ 

An  acceptance,  if  in  writing,  is  constituted  by  words  showing 
an  intention  to  accept  and  not  putting  a  direct  negative  upon 
the  order  contained  in  the  bill  ;-^^  but  the  mere  admission  of  the 
correctness  of  the  amount  is  not  an  assent  to  the  order.-^*  At 
common  law  but  not  under  the  Negotiable  Instruments  Law  a 
verbal  acceptance  is  allowed  and  such  is  constituted  by  any  words 
which  evidence  such  intention  clearly  and  unequivocally,  if  they  be 
addressed  to  the  drawer  or  holder,  and  he  waive  his  right  to  a 
written  acceptance.^^  And  at  common  law  an  acceptance  may 
also  be  implied  from  conduct  evidencing  such  intention. 


10  Neg.  Inst.  Law,  §  138,  where 
all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped. 

11  Neg.  Inst.  Law,  §133,  where 
all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped. 

*2  Cortelyou  v.  Maben,  32  Neb. 
697,  36  N.  W.  159,  3  Am.  St.  Rep. 
284;     Whilden     v.     Merchant     etc. 


Nat.  Bank,  64  Ala.  1,  38  Am.  Rep. 
1 ;  Block  V.  Wilkerson,  42  Ark.  253 ; 
Bank  v.  Bank  (Kan.),  87  Pac.  746. 

^2a  Plaza  Farmers'  Union  v.  Ry, 
an,  78  Wash.  124,  138  Pac.  65L 

13  In  re  Goddard,  66  Vt.  415,  29 
Atl.  634;  Walker  v.  Lide,  1  Rich. 
(S.  C.)  249,  44  Am.  Dec.  252; 
Ecker  v.  Snowden,  2  Miles  (Pa.) 
275.  For  a  full  discussion  see : 
Allen  V.  Leavens,  26  Oreg.  164,  37 


§  74  ACCEPTANCE  OF  BILLS.  89 

Acceptance  by  telegram  has  been  held  sufficient,*^  and  such 
acceptance  when  the  bill  is  properly  identified  seems  entirely  un- 
objectionable and  accords  with  the  best  interests  of  the  business 
world.  Such  acceptances  have  almost  uniformly  been  held  valid 
under  the  Negotiable  Instruments  Law  ;***  thus  A  wires  B  a  tele- 
gram reading :  "Will  you  wire  me  that  you  will  honor  draft  for 
$300?"  and  B  telegraphed  back:  "I  will."  It  was  a  sufficient 
acceptance  under  the  statute.*^"  Under  the  statutes  of  some  states, 
which  make  an  unconditional  promise  to  accept  a  bill  before  it 
is  drawn  equivalent  to  actual  acceptance  in  favor  of  a  party,  who 
upon  the  faith  thereof  receives  it  for  valuable  consideration,  it 
has  been  adjudged  that  a  telegram  written  and  sent  by  the 
promisor  operates  as  an  acceptance.-^^ 

Under  the  English  Bills  of  Exchange  Act  the  acceptance  must 
be  written  on  the  bill  itself  which  precludes  the  giving  of  an 
acceptance  by  telegraph,  either  by  a  bank  or  by  any  other 
drawee.*'^* 

This  section  as  to  writing  doc"  not  apply  to  a  foreign  bill  pay- 
able in  another  state  unless  the  law  of  that  other  state  is  proved 
since  the  common  law  rule  will  be  presumed  to  apply  that  an 
acceptance  may  be  oral.  *'" 

§  74.  Nature  and  effect  of  acceptance.  The  drawer  of  a  bill 
undertakes  that  when  it  is  presented  to  the  drawee  the  latter  will 
accept  it ;  and  by  acceptance  is  meant  an  undertaking  on  the 
drawee's  part  to  pay  the  bill  according  to  its  tenor.  Until  the 
bill  has  been  accepted,  the  drawer  is  the  primary  debtor.  After 
acceptance,  the  drawer  becomes  secondarily  liable,  and  his  liabil- 
ity is  the  same  as  that  of  a  first  indorser  upon  a  promissory  note. 

The  effect  of  the  acceptance  of  a  bill  is  to  constitute  the  accep- 
tor the  principal  debtor.-^®     The  bill  becomes  by  the  acceptance 

Pac.  488.  46  Am.   St.  Rep.  613.  26  i^b  oil  Well  Supply  Co.  v.  Mac- 

L.  R.  A.  620.     See  also  note  1  Am.  Murphy,  119  Minn.  500. 

St.   Rep.   137.  15  Henrietta   Nat.   Bank  v.   State 

14  Flora   etc.    Bank   v.    Clark,   61  Nat.  Bank,  80  Tex.  648,   16  S.  W. 

Md.  400.  48  Am.  Rep.  114;  Garrett-  321,  26  Am.  St.  Rep.  IIZ.    See  also 

son   V.   North   Atchinson   Bank.   39  note  2  L.  R.  A.  709. 

Fed.  163,  7  L.  R.  A.  428.    See  also  i^^  Appendix  C.  paragraph  17. 

note  4  U.  S.  L.  Ed.  185.  i"'"  Bank  of  Laddonia  v.   Bright- 

14a  In  re  Armstrong,  41  Fed.  381  ;  Coy  Commission  Co.,  139  Mo.  App. 

Selma    Savings    Bank    v.    Webster  110,  120  S.  W.  648. 

County  Bank.   182   Ky.  604,  206  S.  1«  Jarvis  v.  Wilson.  46  Conn.  9ft. 

W.  870;  Iowa  State  Savings  Bank  ZZ  Am.  Rep.  18;  Farmers  etc.  Bank 

V.    City   National    Bank,    183    Iowa  v.    Rathbone.    26    Vt.    19,    58    Am. 

1347,  168  N.  W.  148.  Dec.    200;    Ragsdale    v.    Gresham, 


■% 


^ 


90  NEGOTIABLE    INSTRUMENTS.  §  75 

very  similar  to  a  promissory  note — the  acceptor  being  the  prom- 
isor, and  the  drawer  standing  in  the  relation  of  an  indorser.*'^ 

The  acceptance  is  a  response  to  the  direction  contained  in  the 
bill ;  and  the  language  of  the  bill  and  the  acceptance  are  but  parts 
of  one  entire  contract  in  writing,^''*  but  this  contract  is  regarded 
as  a  new  contract.^"'' 

Upon  paying  the  bill  the  acceptor  can  charge  the  amount  of 

'v  the  same  to  the  fund  of  the  drawer  in  his  hands,  or  if  he  has 

none,  he  can  recover  from  the  drawer  by  action.^*    If  the  drawee 

refuses  to  accept  the  instrument  after  he  has  promised  to  do  so, 

the  drawer  may  sue  on  the  original  amount  due  or  on  the  breach 

\     of  his  promise  to  accept  the  bill.*'* 

Y\         / 

§/75.     According  to  tenor  of  bill.     The  acceptance  must  be 

.^  according  to  the  tenor  of  the  bill  to  bind  all  the  parties  to  it. 
The  promise  must  be  to  pay  all  the  money  called  for  in  the  bill, 
at  the  time  and  place  of  payment.^"  If  the  acceptance  were  not 
according  to  the  tenor  of  the  bill  there  w^ould  be  two  or  three 
causes  of  action  divided  among  the  parties.  If  an  acceptor  of 
a  hundred-dollar  bill  of  exchange  accepts  for  $50,  that  leaves 
$50  which  has  not  been  accepted.  There  v^'ould  be  confusion 
when  the  obligation  was  paid ;  the  party  paying  would  be  entitled 
to  possession  of  the  bill  and  that  would  raise  the  presumption 
that  the  whole  bill  was  paid.  So  for  these  among  other  reasons, 
the  acceptance  must  be  according  to  the  tenor  of  the  bill.  When 
the  modification  of  the  tenor  of  the  bill  is  such  that  it  either 
casts  no  hardship  upon  the  indorser  or  where  the  indorser  or  par- 
ties prior  to  the  acceptor  know  of  the  modification  and  assent  to 
it,  there  the  reason  for  rejecting  it  as  a  form  of  acceptance 
ceases  to  exist,  and  so  the  rule  is  that  a  modified  or  qualified 
acceptance  if  immaterial,  or  if  known  and  assented  to  is  a  good 
acceptance. 

The  Negotiable  Instruments  Law  provides  as  follows  as  to  a 
qualified  acceptance: 

"The  holder  may  refuse  to  take  a  qualified  acceptance,  and  if 
he  does  not  obtain  art  nnqiialiiied  acceptance,  he  may  treat  the 

141    Ala.   308,   Z7   So.    W.     As   to  i^b  Superior  City  v.  Ripley,  138  U. 

accommodation  acceptor  see:  White  S.  93. 

V.  Hopkins,  3  Watts  &  S.  (Pa.)  99,  is  Christian  v.  Keen,  80  Va.  Z77 ; 

Z7  Am.  Dec.  542.     See  Van  Alstyne  Martin  v.  Muncy,  40  La.  Ann.  190. 

V.    Sorley,   32  Tex.   518.      See   note  »» Cooper  v.  Jones,  79  Ga.  379,  4 

1  Am.  St.  Rep.  134.  S.  E.  916;  Coursin  v.  Ledlie,  3  Pa. 

i^Raborg    et    al.    v.     Peyton,    2  St.  506 ;  Quin  v.  Han'ev,  5  111.  App. 

Wheat  (15  U.  S.)  385.  51. 

17a  Meyer  v.  Beardsley,  29  N.  J.  ^o  See,    however,    §  79   on    quali- 

L.  236.  fied  acceptance. 


§§    76-78  ACCEPTANCE    OF    BILLS.  91 

bill  as  dishonored  by  non-acceptance.  Where  a  qualified  accept- 
ance is  taken  the  drazver  and  indorsers  are  discharged  from 
liability  on  the  bill,  unless  they  have  expressly  or  impliedly  au- 
thorized the  holder  to  take  a  qualified  acceptance,  or  subsequently 
assent  thereto.  When  the  drawer  or  an  indorser  receives  notice 
of  a  qualified  acceptance,  he  must  within  a  reasonable  time  express 
his  dissent  to  the  holder,  or  he  will  be  deemed  to  have  assented 
thereto:"'^^ 

If  the  holder  receives  such  an  acceptance  he  can  claim  payment 
only  according  to  the  condition  or  qualification.^^*  An  agent  for 
collection  as  a  bank  has  no  authority  to  receive  anything  short  of 
an  explicit  and  unqualified  acceptance .^■^'' 

§  76.     Delivery.  The  Negotiable  Instruments  Law  provides  : 

"Acceptance  means  an  acceptance  completed  b\  delivery  or 
notification."^'^ 

The  acceptance  is  incomplete  until  delivery  or  notification.^^* 

§  77.  Acceptance  of  incomplete  bill.  While  still  incomplete 
a  bill  may  be  accepted.  The  Negotiable  Instruments  Law  pro- 
vides : 

"A  bill  may  be  accepted  before  it  has  been  signed  by  the 
drawer,  or  zvhile  otherwise  incomplete,  or  zvhen  it  is  overdue,  or 
after  it  has  been  dishonored  by  a  previous  refusal  to  accept,  or  by 
non-payment.  But  when  a  bill  payable  after  sight  is  dishonored 
by  non-acceptance  and  the  drawee  subsequently  accepts  it,  the 
holder,  in  the  absence  of  any  different  agreement,  is  entitled  to 
have  the  bill  accepted  as  of  the  date  of  the  presentment."^^ 

The  right  of  the  holder  to  recover  from  the  acceptor  is  not  af- 
fected by  the  fact  that  he  discounted  the  instrument  before  ac- 
ceptance.*^* A  bill  does  not  necessarily  lose  its  negotiable  character 
by  being  dishonored.*^" 

§  78.  Varieties  of  acceptance — In  general.  There  are  sev- 
eral varieties  of  acceptance.     For  convenience  they  may  be  clas- 

21  Neg.  Inst.  Law,  §  142,  where  A'^ashville,  —  Tenn.  — ,  154  S.  W. 
all  cases  directly  or  indirectly  bear-       965. 

ing    upon    or    citing    the    Law    are  23  jsjgg.    Inst.    Law,    §  138,    where 

grouped.  all  cases  directly  or  indirectly  bear- 

2i«Cline  V.  Miller,  8  Md.  274.  ing   upon    or    citing    the    Law    are 

21b  Walker    v.    New    York    State  grouped. 

Bank,  9  N.  Y.  582.  23a  Bank  of  Louisville  v.   Ellery, 

22  Neg.   Inst.  Law,   §   191.  where  34  Barb.630. 

all  cases  directly  or  indirectly  bear-  23b  Leavitt  v.  Putnam,  3  N.  Y.  494. 
ing  upon  or  citing  the  Law  are  As  to  acceptance  when  bill  is  in- 
grouped,  complete  see:  Bank  v.  Neal,  22 
22a  First  Nat.  Bank  of  Murfrees-  How  C63  U.  .S.)  107;  Hopps  v. 
toro    V.    First    National    Bank    of  Savage,  69  Md.  513. 


92  NEGOTIABLE    INSTRUMENTS.  §§  79-80 

sified  as  to  their  terms,  as  to  their  form,  and  as  to  the  mode  of 
proof.  As  to  their  terms  acceptances  are  either  general  or  quah- 
fied;  as  to  their  form,  they  are  either  written  or  by  parol;  as  to 
their  mode  of  proof,  they  are  either  express  or  implied. 

§  79.  Varieties  of  acceptances — As  to  terms — General  ac- 
ceptance. "An  acceptance  is  cither  general  or  qualified.  A  gen- 
eral acceptance  assents  without  qualification  to  the  order  of  the 
drawer.  A  qualified  acceptance  in  express  terms  varies  the  effect 
of  the  bill  as  drawn."'^'^ 

"An  acceptance  to  pay  at  a  particular  place  is  a  general  accept- 
ance unless  it  expressly  states  that  the  bill  is  to  be  paid  there  only 
and  not  elsewhere."^^ 

The  above  sections  of  the  Negotiable  Instrument  Law,  as  a 
general  rule,  have  been  the  law  in  this  country  without  statutory 
enactment. 

A  bill  addressed  generally  to  a  drawee  in  a  city  may  be  ac- 
cepted payable  at  a  particular  bank  in  that  city  ;^^*  but  where  a  bill 
is  addressed  to  the  drawee  in  one  place,  and  is  accepted  payable 
in  ^nother,  it  is  a  material  variation .^•"^'' 

§  80.  Varieties  of  acceptances — As  to  terms — Qualified  ac- 
ceptance.   The  Negotiable  Instruments  Law  provides  : 

"An  acceptance  is  qualified  which  is  (1)  conditional,  that  is  to 
say,  which  makes  payment  by  the  acceptor  dependent  on  the  ful- 
fillment of  a  condition  therein  stated;  (2)  partial,  that  is  to  say, 
acceptance  to  pay  part  only  of  the  amount  for  which  the  bill  is 
drawn;  (3)  local,  that  is  to  say,  an  acceptance  to  pay  only  at  a 
particular  place;  (4)  qualified  as  to  time;  (5)  the  acceptance  of 
some  one  or  more  of  drawees,  but  not  of  all."^^ 

The  above  is  a  clear  statement  of  the  law  generally. 

Such  acceptances  do  not  become  due  until  the  happening  of  the 
contingency  upon  which  the  bill  is  accepted.^^* 

§8L     Varieties  of  acceptance — As  to  form — In  general.   As 

to  their  form  acceptances  in  the  absence  of  statute  are  written 
or  parol. 

24  Neg.  Inst.  Law,  §  139,  where  25b  Niagara  District  Bank  v. 
all  cases  directly  or  indirectly  bear-  Fairman  etc  Mfg.  Co.,  31  Barb, 
ing    upon    or    citing    the    Law    are       403. 

grouped.  26  Neg.    Inst.    Law,    §  141,    where 

25  Neg.  Inst.  Law,  §  140,  where  all  cases  directly  or  indirectly  bear- 
all  cases  directly  or  indirectly  bear-  ing  upon  or  citing  the  Law  are 
ing    upon    or    citing    the    Law    are  grouped. 

grouped.  26a  Marshall   v.    Burnby,    25   Fla. 

25a  Troy   City   Bank  v.   Lanwan,       619. 
19  N.  Y.  477;  Meyers  v.  Standart, 
11  Ohio  St.  29, 


§  82  ACCEPTANCE  OF  BILLS.  93 

A  written  acceptance:  (1)  may  be  written  on  the  instrument; 
or  (2)  it  may  be  written  on  a  separate  paper ;  and  if  on  a  separate 
paper,  (a)  it  may  be  an  acceptance  as  to  an  existing  bill;  or  it 
may  be  (b)  an  acceptance  as  to  a  non-existing  bill. 

§  82.  Varieties  of  acceptance — As  to  form — Written.  Take 
a  bill  of  exchange ;  the  drawee  writes  across  the  face  of  the  bill 
"accepted"  and  signs  his  name  on  the  bill  itself.^^  That  is  the 
first  form.  Now,  take  the  second  form  of  written  acceptances : 
A  writes  B  that  he  has  drawn  on  him  for  $500  and  wants  to 
know  whether  he  will  accept  that,  and  B  writes  to  A,  or  to  the 
payee  C,  "y^s,  I  will  accept  that  bill."  That  is  an  acceptance 
of  an  existing  bill.^*  Now,  suppose  A  writes  to  B  and  says :  'T 
(in  the  future)  am  going  to  draw  on  you  and  want  to  know  if  you 
are  going  to  accept  it,"  and  B  writes  A  and  says  he  will  accept  it. 
That  is  the  acceptance  of  a  non-existing  bill.^**  As  to  the  existing 
bill  the  Negotiable  Instruments  Law  provides : 

"Where  an  acceptance  is  written  on  a  paper  other  than  the  bill 
itself,  it  does  not  bind  the  acceptor,  except  in  favor  of  a  person  to 
whom-  it  was  shown  and  who,  on  the  faith  thereof,  receives  the 
bill  for  valuer^'' 

For  example,  a  certain  instrument  has  been  drawn  and  A  holds 
the  instrument ;  it  has  been  drawn  upon  B,  and  A  writes  to  B  a 
letter  and  says  a  certain  instrument  has  been  drawn  upon  him 
and  describes  it  in  definite  terms  or  reasonably  so,  and  then 
B  writes  back  and  states  in  his  letter  that  he  accepts  that  bill 
which  has  been  drawn  upon  him  and  that  he  will  pay  it ;  then  A 
holds  this  instrument,  he  also  holds  the  letter,  he  shows  them  to 
X  and  X  says:  "I  wall  take  that  instrument  upon  the  promise  of 
B  that  he  will  accept  it.  I  see  that  he  has  written  that  he  would 
and  he  has  clearly  described  the  bill  of  exchange,  and  I  will  re- 
ceive it."  Such  an  acceptance  is  valid  and  conforms  with  the 
requirements. 

Thus  the  acceptance  may  be  on  a  separate  paper,  but  the 
promise  must  be  clear  and  unequivocal.  And  since  the  acceptance 

27  Spear  V.  Pratt,  2  Hill  (N.  Y.)  Ct.  83;  Coolidge  v.  Payson,  2 
582,  38  Am.   Dec.  600.     Not   abso-      Wheat.  66. 

lutely  necessary  to  use  the  word  29  Evansville  Nat.  Bank  v.  Kauf- 
accepted,  Whilden  v.  Merchants  etc.  mann,  24  Hun  (N.  Y.)  612;  Barns- 
Nat.  Bank,  64  Ala.  1,  38  Am.  Rep.  dall  v.  Waltemeyer,  142  Fed.  415, 
1.  When  insufficient,  Cook  v.  Bald-  7Z  C.  C.  A.  515. 
win,  120  Mass.  317,  21  Am.  Rep.  so  ^gg  jng^  l^^^  §  134^  where 
517.  all  cases  directly  or  indirectly  bear- 

28  Cook  V.  Miltenberger,  23  La.  ing  upon  or  citing  the  Law  are 
Ann.   Z77 ;   Bank   of   Commerce   v.  grouped 

J.  G.  Shaw  Band,  54  N.  Y.   Sup. 


94  NEGOTIABLE    INSTRUMENTS.  §82 

need  not  be  on  the  instrument  itself,  a  letter  accompanying  the 
bill  may  be  used  to  qualify  or  limit  an  acceptance  indorsed  on  the 
bill,^®'  but  not  against  a  bona  Me  holder;  and  a  written  agree- 
ment modifying  the  terms  of  an  accepted  bill  and  securely  pasted 
thereto,  is  a  part  thereof  and  cannot  be  lawfully  severed  there- 
from without  the  drawer's  consent.^"'' 

A  telegram  agreeing  to  accept  an  instrument  for  a  certain  sum 
"for  stock"  is  valid  as  an  acceptance  and  is  not  a  conditional  con- 
tract,^®'=  for  at  most  the  words  "for  stock"  are  but  an  indication 
of  the  nature  of  the  consideration  between  the  drawer  and  ac- 
ceptor.^**** 

As  to  the  non-existing  bill  the  Negotiable  Instruments  Law  pro- 
vides :  "An  unconditional  promise  in  zvriting  to  accept  a  bill  be- 
fore it  is  drazvn  is  deemed  an  actiiul  acceptance  in  favor  of  every 
person  ivho,  upon  the  faith  thereof,  receives  the  bill  for  valiie."^^ 

If  the  bill  is  not  in  existence,  for  the  convenience  of  business, 
the  acceptance  may  be  on  a  separate  paper. 

The  requirements  are: 

(1)  That  the  contemplated  drawee  shall  describe  the  bill  to 
be  drawn,  and  promise  to  accept  it.^^ 

(2)  That  the  bill  shall  be  drawn  in  a  reasonable  time  after 
such  promise  is  written  ;^^  and 

(3)  That  the  holder  shall  take  the  bill  upon  the  credit  of  the 
promise.^"* 

Thus  A  says  to  B :  "I  am  going  to  draw  upon  you  for  $500 
and  I  want  to  know  if  you  will  accept  the  instrument,  if  I  draw 
upon  you,"  and  B  writes  back  a  letter  and  says:  "I  will  accept 
that  instrument  for  $500;"  and  describes  the  instrument  so  it 

soaLehnhard  v.  Sidway,  160  Mo.  Burke  v.  Utah  Nat.  Bank,  47  Neb. 

App.  83.  247,  66  N.  W.  295. 

30b  YVait    V.    Pomeroy,    20    Mich.  ^3  Flora     First     Nat.     Bank     v. 

425;  Gerrish  v.  Glines,  56  N.  H.  9.  Clark,    61    Md.    400,    48    Am.    Rep. 

30oCoffman   v.   Campbell,   87   111.  114;   Wilson  v.   Clements,  3   Mass. 

98.  1;   Union  Bank  v.   Shea,  57  Minrt. 

30"  State  Bank  v.  Bradstreet.  89  180,  58  N.  W.  985. 

Neb.  188.  What   is   reasonable.    Nimochs  v. 

31  Neg.  Inst.  Law,  §135,  where  Woody,  97  N.  C.  1,  2  S.  E.  249,  2 
all  cases  directly  or  indirectly  bear-  Am.  St.   Rep.  268. 

ing    upon    or    citing    the    Law    are  34  Kennedy    v.    Geddes,    8    Port. 

grouped.  (Ala.)  263,  ZZ  Am.  Dec.  289;  Ster- 

32  Von  Phul  V.  Sloan,  2  Rob.  nan  v.  Harrison,  42  Pa.  St.  49,  82 
(La.)  148,  38  Am.  Dec.  207;  Few-  Am.  Dec.  491;  Hall  v.  Emporia 
ler  V.  McPhee,  13  Colo.  App.  185,  Nat.  Bank,  133  111.'  234,  24  N.  E. 
56  Pac.  118;  Am.  Waterworks  Co.  546;  Nelson  v.  Chicago  First  Nat. 
V.  Venner.  18  N.  Y.  S.  379,  45  N.  Bank,  48  111.  39,  95  Am.  Dec.  510. 
Y.    St.   441 ;   Brinkman   v.    Hunter,  See  Storer  v.  Logan,  9  Mass.  55. 

7Z    Ma    172,    39    Am.    Rep.    492; 


§  83  ACCEPTANCE  OF  BILLS.  95 

can  be  understood.  A  shows  this  letter  to  Y  and  Y  says :  "Yes, 
I  see  you  have  drawn  that  instrument  as  you  said  you  would  and 
I  will  take  the  instrument,  relying  upon  B's  written  promise." 
Such  an  acceptance  is  valid  and  conforms  with  the  requirements. 

The  last  principles  also  apply  to  acceptances  on  a  separate 
paper  whether  the  bill  is  or  is  not  in  existence.  That  is,  (1) 
credit  must  be  given  to  the  promise  ;^^*  (2)  the  bill  must -be  de- 
scribed and  the  terms  must  be  definite,  or  reasonably  so  ;**"  and 
(3)  the  bill  must  have  been  discounted  upon  the  promise.  But 
the  promise  is  exempted  if  not  made  with  the  knowledge  of 
some  holder  of  the  bill.^^  An  acceptance  on  a  separate  piece  of 
paper  is  a  valid  acceptance  mainly  because  it  assists  in  the  nego- 
tiation of  bills. 

Telegraphic  authority  to  draw  is  an  unconditional  power  in 
writing  under  the  statute.^^* 

As  the  Negotiable  Instruments  Law  requires  all  acceptances  to 
be  in  writing,  a  bank  cannot  be  held  upon  the  oral  promise  of 
one  of  its  officers  to  pay  a  check.^'" 

A  written  agreement  modifying  the  terms  of  an  accepted  bill 
and  securely  attached  thereto  is  a  part  thereof  and  cannot  be 
lawfully  detached  therefrom  without  the  drawer's  consent.^*^ 

§  83.  Varieties  of  acceptances — As  to  form — Parol,  A  parol 
acceptance  is  not  recognized  by  thei  Negotiable  Instruments 
Law.^** 

In  the  absence  of  a  statutory  intervention,  it  is  the  common 
law  rule  that  an  unequivocal  parol  promise  to  accept  a  specific 
existing  bill  is  binding.^'  But  such  a  promise  to  accept  a  future 
bill,  even  though  the  bill  be  taken  by  the  holder  upon  the  faith 
and  credit  of  such  promise,  is  not  binding  as  an  acceptance.  Thus 
where  A  calls  up  B  over  the  telephone  and  says :  "B,  I  am  going 

34a  Bank  v.  Hay,  143  N.  C.  332;  Ford,  35  Colo.  142,  83  Pac.  778,  117 

First  National   Bank  v.   Muskogee,  Am.   St.  Rep.  182. 

40  Okla.  603.  35o  Bothell  v.  Schweister,  84  Neb. 

341'    Bank  of  Flora  v.   Clark,  61  271. 

Md.  405.  36Neg.    Inst.   Law,    §132,   where 

35  Pollock  V.   Helm,   54   Miss.   1,  all  cases  directly  or  indirectly  bear- 

28    Am.     Rep.     342;     Nimochs    v.  ing   upon    or    citing    the    Law    are 

Woody,  97  N.  C.  1.  2  S.  E.  249,  2  grouped. 

Am.  St.  Rep.  268 ;  Coolidge  v.  Pay-  37  Whilden     v.     Merchants,    etc., 

son^  2  Wheat.   (U.  S.)  66.  Bank,  64  Ala.   1.   38  Am.   Rep.   1 ; 

35a  Wells  V.  Western  Union  Tele-  Joyce  v.  Wing  Yet  Lung,  87  Cal. 

graph  Co.,  144  Iowa  605,  123  N.  W.  424,  25  Pac.   545 ;   Ecker  v.   Snow- 

371,  24  L.  R.  A.  1045.  den,  2  Miles  (Pa.)  275;  In  re  God- 

35"  Ewing  V.  Citizens'  Nat.  Bank,  dard,  66  Vt.  415,  29  Atl.  634.     As 

162  Ky.  551,   172  S.  W.  955;  Van  to   parol   acceptances,   see   note  26 

Buskirk  v.   State   Bank   of   Rocky  L.  R.  A.  620. 


96  NEGOTIABLE    INSTRUMENTS.  §§84-85 

to  draw  a  certain  bill  of  exchange  upon  you  and  I  want  to  know 
if  you  will  accept  it,"  and  B  says,  "Yes,  I  will  accept  it,"  and 
A  draws  the  bill  and  takes  it  to  Z  and  tells  him  what  was  said 
by  B,  and  Z  takes  it,  and  Z  doesn't  wish  to  rely  on  the  credit  of 
A  because  A  has  no  credit,  but  takes  it  because  of  B's  credit; 
the  law  generally  is  that  such  a  promise  is  not  a  good  acceptance 
of  a  bill  not  in  existence,  if  made  by  parol.^ 

§  84.  Varieties  of  acceptances — As  to  mode  of  proof — Ex- 
press. An  express  acceptance  is  an  acceptance  w^-itten  upon 
the  face  of  the  instrument.^** 

§  85.  Varieties  of  acceptances — As  to  mode  of  proof — Im- 
plied. An  implied  acceptance  is  any  act  which  clearly  indi- 
cates an  intention  to  comply  with  the  request  of  the  drawer,  or 
any  conduct  of  the  drawee  from  which  the  holder  is  justified  in 
drawing  the  conclusion  that  the  drawee  intended  to  accept  the 
bill,  and  intended  to  be  so  understood.'*'* 

The  Negotiable  Instruments  Law  provides : 

"Where  a  drawee  to  whom  a  bill  is  delivered  for  acceptance 
destroys  the  same,  or  refuses  within  twenty-four  hours  after  such 
delivery,  or  within  such  period  as  the  holder  may  allow,*to  return 
the  hill  accepted  or  non-accepted  to  the  holder,  he  will  be  deemed 
to  have  accepted  the  sa^ne.'"^^ 

In  some  jurisdictions,  as  in  Illinois  and  South  Dakota,  the 
above  section  is  omitted ;  in  others  as  in  Wisconsin  it  is  pro- 
vided that  mere  retention  of  the  bill  is  not  acceptance;  while  in 
some  jurisdictions  as  in  Pennsylvania,  a  proviso  as  to  demanding 
the  return  of  the  bill  has  been  added."*^* 

The  word  "refuses"  as  used  in  the  statute  above,  does  not 
mean  a  tortious  refusal,  nor  does  it  imply  that  a  previous  de- 
mand for  the  return  of  the  instrument  to  the  holder  should  be 

38  Wakefield  v.  Greenhood,  29  State  v.  Weiss,  91  N.  Y.  S.  276; 
Cal.  597;  Mercantile  Bank  v.  Cox,  Hough  v.  Loring,  24  Pick.  (Mass.) 
38  Me.  500;  Nichols  v.  Commercial  254;  Pickle  v.  Muse,  88  Tenn.  380, 
Bank,  55  Mo.  App.  81.  12  S.  W.  919,  17  Am.  St.  Rep.  900, 

Contra,      Nelson    v.   .Chi.    First  7  L.  R.  A.  93;  Dickinson  v.  Marsh, 

Nat.  Bank.  48  111.  36,  95  Am.  Dec.  57  Mo.  App.  566;  Hall  v.  Emporia 

510;  Woodward  V.  Griffins-Marshall  First    Nat.    Bank,    133    111.    234,    24 

Grain  Co.,  43  Minn.  260,  45  N.  W.  N.  E.  546. 

433.  41  Neg.    Inst.   Law,   §  137,   where 

39  Spear  v.  Pratt,  2  Hill  (N.  Y.)  all  cases  directly  or  indirectly  bear- 
582,  38  Am.  Dec.  600;  Cortelyou  v.  ing  upon  or  citing  the  Law  are 
Maben,  32  Neb.  697,  36  N.  W.  159,  grouped. 

3  Am.  St.  Rep.  284.  4ia  g^g    j^^g^    i^^^    l^^^    §    137^ 

40Westbnrg  v.   Chicago  L.  &  C.      for  changes  made  in  different  juris- 
Co.,  117  Wis.  589;  Overman  v.  Ho-      dictions, 
boken  City  Bank,  31  N.  J.  L.  563; 


§§  86-88  ACCEPTANCE  OF  BILLS.  97 

made,  but  is  to  be  construed  to  cover  a  failure  or  neglect  to  re- 
turn the  check.**" 

§  86.     Acceptance  of  bills  drawn  in  sets.    The  law  as  to  the 

acceptance  of  bills   drawn   in   sets   is   stated  in   the   Negotiable 
Instruments  Law  as  follows : 

"The  acceptance  may  he  written  on  any  part,  and  it  must  be 
"written  on  one  part  only.  If  the  drawee  accepts  more  than  one 
part,  and  such  accepted  parts  are  negotiated  to  different  holders 
in  due  course,  he  is  liable  on  every  such  part  as  if  it  were  a  sep- 
arate biiir'^ 

§  87.  Revocation  of  acceptance.  The  acceptor  or  drawee 
who  has  not  communicated  his  acceptance  or  the  accepted  bill 
to  the  holder,  may  revoke  an  acceptance  before  delivery  and 
cancel  the  written  acceptance.'*^ 

§  88.     What  bills  must  be  presented  for  acceptance.     The 

Negotiable  Instruments  Law  provides : 

"Presentment  for  acceptance  must  be  made : 

1.  Where  the  bill  is  payable  after  sight  or  in  any  other  case 
where  presentment  for  acceptance  is  necessary  in  order  to  iix  the 
maturity  of  the  instrument. 

2.  Where  the  bill  expressly  stipulates  that  it  shall  be  presented 
for  acceptance ;  or 

3  Where  the  bill  is  drazvn  payable  elsewhere  than  at  the  resi- 
dence or  place  of  business  of  the  drawee. 

In  no  other  case  is  presentment  for  acceptance  necessary  in 
order  to  render  any  party  to  the  bill  liable."'*^ 

Bills  payable  on  demand  or  at  sight  without  grace,  or  payable 
at  a  certain  number  of  days  after  date,  or  after  any  other  certain 
event,  or  payable  on  a  certain  day,  need  not  be  presented  for  ac- 
ceptance at  all,  but  only  for  payment.*^   But  it  is  usual  and  best, 

41^  State  Bank  v.  Miss.,  91  N.  Y.  44  Neg.  Inst.  Law,  §  143.  where 
276;  Westburg  v.  Chicago  Lumber  all  cases  directly  or  indirectly  bear- 
Co.,  117  Wis.  589,  94  N.  W.  572.  ing    upon    or    citing    the    Law   are 

42  Neg.    Inst.    Law,    §181,    where  grouped. 

all  cases  directly  or  indirectly  bear-  45  Commercial  Bank  v.  Perry,  10 

ing    upon    or    citing   the    Law    are  Rob.    (La.)    61,   43   Am.   Dec.   168; 

grouped.  Carmichael   v.    Pennsj^Ivania    Bank, 

43Robbins    v.    Lambeth,    2    Rob.  4  How.    (Miss.)    567,  35  Am.  Dec. 

(La.)    304;   Irving  Bank  v.   Weth-  408;   House  v.   Adams,  48  Pa.    St. 

erald,  36  N.  Y.  335 ;  German  Nat.  ?61,  86  Am.  Dec.  588 ;  Champion  v. 

Bank  v.  Farmers  Dep.  Nat.   Bank,  Gordon,  70  P^.  St.  474,  10  Am.  Rep. 

118  Pa.  St.  294.  12  Atl.  303;  Guth-  581. 
rie  Nat.  Bank  v.  Gill,  6  Okla,  560, 
54  Pac.  434. 


98  NEGOTIABLE   INSTRUMENTS.  ,  §89 

when  the  bill  is  payable  at  a  future  day,  to  present  it  for  ac- 
ceptance, in  order  to  ascertain  whether  it  will  certainly  be  hon- 
ored, and  to  procure  the  assurance  of  Hability  of  the  acceptor.*'^'' 

Bills  payable  at  sight  or  at  so  many  days  after  sight,  or  after 
demand,  or  after  any  other  event  not  absolutely  fixed  must  be 
presented  to  the  drawee  for  acceptance  and  payment,  or  for  ac- 
ceptance only,  without  unreasonable  delay,  or  the  drawers  and 
indorsers  will  be  discharged,  for  they  have  an  interest  in  having 
the  bills  accepted  immediately  in  order  to  shorten  the  time  of 
payment,  and  thus  put  a  limit  to  the  period  of  their  Hability 
and  also  to  enable  them  to  protect  themselves  by  other  means 
before  it  is  too  late,  if  the  bill  is  not  accepted  and  paid  within  the 
time  originally  contemplated  by  them.'*® 

§  89.     By  and  to  whom  presentment  should  be  made.    Any^ 

person  in  possession  of  a  bill  of  exchange  may  present  it  for 
acceptance,  or  may  do  so  through  his  properly  authorized  agent.*'" 
The  presentment  must  be  made  to  the  drawee  personally  or  to 
some  person  who  has  authority  to  accept  or  refuse  to  accept  for 
him.48 

The  Negotiable  Instruments  Law  provides: 

"Where  a  hill  is  addressed  to  two  or  more  drawees  who  are  not 
partners,  presentment  must  he  made  to  them  all,  unless  one  has 
authority  to  accept  or  refuse  acceptance  for  all,  in  which  case 
presentment  may  he  made  to  him  only.'"^^ 

"Where  the  drazvee  is  dead,  presentment  way  he  made  to  his 
personal  representative."^^ 

"Where  the  drazvee  has  heen  adjudged  a  hankrupt  or  an  insol- 
vent; or  has  made  an  assignment  for  the  benefit  of  creditors, 
presentment  may  he  made  to  him  or  to  his  trustee  or  assignee."'^'*- 

If  one  of  the  drawers  accepts  he  will  of  course  be  bound  by 
his  acceptance. 

45a  National  Park  Bank  v.  Saitta,  48  Schuchardt    v.    Hall,    36    Md. 

127  App.  Div.  (N.  Y.)  624.  590,  11  Am.  Rep.  514;  Stainback  v. 

46  Neg.  Inst.  Law,  §144,  where  State  Bank,  11  Gratt.  (Va.)  269; 
all  cases  direct^  or  indirectly  bear-  Nelson  v.  Fotterall,  7  Leigh  (Va.) 
ing    upon    or    citing   the    Law    are  179. 

grouped ;  Nimocks  v.  Woody,  97  N.  49  jsj-^g^  j^st.   Law,   §   145,  where 

C.  1,  2  S.  E.  249,  2  Am.   St.  Rep.  all  cases  directly  or  indirectly  bear- 

268;   Nutting  v.   Burked,  48   Mich.  ing   upon    or    citing    the   Law    are 

241 ;  Thornburg  v.  Emmons,  23  W.  grouped. 

Va.  333.  50  See  preceding  note. 

47  Stainback   v.    Bank,    11    Gratt.  51  See  preceding  note. 
269;   Walker  v.   State   Bank,  9  N. 

Y.   582. 


§    90  ACCEPTANCE  OF   BILLS.  99 

Where  the  drawee  is  dead  presentment  is  not  necessary  and 
the  above  section  of  the  law  merely  states  some  one  to  whom 
presentation  can  be  made. 

§90.  Time  of  presentment.  The  Negotiable  Instruments 
Law  provides : 

"Presentment  for  acceptance  must  be  made  by  or  on  behalf  of 
the  holder  at  a  reasonable  hour  on  a  business  day,  and  before 
the  bill  is  oz'erdue,  to  the  drar^vee  or  some  person  authorized  to 
accept  or  refuse  acceptance  on  his  behalf ."^^ 

The  time  within  which  the  holder  must  present  a  bill  for 
acceptance  which  requires  such  presentment,  is  usually  stated  to 
be  a  reasonable  time,  and  this  is  a  mixed  question  of  law  and 
fact  depending  upon  the  circumstances. 

The  Negotiable  Instruments  Law  provides: 

"Except  as  herein  otherwise  provided,  the  holder  of  a  bill  which 
is  required  by  the  next  preceding  section  to  be  presented  for  ac- 
ceptance must  either  present  it  for  acceptance  or  negotiate  it  with- 
in a  reasonable  time:  If  he  fails  to  do  so,  the  drawer  and  all  in- 
dorsers  are  discharged ."^^^ 

This  has  always  been  the  law  in  general. 

A  delay  of  the  mail  is  a  sufficient  excuse  for  the  omission  to 
immediately  present  a  bill  for  acceptance,  and  a  presentation  im- 
mediately after  its  reception  is  in  time  to  charge  the  indorser.'^*" 

Presentment  should  be  made  during  usual  and  reasonable 
hours.  What  constitutes  reasonable  hours  of  business  depends 
upon  the  custom  of  the  particular  place  and  also  upon  the  trade 
or  business.  Any  hour  before  the  customary  hour  of  retiring  will 
be  sufficient  when  presented  at  drawee's  residence.^^ 

As  to  the  days  on  which  presentment  may  be  made  the  Ne- 
gotiable Instruments  Law  provides  as  follows: 

"A  bill  may  be  presented  for  acceptance  on  any  day  on  which 
negotiable  instruments  may  be  presented  for  payment  under  the 
provisions  of  sections  seventy-two  and  eighty-Uve  of  this  act. 
When  Saturday  is  not  otherwise  a  holiday,  presentation  for  ac- 
ceptance may  be  made  before  tzvelve  o'clock  noon  on  that  day."^^'^ 

s^Neg.  Inst.  Law,  §  145,  where  146,  11  Am.  Dec.  259;  Phoenix  Ins. 

all  cases  directly  or  indirectly  bear-  Co.  v.  Allen,  11  Mich.  501. 

ing    upon    or    citing    the    Law    are  Rule  does  not  apply  to  non-nego- 

grouped.  liable  paper.     Briggs  v.  Persons,  31 

52a  Neg.  Inst    Law,  144.  Mich.   400. 

52b  Walsh  V.  Blatchly,  6  Mo.  422.  ^sa  ^gg    ingt.  Law,  §  146,  where 

53  Bolton    V.    Harrod,    9    Mart,  all  cases  directly  or  indirectly  bear- 

(La.)  326,  13  Am.  Dec.  306;  Rob-  ing    upon    or    citing   the    Law    are 

inson  v.  Ames,  20  Johns.   (N.  Y.)  grouped. 


100  NEGOTIABLE    INSTRUMENTS.  §§91-92 

Several  jurisdictions  as  Arizona,  Kentucky  and  Wisconsin  omit 
the  last  sentence  of  the  above  section. 

The  Negotiable  Instruments  Law  further  provides : 

"The  drawee  is  allowed  twenty-four  hours  after  presentment 
in  which  to  decide  whether  or  not  he  will  accept  the  bill;  but  the 
acceptance  if  given  dates  as  of  the  day  of  presentation"^"^ 

There  may  be  an  acceptance  after  there  has  been  a  refusal  to 
accept  or  after  protest  or  after  dishonor.^^  So  when  we  say  it 
must  be  in  a  reasonable  time,  that  means  when  the  instrument  is 
first  presented  for  acceptance.  It  does  not  mean  that  after  twenty- 
four  hours  the  bill  can  never  be  accepted.  When  the  bill  is  pre- 
sented, it  is  reasonable  that  the  drawee  should  be  allowed  some 
time  to  deliberate  whether  he  will  accept  or  not ;  and  by  the  rule 
of  the  law  merchant  he  was  entitled  to  demand  twenty-four  hours 
for  this  purpose,  and  the  holder  was  justified  in  leaving  the  bill 
with  him  for  that  time. 

The  time  allowed  is  twenty-four  hours  after  delivery  and  not 
after  demand  for  a  return  of  the  bill  and  the  time  for  returning 
the  bill  to  the  holder  does  not  begin  to  run  from  the  demand  for 
its  return,  but  the  date  of  its  delivery .^^^ 

§  91.  Place  of  presentment.  The  presentment  for  accept- 
ance, if  the  bill  is  addressed  to  the  drawee  at  a  particular  place, 
should  be  made  at  that  place.^®  If  the  bill  is  not  addressed  to 
any  particular  place,  presentment  should  be  made  either  to  the 
drawee  personally,  or  at  his  dwelling  or  place  of  business'*'"  at 
the  time  of  presentment. 

§  92.  Presentment  excused.  "Presentment  for  acceptance  is 
excused  and  a  bill  may  be  treated  as  dishonored  by  non-accept- 
ance in  either  of  the  following  cases:  (1)  Where  the  drawee  is 
dead  or  has  absconded,  or  is  a  fictitious  person  or  a  person  not 
having  capacity  to  contract  by  bill.  (2)  Where,  after  the  exer- 
cise of  reasonable  diligence,  presentment  cannot  be  made.  (3) 
Where,  although  presentment  has  been  irregidar,  acceptance  has 
been  refused  on  some  other  ground."^^ 

54Neg.    Inst.    Law,    §136,   where  (Tenn.)    425;    Reynolds   v.   Chittle, 

all  cases  directly  or  indirectly  bear-  2  Campb.  596. 

ing   upon    or    citing    the    Law    are  '*'  Boot  v.  Franklin,  3  John.   (N. 

grouped.  Y.)     207;    Mason    v.    Franklin,    3 

55  Wynne  v.  Raikes.  5  East.  514;  Johns.    (N.   Y.)    202;   Anderson   v. 

Thompson  on  Bills,  214.  Drake,  14  Johns.   (N.  Y.)    113. 

55a  3   R.    C.   L.    1309;   Wisner   v.  58  ^gg.    Inst.    Law,    §148,    where 

Bank  of  Gallitzin,220  Pa.  St.  21.  all  cases  directly  or  indirectly  bear- 

5«  Wolfe  V.  Jewett,   10  La.  383;  ing   upon    or   citing   the   Law   are 

Ratcliff  V.  Planters  Bank,  2  Sneed  grouped. 


§  93  ACCEPTANCE  OF  BILLS.  101 

Presentment  for  acceptance  is  excused  and  the  bill  should  be 
protested  as  dishonored  by  non-acceptance:  when  the  drawee  is 
discovered  to  be  a  fictitious  person,  or  is  incapable  of  making  a 
valid  contract  from  legal  disabilities,  or  where,  after  reasonable 
diligence  to  ascertain  the  drawee,  the  presentment  cannot  be 
effected,  or  under  any  other  like  circumstances. 

§  93.-k^cceptances  for  honor,  or  supra  protest.  The  Nego- 
tiable InstrumentsTSWprovWesI 

"Where  a  bill  of  exchange  has  been  protested  for  dishonor  by 
non-acceptance  or  protested  for  better  security  and  is  not  overdue, 
any  person  not  being  a  party  already  liable  thereon  may,  with  the 
consent  of  the  holder,  intervene  and  accept  the  bill  supra  protest 
for  the  honor  of  any  party  liable  thereon  or  for  the  honor  of  the 
person  for  -whose  account  the  bill  is  drawn.  The  acceptance  for 
honor  may  be  for  part  only  of  the  sum  for  which  the  bill  is 
drawn;  and  where  there  has  been  an  acceptance  for  honor  for  one 
party,  there  may  be  a  further  acceptance  by  a  different  person  for 
the  honor  of  another  party."^^ 

"An  acceptance  for  honor,  supra  protest,  must  be  in  writing 
and  indicate  that  it  is  an  acceptance  for  honor,  and  must  be 
signed  by  the  acceptor  for  honor."^^ 

"Where  an  acceptance  for  honor  does  not  expressly  state  for 
whose  honor  it  is  made,  it  is  deemed  to  be  an  acceptance  for  the 
honor  of  the  draiver."^^ 

"The  acceptor  for  honor  is  liable  to  the  holder  and  to  all  par- 
ties to  the  bill  subsequent  to  the  party  for  whose  honor  he  has 
accepted."^^ 

This  is  a  peculiar  kind  of  acceptance.  It  most  frequently  hap- 
pens when  the  original  drawee  refuses  to  accept  the  bill,  in  which 
case  a  stranger  may  accept  the  bill  for  the  honor  of  some  one  of 
the  parties  thereto,  which  acceptance  will  inure  to  the  benefit  of 
all  the  parties  subsequent  to  him  for  whose  honor  it  was  accepted. 
It  is  essential  that  the  acceptor  for  honor  appear  before  a  notary 
public  and  declare  that  he  accepts  the  protested  bill  in  honor  of 
the  drawer  or  indorser,  as  the  case  may  be,  and  that  he  will  pay 
it  at  the  appointed  time. 

"^Neg.  Inst.  Law,  §161,  where  ^^Neg.  Inst.  Law,  §163,  where 
all  cases  directly  or  indirectly  bear-  all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are  ing  upon  or  citing  the  Law  are 
grouped.  grouped. 

*ONeg.  Inst.  Law,  §162,  where  *2  jsjeg  jnst.  Law,  §164.  where 
all  cases  directly  or  indirectly  bear-  all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are  ing  upon  or  citing  the  Law  are 
grouped.  grouped. 


102  NEGOTIABLE    INSTRUMENTS.  §93 

An  acceptance  for  honor,  then,  is  properly  made  by  the  ac- 
ceptor appearing  before  a  notary  pubhc  and  declaring  his  inten- 
tion to  accept  for  the  honor  of  some  one  or  more  of  the  parties 
and  subscribing  to  some  such  expression  of  his  intention  as 
"accepted  for  the  honor  of  A."®^ 

This  is  done  to  save  the  credit  of  the  parties  to  the  instrument, 
or  some  party  to  it,  as  the  drawer,  drawee,  or  indorser,  or  some- 
body else.  Some  one  desires  to  save  the  credit  of  some  one  on  the 
bill,  and  he  does  so  by  writing  "accepted"  on  the  bill.  The 
court  holds  that  the  consideration  is  presumed,  and  the  presump- 
tion is  that  he  does  have  funds  or  money. 

The  acceptor  for  honor  has  recourse  against  the  party  for 
whose  honor  the  acceptance  was  made  and  all  parties  against 
whom  the  latter  would  have  recourse,  for  all  damages  incurred 
by  reason  of  his  acceptance.^'* 

But  the  acceptor  for  honor  of  the  drawer  cannot  maintain  an 
action  thereon  against  the  drawer  without  proof  of  its  present- 
ment to  the  drawee  and  non-acceptance  or  non-payment  by  him, 
and  notice  thereof  to  the  drawer.®'" 

"The  acceptor  for  honor  by  such  acceptance  engages  that  he 
will  on  due  presentment  pay  the  bill  according  to  the  terms  of  his 
acceptance,  provided  it  shall  not  have  been  paid  by  the  drawee, 
and  provided  that  it  shall  hai'e  been  duly  presented  for  payment 
and  protested  for  non-payment  and  notice  of  dishonor  given  to 
him."^"^ 

The  undertaking  of  the  acceptor  for  honor  is  not  an  absolute 
engagement  to  pay  at  all  events,  but  only  a  collateral  and  condi- 
tional engagement  to  pay,  if  the  drawee  does  not.®'*  The  result 
of  this  rule  is  to  require  that  the  bill  be  presented  to  the  drawee 
named  therein  at  its  maturity  for  payment  and  if  payment  is 
refused  that  it  be  protested  and  notice  of  dishonor  given  to  him.®** 
And  the  rule  has  been  stated  that  the  acceptor  of  a  bill  for  the 
honor  of  the  drawer  cannot  maintain  an  action  thereon  against 
him,  without  proof  of  its  presentment  to  the  drawee  and  non- 
acceptance  or  non-payment  by  him,  and  notice  thereof  to  the 
drawer.*'^ 

*3  Gazzam  v.  Armstrong,  3  Dana  ^^  Schofield  v.  Bayard,  3  Wend. 

(Ky.)  554.    See  note  7  U.  S.  L.  Ed.  (N.  Y.)  488;  Mitchell  v.  Baring,  18 

132.  M.  &  M.  381. 

«3a  Swope  v.  Rose,  40  Pa.  St.  186,  ee  Walton    v.    Willianns,    4    Ala. 

80  Am.   Dec.  567.  347;    BarJng    v.    Clark,    19    Pick. 

«3b  Baring  v.  Clark,  19  Pick  220.  (Mas.)  220. 

«4Neg.   Inst.   law.    §165,   where  ^^  Wood  v.    Pugh,   7  Ohio,    (Pt. 

all  cases  directly  or  indirectly  bear-  2)  156. 
ing   upon    or   citing   the   Law   are 
grouped, 


§  93  ACCEPTANCE  OF  BILLS.  103 

The  following  miscellaneous  provisions  relating  to  acceptances 
for  honor  are  found  in  the  Negotiable  Instruments  Law : 

"Where  a  hill  payable  after  sight  is  accepted  for  honor,  its 
m-aturity  is  calculated  from  the  date  of  the  noting  for  non-ac- 
ceptance and  not  from  the  date  of  the  acceptance  for  honor."^^ 

"When  a  dishonored  bill  has  been  accepted  for  honor,  supra 
protest,  or  contains  a  reference  in  case  of  need,  it  must  be  pro- 
tested for  non-payment  before  it  is  presented  for  payment  to  the 
acceptor  for  honor  or  reference  in  case  of  need."^^ 

"Presentment  for  payinent  to  the  acceptor  for  honor  must  be 
made  as  folloivs:  (1)1  f  if  is  to  be  presented  in  the  place  where 
the  protest  for  non-payment  zvas  made,  it  must  be  presented  not 
later  than  the  day  following  its  maturity;  (2)  If  it  is  presented  in 
some  other  place  than  the  place  where  it  was  protested,  then  it 
must  be  forwarded  within  the  time  specified  in  section  one  hun- 
dred and  four.'"^^ 

"The  provisions  of  section  eighty-one  apply  where  there  is  de- 
lay in  making  presentment  to  the  acceptor  for  honor  or  referee 
in  case  of  need.'"^^ 

"When  the  bill  is  dishonored  by  the  acceptor  for  honor  it  must 
be  protested  for  non-payment  by  him-."'^^ 


68  Neg.  Inst.  Law,  §  166. 

'■1  Neg.  Inst.  Law,  §  169. 

69Neg.   Inst.  Law,   §167. 

"Neg.   Inst.   Law,  §170. 

70  Neg.  Inst.  Law,  §  168. 

SUBDIVISION  B— TRADE  ACCEPTANCES. 

§  93a.  Meaning  of  term.  §  93e.  Where  payable.  _  _ 

93b.  Trade      acceptances      distin-  93f.  By  whom  presented  for  dis- 

guished  from  ordinary  bill  count. 

of  exchange.  93g.  Inducements  by  Federal  Re- 
93c.  Trade     acceptances      distin-  serve  System. 

guished     from    promissory  93h.  Effect  on  other  negotiable  in- 

note.  struments. 

93d.  Nature     of     transaction     in  93i.    Origin. 

which     trade     acceptances  93j.  Extent  of  use. 

.    0     used.  ,        ,  93k.  Decisions. 

flK  L  ^ a  ^r ,.  .  /  .-  I 

^93ar  Meaning  of  term.  A  trade  acceptance  is  a  bill  of  ex- 
change with  a  certain  maturity  drawn  by  a  seller  on  a  buyer  for 
a  fixed  sum  of  money,  representing  the  purchase  price  of  goods 
payable  to  order,  and  bearing  across  its  face  the  acceptance  of 
the  buyer. 

In  terms  of  business,  it  may  be  defined  as  a  negotiable  cer- 
tificate of  indebtedness,  arising  out  of  a  current  transaction  in 
merchandise. 

§  93b.  Trade  acceptances  distinguished  from  ordinary  bill 
of  exchange.  The  trade  acceptance  states  upon  its  face  that 
the  obligation  of  the  acceptor  arises  out  of  purchase  of  goods 
from  the  drawer,  while  the  ordinary  bill  of  exchange  does  not 
state  upon  its  face  the  transaction  out  of  which  the  giving  of 
the  instrument  arose.  The  trade  acceptance  is  confined  to  credit 
obligations  arising  from  the  sale  of  goods  and  must  have  a  definite 
maturity,  while  the  ordinary  bill  of  exchange  may  cover  various 
kinds  of  transactions  and  may  be  payable  on  demand,  at  sight,  or 
at  the  end  of  a  stated  time. 

It  has  been  held  that  there  is  nothing  in  the  Federal  Reserve 
Act,  Sec.  13,  or  in  the  regulations  made  thereunder  by  the  Fed- 
eral Reserve  Board,  changing  the  character  of  trade  acceptances 
as  bills  of  exchange,  and  they  are  within  the  rules,  that  a  draft 
may  be  signed  by  the  acceptor  before  the  name  of  the  drawer  is 
filled  in,  that  a  drawer  may  be  any  one  whom  the  acceptor  may 
accept  as  such,  and  that  a  negotiable  instrument  may  be  drawn 
payable  to  the  order  of  a  payee  who  is  not  a  maker,  drawer  or 
drawee.* 

1  Stafiford  V.  Hill,  —  Calif.  App.    -,  200  Pac.  33. 

104 


§§   93c-93f  TRADE  ACCEPTANCES.  105 

§  93c.  Trade  acceptances  distinguished  from  promissory 
note.  In  addition  to  the  usual  differences  between  a  bill  of 
exchange  and  a  promissory  note,  a  trade  acceptance  is  limited 
to  obligations  arising  from  the  sale  of  goods,  while  the  promis- 
sory note  may  cover  not  only  obligations  arising  from  the  sale 
of  goods,  but  also  may  cover  practically  any  kind  of  obligation. 
In  other  words,  the  promissory  note  deals  with  all  kinds  of  busi- 
ness transactions,  while  the  trade  acceptance  deals  with  current 
merchandise  transactions  alone.  The  trade  acceptance,  unlike  the 
promissory  note,  is  not  to  be  given  for  borrowed  money  or  past- 
due  obligations. 

§  93d.  Nature  of  transaction  in  which  trade  acceptance 
used.  The  business  practice  involved  in  a  transaction  in 
which  the  trade  acceptance  is  used  is  that  one  buys  a  bill  of 
goods  from  a  wholesaler  or  jobber  and,  later,  instead  of  putting 
the  account  on  his  books  or  taking  the  buyer's  promissory  note, 
executes  a  time  draft  or  bill  of  exchange  on  the  buyer,  who 
writes  across  the  face  of  the  instrument,  "Accepted,"  and  affixes 
his  name.  Thus  a  definite  bargain  is  consummated  between  the 
seller  and  buyer  of  goods,  and  an  amount  due  with  a  definite 
term  agreed  upon ;  the  seller  draws  the  trade  acceptance  and 
presents  it  to  the  buyer;  if  the  buyer  is  willing  to  assume  that 
title  to  goods  has  passed  to  him,  that  the  trade  acceptance  is  in 
proper  form,  and  that  the  conditions  of  sale  have  been  complied 
with,  he  accepts  by  writing  across  the  face  of  the  instrument  the 
word,  "Accepted,"  the  date  and  place  of  payment,  and  his  name, 
and  then  returns  it  to  the  seller  or  to  the  bank  presenting  it ;  the 
seller  either  holds  the  instrument  until  maturity  or  arranges  to 
have  it  negotiated,  and,  in  negotiating  it,  any  of  the  following 
may  be  brought  into  the  transaction:  that  is,  the  acceptor,  the 
bank,  the  note  broker,  and  the  Federal  Reserve  Bank;  for  the 
instrument  after  acceptance  becomes  a  piece  of  negotiable  two- 
name  paper  which  the  seller  may  retain  until  maturity  if  he  so 
desires,  or  may  take  to  his  bank  for  discount.  The  acceptor 
either  pays  it  at  maturity  or  secures  an  extension  of  time  by 
treating  it  as  a  past-due  obligation  and  covering  it  by  a  promis- 
sory note. 

§  93e.  Where  payable.  Ordinarily  the  trade  acceptance  is 
paid,  preferably  at  the  buyer's  bank,  and  if  not  there,  usually  at 
some  other  place  mutually  agreed  upon  at  the  time  of  its  issue. 

§  93f.  By  whom  presented  for  discount.  The  trade  accept- 
ance is  ordinarily  presented  for  discount  by  the  seller  of  the 
merchandise. 


106  NEGOTIABLE    INSTRUMENTS.  §§  93g-93i 

§  93g.  .  Inducements  by  federal  reserve  system.  For  the 
trade  acceptance  to  be  eligible  for  purchase  by  Federal  Reserve 
Banks,  the  trade  acceptance  must  have  a  maturity  at  the  time  of 
purchase  of  not  more  than  ninety  days,  exclusive  of  the  days  of 
grace,  and  it  must  be  indorsed  by  a  member  bank  or  supported 
by  a  statement  of  the  financial  condition  of  one  or  more  of 
the  parties  thereto.  It  must,  of  course,  also  bear  the  clause 
prescribed  by  the  Federal  Reserve  Board,  "The  obligation  of  the 
acceptor  hereof  arises  out  of  the  purchase  of  goods  from  the 
drawer."  Then  the  trade  acceptance  is  entitled  to  extensive  re- 
discount facilities  with  preferential  rates  and  practical  freedom 
from  the  ten  per  cent  of  capital  and  the  surplus  limits  which 
measure  the  capacity  of  banks  to  loan  to  one  person  or  concern 
upon  single-name  paper. 

§  93h.  Effect  on  other  negotiable  instruments.  The  trade 
acceptance  does  not  affect  other  negotiable  instruments  as  the 
promissory  note,  since  it  is  not  given  for  borrowed  money  or 
past-due  obligations. 

It  may  be  legally  treated  as  a  check  chargeable  against  a 
buyer's  balance  at  his  bank  without  further  instructions  or  au- 
thority. The  Negotiable  Instruments  Law  provides  that:  "Where 
the  instrument  is  made  payable  at  a  bank,  it  is  equivalent  to  an 
order  to  the  bank  to  pay  the  same  for  the  account  of  the  person 
debtor  thereon."^ 

§  93i.  Origin.  The  trade  acceptance  has  been  used  in  Eu- 
rope for  two  centuries  and  was  employed  in  America  before  the 
Civil  War.  It  has  been  brought  to  life  again  in  this  country  by 
the  Federal  Reserve  Board,  and  a  joint  committee  of  the  Amer- 
ican Bankers  Association,  the  United  States  Chamber  of  Com- 
merce, and  the  National  Association  of  Credit  Men  who  are  con- 
sistently promoting  the  use  of  the  trade  acceptance  in  the  settle- 
ment of  the  obligations  arising  out  of  commercial  transactions.  It 
is  urged  that  a  wide  use  of  trade  acceptance  would  release  for  pro- 
ductive business  hundreds  of  millions  of  dollars  now  tied  up  in 
"accounts  receivable,"  and  will  supplant  the  "open  book  ac- 
count" and  the  promissory  note  plan  of  commercial  credit.  It 
makes  capital  more  fluid  by  releasing  funds  now  tied  up  in  open 
book  accounts  and  by  substituting  readily  negotiable  paper  for 
non-negotiable  book  accounts ;  it  enables  the  buyer  to  realize 
that  credit  is  as  tangible  as  cash  and  should  be  guarded  and  used 
accordingly,  and  further  helps  him  by  making  him  deal  always 
in  current  transactions  rather  than  in  long-drawn-out  book  ac- 


§§  93 j -93k  TRADE   ACCEPTANCES,  107 

counts  and  prevents  the  accumulation  of  the  over-due  accounts; 
it  relieves  the  seller  from  the  burden  of  financing  his  customers 
and  the  consequent  burdening  of  his  own  capital,  and  puts  the 
burden  of  proving  correctness  of  the  details  of  merchandise 
transactions  upon  the  buyer  where  it  rightly  belongs,  and  it  en- 
ables the  banker  to  borrow  more  easily  because  the  trade  accept- 
ance can  be  so  easily  rediscounted  at  the  Federal  Reserve  Bank. 

It  is  urged  that  it  will  limit  certain  evils  in  our  present  com- 
mercial methods,  such  as  those  pertaining  to  discounts,  bad  debts, 
the  secret  assignment  of  book  accounts,  over-buying  and  over- 
selling, and  the  practice  of  cancelling  orders  and  returning  goods 
without  sufficient  reasons. 

§  93j.  Extent  of  use.  The  trade  acceptance  has  now  been 
almost  universally  adopted  in  almost  all  lines  of  trade  through- 
out the  United  States ;  they  are  used  by  the  producer  of  raw  ma- 
terial, manufacturer,  jobber  and  retailer.  Banks  of  the  United 
States  have  become  well  informed  as  to  the  value  of  trade  ac- 
ceptances in  place  of  single  name  promissory  notes  and  are  freely 
discounting  them  at  favorable  rates  for  their  customers.  During 
the  past  three  years  the  number  of  trade  acceptances  and  the 
volume  represented  by  dealers  has  increased  tremendously.  It 
is  estimated  at  the  present  time  that  more  than  25,000  of  our  large 
concerns  are  using  trade  acceptances  and  are  warm  advocates  of 
this  system. 

§  93k.  Decisions.  Any  legal  questions  which  have  arisen 
have  been  decided  by  the  application  of  the  provisions  of  the  Ne- 
gotiable Instruments  Law  in  force  in  all  but  one  of  the  states. 
The  same  law  which  would  apply  to  a  promissory  note  or  bill  of 
exchange  would  apply  to  a  trade  acceptance. 


A  ^  CHAPTER  IX. 

TRANSFER— NEGOTIATION  BY  INDORSEMENT. 


94.  Meaning  of  term  negotiation. 

95.  Who  may  negotiate. 

96.  Methods  of  transfer. 

97.  Meaning   of   indorsement. 
98-  Who  indorse. 

99.  Nature  of  indorsement. 

100.  Requisites  of  indorsement. 

101.  Varieties  of   indorsement. 

102.  Indorsement    in    full   or    spe- 

cial indorsement. 

103.  Indorsement  in  blank. 

104.  Absolute  and  conditional  in- 
dorsement. 

105.  Restrictive   indorsement. 


106.  Indorsement      without      re- 
course. 

107.  Joint   indorsement. 

108.  Successive  indorsements. 

109.  Irregular    or    anomalous    in- 
dorsement. 

110.  Presumptions  as  to  indorse- 
ment. 

110a.  Effect    of    transfer    without 

necessary    indorsement. 
110b.  Indorsement  striken  out. 
110c.  Negotiable    character    con- 
tinued. 
llOd.  Negotiations  by  prior  party. 


§  94.  Meaning  of  term  negotiation.  Negotiation  is  an  act 
of  the  parties  or  of  the  law,  by  which  the  title  to  bills  and  notes 
is  conveyed  from  one  person  to  another.^ 

Negotiation  means  the  act  by  which  a  bill  of  exchange  or  prom- 
issory note  is  put  into  circulation  by  being  passed  by  one  of  the 
original  parties  to  another  person.  If  A  gives  B  a  check  on  C 
bank,  and  B  presents  the  check  at  the  counter  of  C,  no  negotia- 
tion is  necessary  or  had.  He  simply  demands  and  receives  pay- 
ment; but  if  B  goes  to  D  store  and  buys  a  bill  of  goods  and 
tenders  the  indorsed  check  in  payment,  he  negotiates  the  check. ■^'' 

The  Negotiable  Instruments  Law  has  the  following  provision 
as  to  what  constitutes  negotiation : 

"An  instrument  is  negotiated  zvhen  if  is  transferred  from  one 
person  to  another  in  such  manner  as  to  constitute  the  transferee 
the  holder  thereof.  If  payable  to  bearer  it  is  negotiated  by  deliv- 
ery;  if  payable  to  order  it  is  negotiated  by  the  indorsement  of  the 
holder  completed  by  delivery. "^^ 

As  a  bill  or  note  is  a  chattel  it  may  be  sold  as  a  chattel ;  it  is 
also  a  chose  in  action  and  may  be  assigned  as  a  chose  in  action ; 


1  Odell  V.  Clyde,  57  N.  Y.  S.  126, 
38  App.  Div.  ZZZ;  Whitworth  v. 
Adams,  5  Rand.  (Va.)  2Z?>,  415; 
Shaw  V.  Merchants  Nat.  Bank,  101 
U.  S.  557,  562,  25  L.  Ed.  892. 


1^  Aurora  State  Bank  v.  Hayes- 
Eames  Elevator  Co.,  88  Neb.  187, 
190 ;  Seaman  v.  Muir,  —  Ore. — ,  144 
Pac.    121. 

ii^Neg.   Inst.   Law,   §30. 


108 


§§95-96  TRANSFER  BY  INDORSEMENT.  109 

and  as  it  is  also  a  negotiable  instrument  it  may  be  transferred  by 
indorsement  according  to  the  rules  of  the  law  merchant.^ 

§  95.  Who  may  negotiate.  In  general,  a  bill  or  note  must 
be  negotiated  by  the  de  facto  holder,  that  is,  the  person  in  pos- 
session of  a  bill  or  note  and  to  whom  it  is  payable,  whether  his 
possession, be  lawful  or  not.^  And  in  such  sense  it  is  broader  in 
significance  than  the  term  "holder,"  which  customarily  means 
lawful  holder.  If  the  bill  or  note  is  payable  to  bearer  the  person 
in  possession  is  the  de  facto  holder,  but  if  the  bill  or  note  is 
payable  to  order,  the  de  facto  holder  must  have  possession  and 
be  the  person  to  whom  it  is  payable.*  But  if  the  name  is  mis- 
spelled, or  wrongly  designated,  the  holder  may  negotiate  by  writ- 
ing the  name  as  in  the  bill,  and  then  his  true  name.  So  the 
person  who  obtains  title  by  transfer  of  act  of  law  is  a  de  facto 
holder.** 

§  96.  Methods  of  transfer.  There  are  four  methods  of 
transfer,  viz. :  by  assignment,  by  operation  of  law,  by  indorse- 
ment, and  by  delivery. 

The  holder  of  a  bill  or  note  may  transfer  it  by  assignment  the 
same  as  any  other  chose  in  action.^  Where  the  holder  of  a  bill 
payable  to  order  transfers  it  without  indorsement  it  operates  as 
an  equitable  assignment,  and  the  transferee  may  compel  indorse- 
ment.'^ And  when  indorsement  is  subsequently  obtained,  the 
transfer  operates  as  a  negotiation  from  the  time  when  given,*  un- 
less the  indorsement  was  omitted  at  the  time  of  transfer  by  fraud, 
accident  or  mistake,  in  which  case  it  operates  from  the  time  of  the 
transfer.® 

The  full  title  to  a  bill  or  note  passes,  without  either  assign- 
ment, indorsement,  or  delivery,  that  is,  by  operation  of  law,  (a) 
by  the  death  of  the  holder,*"  where  the  title  vests  in  his  personal 

a  Willis  V.  Barrett,  2   Stark.  29;  7  Brown  v.  Wilson.  45  S.  C.  519, 

Bryant  v.  Eastman,  7  Cush.  111.  23  S.  E.  630,  55  Am.  St.  Rep.  779; 

3  Collins  V.  Gilbert,  94  U.  S.  753 ;  Contro  v.  Rafiferty,  7  Montreal 
Wilson  Sewing  Mach.  Co.  v.  Spears,  Super.  Ct.  146';  Schoepfer  v.  Tom- 
50  Mich.  534,  15  N.  W.  894;  Ever-  mack,  97  111.  App.  562. 

ton  V.  Bank,  66  N.  Y.  14.  ^  Goshen  Nat.  Bank  v.   Bingham, 

4  Jackson  v.  Love,  82  N.  C.  405;  118  N.  Y.  349,  23  N.  E.  180;  Osgood 
Lancaster  Nat.  Bank  v.  Taylor,  100  v.  Artt,  17  Fed.  575 ;  Hays  v.  Plum- 
Mass.  18,  97  Am.  Dec.  70,  1  Am.  mer,  126  Cal.  107,  58  Pac.  447,  77 
Rep.  71;  Durein  v.  Moeser,  36  Kan.  Am.  St.  Rep.  153. 

441,    13   Pac.   797.  »  Beard  v.  Dedolp,  29  Wis.  136. 
^Earhart  v.  Grant,  Z2  la.  481.  lO  Wooley  v.  Lyon.  117  111.  244,  6 
6  Mitchell  V.  Walker,  17  Fed.  Cas.  N.  E.  885,  57  Am.  Rep.  867;  Camp- 
No.  9,670;  Deshler  v.   Guy,  5  Ala.  bell  v.  Brown,  64  la.  425,  20  N.  W. 
186;  Biscoe  v.  Sneed,  11  Ark.  104.  745,  52  Am.  Rep.  446, 


110  NEGOTIABLE   INSTRUMENTS.  §97 

representative,  or  (2)  by  the  bankruptcy  of  the  holder/*  where 
title  vests  in  his  assignee  or  trustee,  or  (3)  in  some  jurisdictions, 
v^here  the  holder  is  an  unmarried  woman,  on  her  subsequent  mar- 
riage the  title  vests  in  her  husband,*^  or  (4)  upon  the  death  of  a 
joint  payee  or  indorsee,  in  which  case  the  general  rule  is  that 
the  title  vests  at  once  in  the  surviving  payee  or  indorsee.*^ 

The  legal  title  to  an  instrument  made  payable  to  order  can 
regularly  be  transferred  only  by  indorsement.*'*  The  transferee 
of  an  instrument  made  payable  to  order  without  indorsement  is 
the  equitable  owner,  and  takes  it  subject  to  all  the  equities  vested 
in  prior  parties.*'*  The  indorsement  must  be  written  on  the  bill 
itself,  or  on  a  slip  of  paper  attached  thereto  called  an  "Allonge" 
and  considered  a  part  of  the  bill.*^  The  indorsement  may  be  on 
the  face  of  the  bill.  When  the  note  or  bill  is  made  or  becomes 
payable  to  bearer,  it  is  transferable  by  delivery  without  indorse- 
ment.*® 

§  97.  Meaning  of  indorsement.  The  literal  meaning  of  in- 
dorsement is  writing  on  the  back,  derived  from  the  Latin  in  dorsa. 
In  this  connection,  the  word  is  used  to  indicate  a  legal  transaction, 
effected  by  a  writing  of  one's  own  name  on  the  back,  whereby 
one  not  only  transfers  one's  full  legal  title  to  the  paper  trans- 
ferred, but  likewise  enters  into  an  implied  guaranty  that  the  note 
or  instrument  will  be  duly  paid.  An  acceptance  applies  to  bills 
alone,  while  indorsement  applies  to  both  bills  and  notes.  The  in- 
dorsement cannot  be  by  parol  and  the  proper  place  for  writing  it 
is  on  the  back  of  the  instrument.*®  But  the  name  may  be  stamped 
on  the  back  of  the  instrument,  by  one  having  authority  to  do  so, 
and  with  intent  to  indorse  and  be  a  valid  indorsement.*®*  "The 
indorsement  must  be  written  on  the  instrument  itself  or  upon  a 
paper  attached  thereto.     The  signature  of  the  indorser,  imthout 

"  Roberts  v.  Hall,  2>7  Conn.  205,  Bishop  v.  Chase,   156  Mo.    158,   56 

9  Am.  Rep.  308;  Billings  v.  Collins,  S.  W.  1080.  79  Am.  St.  Rep.  515. 
44   Me.   271.  is  Crosby  v.  Roub,  16  Wis.  645; 

12  Coles  V.  Davis,   1  Campb.  485.  Folger  v.  Chase  18  Pick.  63 ;  French 

13  Draper  v.    Jackson,    16    Mass.  v.  Turner,  15  Ind.  59. 

480;  Allen  v.   Tate,   58   Miss.  585;  i"  Wilton    v.    Williams.    44    Ala. 

Sanford  v.   Sanford,  45  N.  Y.  723.  347;  Haines  v.  Dubois,  30  N.  J.  L. 

Some    jurisdictions    have     statutes  259. 

contra.  ^''Freund     v.      Importers      Nat. 

"Hopkins  v.  Manchester,  16  R.  Bank,  76  N.  Y.  352;   Partridge  v. 

I.  663.  19  Atl.  243,  7  L.  R.  A.  387 ;  Davis,    20    Vt.    499 ;     Gorman     v. 

Chadron  Bank  v.  Anderson,  6  Wyo.  Ketcham,  3Z  Wis.  427. 

518,  48  Pac.  197.  20a  Mayers    v.     McRimmon,     140 

15  Pavey  v.  Stauffer,  45  La.  Ann.  N,  C  640. 
353,  12  So.  512,  19  L.  R.  A.  716; 


§97  TRANSFER  BY  INDORSEMENT.  Ill 

additional  words,  is  a  sufficient  indorsement."^^  An  Indorsement 
alone  without  delivery  conveys  no  title.  Indorsement  means  an 
indorsement  completed  by  delivery .^^  An  indorsement  is  usually 
written  on  the  back  of  the  instrument,  but  the  place  is  not  essen- 
tial. If  the  payee  write  his  name  on  any  part  of  the  instrument, 
with  the  intention  of  indorsing  it,  that  is  sufficient  indorsement. 
The  law  looks  to  the  intention  of  the  parties  rather  than  to  the 
form  as  to  indorsement.^*  A  person  writes  certain  words  upon 
the  back  of  the  instrument:  was  it  the  intention  to  indorse  the 
instrument  or  do  something  else?  And  the  law  is  very  apt  to 
consider  any  words  as  an  indorsement  rather  than  something 
else.'^  The  Negotiable  Instruments  Law  states :  "Where  a  sig- 
nature is  so  placed  upon  the  instrument  that  it  is  not  clear  in  zi'hat 
capacity  the  person  making  the  same  intended  to  sign,  he  is 
deemed  to  be  an  indorser."^^^  And  a  further  section  of  the  law 
states :  "A  person  placing  his  signature  upon  an  instrument  other- 
wise than  as  maker,  drawer  or  acceptor  is  deemed  to  be  an  in- 
dorser,  unless  he  clearly  indicates  by  appropriate  zvords  his  inten- 
tion to  be  bound  in  some  other  capacity."^'*  There  is  one  excep- 
tion, however,  and  that  is  in  the  case  of  a  guarantor,  or  a  guar- 
antee written  on  the  back  of  an  instrument.^^  And  it  should 
be  noted  that  there  is  a  difference  between  a  surety  and  a  guar- 
antor. A  guarantor  promises  to  account  for  the  debt,  default,  or 
miscarriage  of  another  person.  The  surety  is  bound  in  his  own 
right  with  his  principal  and  as  an  original  promisor.  He  is  the 
debtor  from  the  beginning  and  is  held  to  know  of  the  default  of 
the  principal.  On  the  other  hand,  the  contract  of  the  guarantor 
is  his  own  separate  contract.  It  is  in  the  nature  of  a  warrant  by 
himself  that  the  thing  to  be  done  by  the  principal  shall  be  done. 
The  contract  is  not  his  contract  and  he  is  not  bound  to  take  no- 
tice of  non-performance.  A  surety  obligation  is  a  primary  obliga- 
tion.  The  surety  and  the  principal  may  be  joined  as  defendants 
in  one  suit,  or  the  surety  may  be  sued  alone.  So,  we  see,  then, 
there  is  that  exception  as  to  a  guaranty ;  when  a  guarantee  is 

21  Neg.    Inst.    Law,    §  31.    where  Brown    v.    Butchers    etc.    Bank,    6 

all  cases  directly  or  indirectly  bear-  Hill  (N.  Y.)  443,  41  Am.  Dec.  755. 

ing   upon    or   citing    the   Law    are  23a  ^^g.    Inst   Law,    §  17,   sub.  6. 

grouped.  24  Neg.  Inst.  Law,  §  63,  where  all 

231  Neg.    Inst.    Law.     §2     (191),  cases  directly  or  indirectly  bearing 

where    all    cases    directly    or    indi-  upon  or  citing  the  Law  are  grouped, 

rectly   bearing   upon    or   citing   the  25  Eagerly  v.  Lawson.  176  Mass. 

Law  are  grouped.  551,  57  N.  E.  1020,  51  L.  R.  A.  432; 

22a  Haines    v.    Dubois,    29    N.    J.  Ely  v.  Bibb,  4  J.  J.  Marsh.    (Ky.) 

Law  259.  71.     See  Chap.  XXI  on  Suretyship 

23  Myers  v.   Wright,  33  111.  284;  and  Guaranty. 


112  NEGOTIABLE   INSTRUMENTS.  §98 

written  on  the  back  of  an  instrument  it  will  not  be  construed  as 
an  indorsement,  but  most  any  other  agreement  or  arrangement 
will  be  construed  as  an  indorsement. 

§  98.  Who  indorse.  The  party  to  whose  order  the  instru- 
ment is  made  payable  should  indorse  the  instrument.^ 

If  the  name  of  the  payee  or  indorsee  is  wrongly  designated  he 
may  indorse  the  paper  as  described.  The  Negotiable  Instru- 
ments Law  states: 

"Where  the  name  of  a  payee  or  indorsee  is  iv^rongly  designated 
or  misspelled,  he  may  indorse  the  instrnment  as  therein  described, 
adding,  if  he  think  fit,  his  proper  signature. '"^^^ 

This  section  also  applies  to  a  name  assumed  in  business  or 
otherwise. 

"Where  an  instrument  is  payable  to  the  orcfer  of  two  or  more 
payees  or  indorsees  who  are  not  partners,  all  must  indorse,  unless 
the  one  indorsing  has  authority  to  indorse  for  the  others."^'' 

"Where  an  instrument  is  drawn  or  indorsed  to  a  person  as 
'cashier'  or  other  fiscal  officer  of  a  bank  or  corporation,  it  is 
deemed  prima  facie  to  be  payable  to  the  bank  or  corporation  of 
which  lie  is  such  officer:  and  may  be  negotiated  by  either  the  in- 
dorsement of  the  bank  or  corporation,  or  the  indorsement  of  the 
officer."^^ 

The  above  section  as  to  the  indorsement  to  a  person  as  "cashier" 
states  an  old  rule  of  the  law,  for  banks  had  uniformly  indorsed 
paper  in  this  manner  when  sent  for  collection. 

And  paper  made  payable  to  A  as  cashier  of  a  bank  and  in- 
dorsed by  him  as  cashier  may  be  recovered  upon  by  the  indorsee 
who  may  show  that  said  cashier  was  acting  in  his  capacity  as  such 
in  negotiating  the  paper.'^* 

The  provisions  of  this  section  are  not  applicable  where  the 
cashier  uses  his  individual  name  without  the  title  of  his  ofifice  i*^" 
and  the  mere  possession  by  a  bank  of  paper  payable  to  its  cashier 
in  his  individual  name  does  not  enable  it  to  maintain  an  action 
thereon  against  the  maker.^*'' 

26  Cock  V.  Fellows,  1  Johns.  (N.  all  cases  directl}'  or  indiiectly  bear- 
Y.)  143;  Freeman  v.  Perry,  22  ing  upon  or  citing  the  Law  are 
Conn.    617;    Woodbury    v.    Wood-      grouped. 

bury,  47  N.  H.  11;  Ellis  v.  Brown,  28a  Johnson     v.     Bufifalo     Center 

6  Barb.  282.  State   Bank,    134   Iowa,   731. 

26a  Neg.  Inst.  Law,  §43.  28b  pjrst       National       Bank       of 

27  Neg.  Inst.  Law,  §  41,  where  Pomeroy  v.  McCullough,  50  Ore. 
all  cases  directly  or  indirectly  bear-  508. 

ing   upon    or    citing    the    Law    are         28o  Swanby     v.     Northern     State 
grouped.  Bank,  150  Wis.  572. 

*^  Neg.    Inst.    Law,    §  42,    where 


§   99  TRANSFER  BY  INDORSEMENT.  113 

This  section  of  the  law  refers  to  "other  fiscal  officer  of  a  bank 
or  corporation."  Under  this,  paper  would  be  deemed  payable  to 
the  corporation  where  indorsed  payable  to  the  treasurer  of  a 
savings  bank,  the  treasurer  or  secretary  of  a  trust  company  or 
the  treasurer  of  a  town.^^** 

§  99.  Nature  of  indorsement.  As  to  its  nature  the  indorse- 
ment is  a  contract^**  and  also  a  transfer.  Every  indorser  is  a  new 
drawer  and  the  terms  are  found  on  the  face  of  the  bill  or  note. 
There  is  an  exception  in  case  the  indorsement  is  to  A  and  not 
to  his  order,  A  could  not  negotiate  it.  There  is  an  added  obligation 
upon  the  instrument  aside  from  what  appears  upon  the  face 
of  the  instrument.  The  person  who  indorses  it  says,  "Yes,  I 
made  that  contract,  but  you  must  present  that  for  payment  and 
you  must  notify  me  if  it  is  not  paid.  If  that  is  presented  for 
acceptance  and  not  accepted,  or  presented  for  payment  and  not 
paid,  then  I  will  pay  it."  That  is  the  contract  that  the  indorser 
on  an  instrument  makes.  He  says,  "I  will  pay  the  instrument 
according  to  the  face  of  the  bill,^"  provided  you  give  me  notice 
of  its  non-acceptance  or  non-payment."^^  So  an  indorsement 
performs  two  things :  It  makes  a  contract  and  it  transfers  the 
instrument ;  the  indorser  says  to  every  person  on  the  face  of 
that  instrument  and  to  every  person  who  precedes  him  as  an 
indorser  of  the  instrument,  *Tf  this  instrument  is  not  paid  by 
the  person  who  is  primarily  liable  on  the  instrument,  and  if 
you  give  me  due  notice  that  the  instrument  has  not  been  paid, 
then  I  will  pay  it."  That  is  the  contract.  He  doesn't  say  that 
he  would  pay  it  absolutely,  but  "if  you  give  me  notice  that  the 
person  who  is  liable  on  the  instrument  will  not  pay  or  has  failed 
in  some  respect,  I  will  pay  the  instrument."  Of  course,  if  it 
is  a  bill  of  exchange,  and  it  is  not  accepted  by  the  acceptor, 
the  indorser  says  by  indorsing  it,  "If  it  is  not  accepted  and 
you  duly  notify  me,  I  will  then  pay  the  instrument."  In  that 
case,  if  the  drawee  did  not  accept  it,  the  drawer  would  be  pri- 
marily liable.  In  the  case  of  a  note,  the  indorser  says,  "In  case 
that  instrument  is  not  paid,  and  you  give  me  notice  of  the  fact 
that  the  maker  does  not  pay  the  note,  then  I  will  pay  the  note 
myself." 

28<i  Quincy    Mutual    Fire    Insur-  743 ;   Prentiss  v.   Savage,   13  Mass. 

ance     Company     v.     International  20;   Woodward   v.   Lowry,   74    Ga. 

Trust  Company,  217  Mass.  370.  148. 

2»Furgeson    v.    Stapels,    83    Me.  3i  jones  v.  Robinson,  11  Ark.  504, 

159,   19  Atl.   158,   17  Am.   St.   Rep.  54  Am.  Dec.  212;   Beer  v.  Clifton, 

470;   Mudd   v.  Harper,    1    Md.   110,  98   Cal.    323,    33    Pac.    204,   35   Am. 

54  Am.  Dec.  644.  St.  Rep.  172,  20  L.  R.  A.  580. 

30  Van  Vleet  v.  Sledge,  45  Fed. 


114  NEGOTIABLE    INSTRUMENTS.  §  100 

The  indorsement  of  a  bill  or  note  implies  an  undertaking  from 
the  indorser  to  the  person  in  whose  favor  it  is  made  and  to  every 
other  person  to  whom  the  bill  or  note  may  afterwards  be  trans- 
ferred, exactly  similar  to  that  which  is  implied  by  drawing  a 
bill,  except  that  in  the  case  of  drawing  a  bill  the  stipulation  with 
respect  to  the  drawer's  responsibility  and  undertaking  do  not 
apply. 

In  the  beginning  of  the  course  we  saw  that  a  note  might  waive 
presentment  and  notice.  Of  course,  under  such  circumstances  it 
will  not  be  necessary  to  make  them  a  part  of  the  contract  that 
the  indorser  makes. 

§  100.  Requisites  of  indorsement.  There  are  certain  requi- 
sites of  an  indorsement.  The  customary  and  mercantile  form 
of  indorsement  is  the  signature  of  the  indorser.  But  an  indorse- 
ment in  such  words  as :  .  "For  value  received,  I  hereby  assign, 
transfer  and  set  over  to  B  all  my  right,  title,  interest  and  claim 
in  the  within  instrument."  have  been  held  to  pass  a  legal  title  to 
the  instrument  and  not  to  destroy  its  negotiability. 

We  have  seen  that  "the  indorsement  must  be  written  on  the 
instrument  itself  or  upon  a  paper  attached  thereto."^^* 

It  is  not  necessary  under  the  law  that  there  should  be  a  physi- 
cal impossibility  of  writing  the  indorsement  on  the  instrument 
itself  as  it  may  be  on  an  allonge,  that  is  a  paper  attached  to  the 
instrument,  whenever  the  necessity  or  convenience  of  the  parties 
require  it. 

It  is  clear  that  a  detached  paper  cannot  bind  one  as  indorser  on 
a  negotiable  instrument.^*" 

The  Negotiable  Instrument  Law  further  provides: 

"The  indorsement  must  be  an  indorsement  of  the  entire  instru- 
ment. An  indorsement  which  purports  to  transfer  to  the  indorsee 
a  part  only  of  the  amount  payable,  or  which  purports  to  transfer 
the  instrument  to  two  or  more  indorsees  severally,  does  not  oper- 
ate as  a  negotiation  of  the  instrument.  But  zvhere  the  instru- 
ment has  been  paid  in  part,  it  may  be  indorsed  as  to  the 
residue."^ 

Take  a  bill  for  $500.  Suppose  the  payee  should  indorse  $250 
to  A  and  $250  to  B.  That  could  not  be  done,  for  the  indorse- 
ment must  be  in  accordance  with  the  bill.^^     But  if  $250  was 

siaNeg.  Inst.  Law,  §  31.  33  Planters    Bank    of    Tenn.    v. 

31"  First   Nat.   Bank   v.   Doherty,  Evans,  36  Tex.  592;  Hughes  v.  Kid- 

156  Ky.  386,  161  S.  W.  211.  dell.  2  Bay  (S.  C.)  324;  Douglas  v. 

33  Neg.  Inst.  Law,  §  42,  where  all  Wilkeson,  6  Wend.  637 ;  Hawkins  v. 

cases  directly  or  indirectly  bearing  Cudy,   1   Ld.  Raym.  360;   Erwin  v. 

upon     or     citing     the     Law     are  Lynn,  16  Ohio  St,  547. 
grouped. 


§  101  TRANSFER  BY  INDORSEMENT.  115 

paid  on  the  bill,  the  rest  could  be  indorsed  to  someone  else,  as 
the  indorsement  of  a  partial  payment  on  the  instrument  does  not 
render  it  non-negotiable.^^*  The  test  then  is,  does  the  transfer  cut 
up  the  right  of  action,  or  does  it  vary  the  rights  of  the  parties. 
If  a  note  for  value  was  transferred  and  there  was  a  neglect  to 
indorse  it,  the  transferrer  may  be  compelled,  in  equity,  to  make 
the  indorsement.^"*  The  transferee  is  the  rightful  holder  of  it 
until  it  is  indorsed,  and  equity  would  compel  that  there  should 
be  an  indorsement.  Suppose  a  case  where  the  note  was  indorsed 
by  A  to  B  and  then  B  indorsed  it  to  A,  each  transfer  being  for 
value,  can  A  recover  from  B  on  that  indorsement?  No.  Because 
of  circuity  of  action.  If  A  sued  B,  B  could  turn  right  around  and 
sue  A.  Consequently,  it  is  held  that  that  could  not  be  done,  un- 
less A,  in  the  first  instance,  should  indorse  "without  recourse," 
and  B  did  not.^ 

The  indorsement  must  follow  the  tenor  of  the  bill  or  note. 
A  bill  or  note  cannot  be  divided  into  two  different  parts,  and 
one  cannot  accept  part  and  not  the  other,  or  pay  part  of  it  and 
not  pay  the  other  part,  providing  it  divides  the  cause  of  action. 
It  would  not  be  absolutely  void  to  divide  it  up  in  this  way ;  it 
would  be  binding  between  the  parties,  yet  it  would  not  be  nego- 
tiable by  the  law  merchant.^^  That  means  not  good  by  the  law 
merchant,  and  a  complaint  fails  to  state  a  cause  of  action  at  law 
where  the  plaintiff  alleges  that  the  payee  had  indorsed  to  the 
plaintiff  a  one-half  interest  in  a  note.^^*  Then,  a  second  requisite 
is  that  the  indorsement  be  by  the  payee  or  subsequent  holder. 
And  the  third  requisite  is  as  to  delivery.  There  can  be  no  ques- 
tion as  between  the  immediate  parties  but  that  a  delivery  is  nec- 
essary, and  when  the  instrument  gets  into  the  hands  of  a  bona 
iide  holder  a  delivery  is  necessary  unless  certain  things  arise 
whereby  the  transferrer  would  be  estopped.  And  there  must 
arise  something  of  that  nature  in  order  to  say  that  an  indorse- 
ment is  valid  without  delivery. 

§  101.  Varieties  of  indorsement.  There  are  various  liabili- 
ties which  may  be  engrafted  on   a  negotiable  instrument,   evi- 

33a  Smith  V.  Shippey,  182  Pa.  St.  Wilders  v.  Stevens.  15  Mecs.  &  W. 

24.  208. 

34  Schoepf  er  v.  Tommack,  97  111.  36  Co^k  v.  Fellows,  1  Johns.  (N. 
App.  562;  Brown  v.  Wilson,  45  S.  Y.)  143;  Newman  v.  Ravenscroft. 
C.  519,  23  S.  E.  630.  55  Am.  St.  Rep.  67  111.  493 ;  Pease  v.  Dwight,  6  How 
779;  Couter  v.  Rafferty,  7  Montreal  (U.  S.)   190. 

Super.  Ct.  146.  36a  parklev   v.    Muller,    164    App. 

35  Bishop  V.  Hayward.  4  Term  R.       Div,   (N.  Y.)  35. 
470;  Moore  v.  Cross,  19  N.  Y.  227; 


116 


NEGOTIABLE    INSTRUMENTS. 


§102 


denced  by  the  character  and  terms  of  the  indorsement  thereon. 
An  indorsement  may  be  (a)  special,  or  (b)  in  blank;  it  may 
be  (c)  absokite,  or  (d)  conditional;  it  may  be  (e)  restrictive; 
it  may  be  (f)  without  recourse  on  the  indorser;  and  there  may 
be  (g)  joint  indorsements  of  the  instrument,  (h)  successive  in- 
dorsements, and  also  (i)  irregular  indorsements. 

The  Negotiable  Instruments  Law  provides : 

"An  indorsement  may  be  either  special  or  in  blank;  and  it  may 
also  be  either  restrictive  or  qualified  or  conditional."^"^ 

Below  are  given  some  of  the  most  common  forms  of  indorse- 
ment: 


(Indorsement   in    full) 
Pay  to  DONALD  S.  MORRIS 
or   order. 

NATHAN  REDDING. 


(Indorsement  in  blank) 
DONALD  S.  MORRIS. 


(Qualified   Indorsement) 
Without  recourse. 
JOSEPH  THOMPSON. 


(Conditional  Indorsement) 
Pay  HENRY  HUDER  or  or- 
der  on    the   completion    of   the 
Newcastle  Road. 

HENRY  STEVENSON. 


(Restrictive  Indorsements) 
1.    Pay  only   to   EARL   MAT- 
LOCK   for   collection    for    my 
account. 

HENRY  HUDER. 


2.  Pay  to  HENRY  REEVE  or 
order  as  Trustee  for  GEORGE 
GRAVES. 

WILLIAM  ADDISON. 


(Indorsement  by  guaranty) 
For    value    received    I   hereby 
guaranty   the   payment  of   this 
note    together   with   any   costs 
incurred    in    collection. 

LOUIS  EWBANK. 


§  102.  Indorsement  in  full  or  special  indorsement.  A  spe- 
cial indorsement  or  an  indorsement  in  full  is  one  which  mentions 
the  name  of  the  person  in  whose  favor  it  is  made  and  to  whom, 
or  to  whose  order,  the  sum  is  to  be  paid.  For  instance :  "Pay 
to  B,  or  order,"  signed  "A,"  is  an  indorsement  in  full  by  A, 
the  payee  or  holder  of  the  paper,  to  B. 

The  special  indorsement  is  the  saine  as  an  indorsement  in  full. 
It  is  an  indorsement  to  someone  or  order ;  that  is,  "a  special  in- 
dorsement specifies  the  person  to  ivhom,  or  to  whose  order,  the 
instrument  is  to  be  payablc."^^ 

The  subsequent  indorsee  must  write  his  order  on  the  instru- 
ment ;  that  is.  "the  indorsement  of  such  indorsee  is  necessary  to 


'^"^  Neg.  Inst.  Law.  §43.  where 
all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped. 

^  Neg.    Inst.    Law,    §  44,    where 


all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped.  But  see  Spence  v.  Rpjb- 
inson,  35  W.  Va.  313,  13  S.  ~E. 
1004. 


§§  103-104  TRANSFER  BY  INDORSEMENT.  117 

the  further  negotiation  of  the  instrument ."^'^  And  the  subse- 
quent holder  of  the  instrument  would  be  required  to  make  more 
proof  in  order  to  recover  on  the  instrument  when  it  is  indorsed 
in  full.  When  there  is  a  special  indorsement,  one  endeavoring 
to  recover  from  one  who  has  received  it  by  special  indorsement 
must  prove  the  signature  of  two  persons ;  where  it  is  indorsed  in 
blank,  one  would  have  to  prove  the  signature  of  the  party  only 
against  whom  he  was  endeavoring  to  recover. 

§  103.  Indorsement  in  blank.  An  indorsement  in  blank  is 
one  which  does  not  mention  the  name  of  the  indorsee,  and  gen- 
erally consists  simply  of  the  payee  placing  his  name  in  writing 
on  the  back  of  the  instrument.^®  As  the  law  states :  "An  indorse- 
ment in  blank  specifies  no  indorsee,  and  an  instrument  so  indorsed 
is  payable  to  bearer,  and  may  be  negotiated  by  delivery."^^^  The 
holder  of  a  bill  with  a  blank  indorsement  may,  by  writing  a  name 
over  the  indorser's  signature,  convert  it  into  a  special  indorse- 
ment,^* but  such  a  bill  if  originally  payable  to  bearer  is  not  re- 
strained thereby  and  is  payable  to  bearer,  except  that  the  special 
indorser  is  only  liable  to  parties  making  title  through  his  indorse- 
ment.^ He  cannot,  however,  write  over  it  any  contract  inconsist- 
ent with  the  character  of  the  indorsement,  as,  for  example,  he 
could  not  write  over  it  a  contract  of  guaranty ;  for  the  effect  of 
this  would  be  to  deprive  the  indorser  of  his  right  to  notice  in  case 
of  non-payment.^^* 

§  104.  Absolute  and  conditional  indorsements.  An  absolute 
indorsement  is  one  by  which  the  indorser  binds  himself  to  pay, 
upon  no  other  condition  than  the  failure  of  prior  parties  to  do 
so,  and  of  due  notice  to  him  of  such  failure.  A  conditional  in- 
dorsement is  one  by  which  the  indorser  annexes  some  other  con- 
dition to  his  liability ;  that  is,  where  there  is  some  condition  in 
the  indorsement.'*^  Now  as  to  the  condition,  if  it  is  in  the  in- 
dorsement, the  courts  hold  that  it  is  valid.  There  may  be  a  valid 
conditional  indorsement  and  it  accomplishes  justice,  and  yet  it 

39  Neg.    Inst.    Law,    §  44,    where  177  111.  431.  53  N.  E.  76,  64  Am.  St. 
all  cases  directly  or  indirectly  bear-  Rep.  252 ;  Hunter  v.  Hempstead,  1 
ing    upon    or    citing    the    Law    are  Mo.  67,  13  Am.  Dec.  468. 
grouped.  '^  Habersham  v.  Lehman,  63  Ga. 

40  Neg.  Inst.  Law,  §  44,  where  383 ;  Johnson  v.  Mitchell,  50  Tex. 
all  cases  directly  or  indirectly  bear-  212. 

ing    upon    or    citing    the    Law    are  43a  Belden  v.  Hann,  61   Iowa  42, 

grouped.     See  also  note  1  L.  R.  A.  43  McGorray  v.  Stockton  Sav.  etc. 

712.  Soc,    131    Cal.    321,    63    Pac.    479; 

40a  j^gg^     jnst.     Law,     §  34     last  Rowe  v.  Haines,  IS  Ind.  445,  77  Am. 

part.  Dec.   101 ;  Johnson  v.   Barrow,   12 

41  Illinois  Conference  v.  Plagge,  La.  Ann,  83, 


118  NEGOTIABLE    INSTRUMENTS.  §  104 

seems  to  restrict  the  circulation  of  the  instrument  to  some  ex- 
tent, because  there  is  some  condition  attached  to  it.  Yet  it  does 
not  in  any  way  interfere  with  the  face  of  the  instrument  as 
such;  it  is  a  primary  obhgation  when  it  is  on  the  face  of  the 
instrument,  and  is  invaHd,  but  il  it  is  an  indorsement  it  is  vahd, 
and  does  not  make  the  instrument  a  non-negotiable  instrument."** 

"Where  an  indorsement  is  conditional  a  party  required  to  pay 
the  instrument  may  disregard  the  condition  and  make  payment 
to  the  indorser  or  his  transferee  whether  the  condition  has  been 
fidfilled  or  not.  But  any  person  to  zvhoni  an  instrument  so  in- 
dorsed is  negotiated  icill  hold  the  same,  or  the  proceeds  thereof, 
subject  to  the  rights  of  the  person  indorsing  conditionally.'"^ 

Suppose  an  indorsement  as  follows:  "Pay  to  A,  or  order,  if 
he  marries  before  he  is  25."  This  is  written  on  the  back  of 
the  instrument  and  is  not  a  part  of  the  original  instrument. 
Now,  that  is  a  conditional  indorsement  and  is  held  good.  It 
is  not  good  if  on  the  face  of  the  instrument,  but  is  held  good  if 
it  is  an  indorsement.  When  a  condition  is  written  on  the  face 
of  the  instrument  it  is  not  negotiable,^**  but  where  it  is  written 
on  the  back  the  courts  say  it  is  negotiable  by  the  law 
merchant.  It  is  a  contract,  and  the  person  who  makes  it  is  bound 
by  it,  providing  the  conditions  are  fulfilled.*''  We  are  now  con- 
sidering whether  it  is  a  good  principle.  Suppose  this  condition 
is  written  on  the  face  of  the  note,  it  would  apply  to  every  man 
who  indorses  it,  whereas,  when  it  is  written  on  the  back  by  one 
indorser  it  only  applies  to  him  and  not  to  the  others. 

Suppose  an  instrument  is  worded,  "Pay  to  the  order  of  A," 
and  signed  "B,"  "A"  being  the  payee  indorses  it  with  a  con- 
ditional indorsement  and  says,  "Pay  to  C,  provided  he  marries 
before  he  is  25."  What  is  the  value  of  that  instrument  ?  Could 
anybody  get  anything  on  that  instrument?  It  means  at  any 
time  he  gets  married  before  he  is  25  years  old.  This  is  an 
exceptional  case  and  really  seems  to  make  the  note  non-negotiable 
at  the  vei'y  first  instance,  but  it  does  not,  if  not  made  contem- 
poraneously with  the  instrument  and  a  part  of  it.  If  a  memo- 
randum of  agreement  of  the  parties  is  written  upon  the  bill  or 
note  contemporaneously  wn'th  its  execution,  and  intended  by  the 

*4Tappan  v.  Ely,  15  Wend.   (N.  4G  Paimer  v.  Sargent,  5  Nebr.  223, 

Y.)    362;   Scares  v.  Glyn,  8  Q.  B.  25  Am.  Rep.  479;  Hill  v.  Nutter,  82 

24,  55  E.  C.  L.  24.  Me.    199.    19    Atl.    170;    Swank    v. 

45  Neg.    Inst.   Law,    §    39,   where  Nichols,  24  Ind.  199. 

all  cases  directly  or  indirectly  bear-  47  Johnson    v,    Barrow,    12    La. 

ing   upon   or   citing   the    Law   are  Ann.  83. 
grouped. 


§  105  TRANSFER  BY  INDORSEMENT.  119 

parties  to  make  a  part  of  the  note  or  bill,  it  is  construed  in  the 
same  manner  as  if  in  the  body  of  the  instrument.'*^ 

By  the  last  sentence  of  section  39  of  the  law  as  above  set  out 
the  rule  is  somewhat  analogous  to  that  which  gives  to  an  indorser 
who  has  paid  a  note  in  part  an  equitable  right  pro  tanto  in  the 
proceeds,  where  the  holder  afterward  collects  the  whole  amount 
of  the  note  from  the  maker."*^* 

One  may  indorse  in  such  terms  as  to  negative  personal  lia- 
bility thus,  as  stated  in  the  Negotiable  Instruments  Law : 

"Where  any  person  is  under  obligation  to  indorse  in  a  repre- 
sentative capacity,  he  may  indorse  in  such  terms  as  to  negative 
personal  liability. '"^^^ 

§  105.  Restrictive  indorsement.  A  restrictive  indorsement 
is  one  so  worded  that  it  may  restrict  the  further  negotiability  of 
the  instrument ;  and  it  is  then  called  a  restrictive  indorsement.'*® 
Thus,  "Pay  the  contents  to  J.  S.  only,"  is  such  an  indorsement. 

The  Negotiable  Instruments  Law  provides : 

"An  indorsement  is  restrictive  which  either  (1)  prohibits  the 
further  negotiation  of  the  instrument ;  or  (2)  constitutes  the  in- 
dorsee the  agent  of  the  indorser;  or  (3)  vests  the  title  in  the 
indorsee  in  trust  for  or  to  the  use  of  some  other  person.  But 
the  mere  absence  of  words  implying  power  to  negotiate  does  not 
make  an  indorsement  restrictive."^^ 

"A  restrictive  indorsement  confers  upon  the  indorsee  the 
right,  (1)  to  receive  payment  of  the  instrument ;  (2)  to  bring 
any  action  thereon  that  the  indorser  coidd  bring;  (3)  to  trans- 
fer his  right  as  such  indorsee,  where  the  form  of  the  indorsement 
authorises  him  to  do  so.  But  all  subsequent  indorsees  acquire 
only  the  title  of  the  -first  indorsee  under  the  restrictive  indorse- 
ment."^^ 

"Pay  the  contents  to  J.  S.  only"  is  an  illustration  of  an  indorse- 
ment which  prohibits  the  further  negotiation  of  the  instrument. 

The  restrictive  indorsement  may  or  may  not  restrict  the  cir- 
culation of  the  instrument,  depending  on  the  indorsement. 
There  are  two  classes — collection  indorsements  and  trustee  in- 

^  Parsons  v.  Jackson,  99  U.   S.  so  jjeg.    Inst.    Law,    §  36,    where 

434,  25  L.  Ed.  457.  all  cases  directly  or  indirectly  bear- 

46a  Madison      Square      Bank      v.  ing    upon    or    citing    the    Law    are 

Pierce,  137  N.  Y.  444.  grouped. 

^Sb  Neg.  Inst.  Law,  §  44.  51  Neg.  Inst.  Law,  §  37,  where  all 

^spawsett  V.  U.  S.  Nat.  L.   Ins.  cases    directly    or    indirectly    bear- 
Co.,   97   111.    11,   37   Am.    Rep.   95;  ing    upon    or    citing   the    Law   are 
Hook  V.  Pratt,  78  N.  Y.  371 ;  Fassin  grouped. 
V.  Hubbard,  55  N.  Y.  465.    See  note 
12  L.  R.  A.  370. 


120  NEGOTIABLE    INSTRUMENTS.  §  105 

dorsements.  If  it  is  a  collection,  it  is  no  longer  negotiable. 
"Pay  to  A,"  and  then  the  words  "for  collection"  written  after- 
wards. That  would  indicate  that  A  no  longer  had  any  right 
to  negotiate  that  instrument,  but  only  had  a  right  to  collect  it.^''* 
But  if  it  is  "Pay  to  A,  or  order,  for  the  use  of  B,"  or  "A  or 
order,  as  trustee  for  B,"  or  words  to  that  effect,  then  the  very 
indorsement  itself  would  indicate  that  A  could  place  an  order 
upon  that  indorsement,  and  that  certainly  would  not  restrict 
the  instrument.  A  trustee  indorsement  containing  the  words  "or 
order,"  or  words  of  similar  import,  can  be  passed  from  hand 
to  hand.^^  In  the  indorsement,  "pay  to  A  for  account  of  B,"  the 
title  passes  to  A,  but  the  indorsement  is  restrictive  and  gives 
notice  that  the  paper  cannot  be  negotiated  by  A  for  his  own  debt, 
or  for  his  own  benefit.®^* 

An  indorsement  for  collection  is  not  a  transfer  of  the  title  of 
the  instrument  to  the  indorsee,  but  merely  constitutes  him  the 
general  agent  of  the  indorser  to  present  the  paper,  demand  and 
receive  payment,  and  remit  the  proceeds.®*  An  indorsement  for 
collection  made  by  the  payee  is  cancelled  by  his  subsequent  in- 
dorsement to  another  indorsee  for  value.®®  Where  an  indorse- 
ment in  blank  is  accompanied  by  a  letter  stating  that  the  instru- 
ment is  "for  collection  and  credit,"  the  indorsement  and  letter 
must  be  read  together,  and  the  effect  is  to  make  the  indorsement 
restrictive,  and  the  same  in  character  as  if  the  contents  of  the 
letter  had  been  incorporated  in  the  indorsement.®®* 

An  indorsement  of  a  bill  or  draft  to  a  bank  for  deposit  is 
common  in  business  transactions.®®  Such  an  indorsement,  like 
an  indorsement  for  collection,  constitutes  a  retention  of  title  in 
the  depositor  in  the  absence  of  any  practice  or  agreement  to  the 
contrary.  It  is  likely,  however,  that  the  title  to  a  check  so  in- 
dorsed which  is  credited,  according  to  the  practice  prevailing 
between  the  bank  and  the  indorser,  to  the  account  of  the  in- 

53  Peoples  etc.  Bank  v.  Craig.  63  S.  W.  982,  IS  L.  R.  A.  102;  Boyer 
Ohio  St.  374,  59  N.  E.  102,  81  Am.  v.  Richardson,  52  Neb.  156,  71  N. 
St.  Rep.  639,  52  L.  R.  A.  872 ;  Con-  W.  981.  See  also  notes  2  L.  R.  A. 
tinental  Nat.  Bank  v.  Weems,  69  699,  7  L.  R.  A.  852,  8  L.  R.  A.  42. 
Tex.  489,  6  S.  W.  802,  5  Am.  St.  14  Am.  St.  Rep.  793,  and  4  Am.  St. 
Rep.    85;    National    City    Bank    of  Rep.  203 

Brooklyn  v.  Wescott,  118  N.  Y.  468,  55  Brook  v.  Van  Nest,  58  N.  J.  L. 

23  N.  E.  900.  162,  33  Atl.  382;  Atkins  v.   Cobb, 

53Leavitt    v.    Putnam,    3    N.    Y.  51  Ga.  86. 

494 ;  Leland  v.  Parriott,  35  la.  454.  55a  gan]^  ^^  America  v.  Waydell, 

53a  Hook  v.  Pratt,  78  N.  Y.  371,  187  N.  Y.  115. 

375.  56  Barbour  v.  Bayon,  5  La,  Ann. 

54  Northwestern     Nat.     Bank    v.  304,  52  Am.  Dec.  593. 
Bank  of  Commerce.  107  Mo.  402,  17 


§  106  TRANSFER  BY  INDORSEMENT.  121 

dorser,  will  be  held  to  have  passed  to  the  bank.  In  any  event  a 
restrictive  indorsement  of  an  instrument  for  collection  or  de- 
posit, or  to  the  use  of  the  indorser  and  for  his  benefit,  in  the 
absence  of  any  other  circumstances,  will  not  divest  the  indorser 
of  his  title  thereto,  until  the  money  is  paid. 

And  the  law  as  above  set  out  enables  a  bank  to  sue  in  its  own 
name  on  paper  indorsed  to  it  "for  collection. "^^* 

One  who  takes  paper  under  a  restrictive  indorsement  takes 
the  paper  subject  to  all  equities  that  might  have  been  asserted  by 
the  principal  obligor  had  it  not  been  indorsed.^^" 

§  106.  Indorsement  without  recourse.  An  indorsement 
qualified  with  the  words,  "without  recourse,"  "sans  recourse,"  or 
"at  the  indorsee's  own  risk,"  renders  the  indorser  a  mere  as- 
signor of  the  title  to  the  instrument,  and  relieves  him  from  all 
responsibility  for  its  payment,^''  though  not  from  certain  liabili- 
ties. 

The  indorsement  without  recourse  means  just  as  the  word 
signifies.  A  says  to  B,  "I  indorse  this  over  to  you,  but  you 
have  no  recourse  on  me,  providing  the  parties  on  the  instrument 
are  not  financially  able  to  pay  this  instrument.  I  don't  stand 
good  for  the  financial  ability  of  the  other  parties  who  have  pre- 
ceded me  on  the  instrument." 

The  form  of  the  indorsement  without  recourse  is  "sans  re- 
course," or  "without  recourse,"  or  "at  the  indorsee's  own  risk," 
or  such  equivalent  words.  It  transfers  the  legal  title  to  the  in- 
strument. "A  qualified  indorsement  constitutes  the  indorser  a 
mere  assignor  of  the  title  to  the  instrument.  It  may  he  made  bv 
adding  to  the  indorser^s  signature  the  word  ^without  recourse/ 
or  any  words  of  similar  import. "^^  It  does  not  free  him  from 
all  liability.  He  warrants  (1)  that  the  instrument  is  in  all  re- 
spects genuine  as  to  prior  parties;^®  (2)  that  he  has  a  good  title 
and  a  right  to  transfer  it  ^^  and  (3)  that  he  has  no  knowledge 

se^Mezger    v.    Sigall,    83    Wash.  ing   upon    or    citing   the    Law    are 

80.  grouped. 

56b  Smith  V.  Bayer,  46  Ore.  143.  59LobdelI    v.     Baker.     1     Mete. 

57  Cross  V.  Hollister,  47  Kan.  652,  (Mass.)  193;  Birmingham  Nat 
28  Pac.  693;  Corbett  v.  F»tzer,  47  Bank  v.  Bradley,  103  Ala.  109.  IS 
Neb.  269,  66  N.  W.  417;  Drom  v.  So.  440,  49  Am.  St.  Rep.  17. 
Sherwin,  20  Colo.  234,  38  Pac.  56;  State  Exchange  Bank  v.  National 
Rice  V.  Stearns,  3  Mass.  225,  3  Am.  Bank  of  Commerce,  —  Okla.  — .  174 
Dec.  129.  As  to  effect  of  indorse-  Pac.  796.  Note  as  to  undertaking 
ment  without  recourse  see  notes  12  of  indorser  without  recourse,  2  A 
L.  R.  A.  371,  and  7  Am.   St.  Rep.  L.  R.  216. 

365.  ooDumont     v.     Williamson,     18 

58  Neg.    Insf.    Law,    §38,    where       Ohio  St.  515;  Palmer  v.  Courtney, 
all  cases  directly  or  indirectly  bear-      32  Neb.  781,  49  N.  E.  754, 


122  NEGOTIABLE    INSTRUMENTS.  §  107 

of  any  facts  to  impair  its  validity .^^  In  other  words,  anyone  who 
writes  his  name  on  a  paper  "without  recourse"  says  "all  parties 
to  that  paper  are  genuine."  If  it  had  been  forged  he  would  be 
held  liable.  He  says,  "I  am  the  lawful  holder  of  that  paper, 
and  I  have  title  to  it  and  know  of  no  reason  why  you  could  not 
recover  on  it  as  a  valid  instrument,  but  one  thing  I  do  not  guar- 
antee ;  I  do  not  guarantee  the  financial  responsibility  of  the  par- 
ties on  that  paper,  but  I  do  say  that  I  hold  the  title  to  it  just  the 
same  as  if  it  were  a  horse  I  was  selling  you." 

The  regular  indorser  guarantees  that  the  instrument  will  be 
paid  by  the  other  parties;  that  they  are  financially  responsible, 
and  if  they  do  not  pay  it,  he  will  see  that  it  is  paid.  Indorsers 
"without  recourse"'  do  not  make  such  guarantees  as  we  have 
seen.  "Without  recourse"  only  applies  to  the  person  who  writes 
those  words  after  his  name. 

Now,  strange  to  say,  this  does  not  interfere  with  the  nego- 
tiability of  the  instrument.  "Such  an  indorsement  does  not  im- 
pair the  negotiable  character  of  the  instrument. "^^  Nor  does  it 
cast  any  suspicion  on  the  character  of  the  paper.  In  that  way 
the  indorser  restricts  his  liability.  A  party  might  enlarge  his  lia- 
bility by  writing  over  his  signature  an  absolute  guarantee,  waiv- 
ing the  usual  demand  and  notice  of  non-payment;  this  is  a 
facultative  indorsement. 

§  107.  Joint  indorsement.  If  a  bill  or  note  be  made  payable 
to  several  persons  not  partners,  the  transfer  can  only  be  made 
■  by  a  joint  indorsement  of  all  of  them.®* 

The  following  provision  is  contained  in  the  Negotiable  Instru- 
ments Law : 

"Where  an  instrument  is  made  payable  to  two  or  more  payees 
or  indorsees  who  are  not  partners,  all  must  indorse,  unless  the 
one  indorsing  has  authority  to  indorse  for  the  other s."^^"" 

The  above  section  of  the  law  really  makes  no  change  in  the  law 
as  the  well  settled  rule  of  the  law  merchant  was  that  co-payees, 
not  partners,  must  each  indorse,  in  order  to  negotiate  the  instru- 
ment.«*" 

«i  Smith  V.  Corege.  53  Ark.  295.  «3pitcher    v.    Barrows,    17    Pick. 

14  S.   W.  93;  Hannun   v.   Richard  (Mass.)     361,    28    Am.    Dec.    306; 

son,  48  Vt.  508;  Challiss  v.  McCrum.  Cooper  v.  Bailey,  52  Me.  230;  Hun- 

22  Kan.  157;  Furgerson  v.  Staples,  gcrford  v.  Perkins,  8  Wis.  267.    See 

82  Me.  159,  19  Atl.  158,  17  Am.  St.  §  98,  supra. 

Rep.  470.  ***  Neg.   Inst.  Law,  §  41. 

62  Neg.    Inst.    Law,    §  38,    where  «3b  Wood  v.  Wood,   16  N.  J.   L. 

all  cases  directly  or  indirectly  bear-  428 ;  Foster  v.  Hill,  36  N.  H.  526. 
ing    upon    or    citing    the    Law    are 
grouped. 


§§  108-109  TRANSFER  BY  INDORSEMENT.  123 

§  108.  Successive  indorsements.  When  several  persons  in- 
dorse a  bill  or  negotiable  note  in  succession,  the  legal  effect  is  to 
subject  them  to  liability  as  to  each  other  in  the  order  they  in- 
dorse.®'* 

§  109.  Irregular  or  anomalous  indorsement.  When  one  not 
a  party  to  an  instrument  places  his  name  irregularly  upon  an 
instrument  it  is  known  as  an  irregular  or  anomalous  indorse- 
ment. 

If  a  note  is  made  payable  to  A  or  bearer,  and  we  should  see 
indorsements  on  the  back  of  the  note,  X,  Y  and  Z,  we  would 
find  no  difficulty  since  the  instrument  is  made  payable  to  bearer ; 
or  a  blank  indorsement  would  be  regular  and  would  be  valid. 
But  suppose  the  instrument  is  made  payable  to  the  order  of  A, 
and  instead  of  the  indorsement  being  A's,  the  first  indorsement, 
we  see  is  the  indorsement  of  Y.  Now,  Y  is  not  a  party  to  the 
instrument ;  the  instrument  has  been  made,  say  by  X,  and  made 
payable  to  the  order  of  A,  while  Y  is  a  complete  stranger  to  the 
instrument.  What  liability  did  he  intend  to  assume  by  placing 
his  name  that  way  on  the  instrument?  His  liability  is  not  gov- 
erned by  the  law  merchant.  It  does  not  make  provision  for 
any  such  person.  Now,  suppose  that  bill  or  note  is  made  payable 
to  the  order  of  A,  and  A  does  not  write  his  name  upon  the 
instrument,  but  the  first  name  appearing  on  the  back  of  the 
instrument  is  the  name  of  B,  the  note  or  bill  being  made  or 
drawn  by  X.  X  does  not  pay  the  note  and  A  proceeds  against  B. 
It  is  important  to  know  what  the  liability  of  the  irregular  party 
to  the  instrument  is  in  order  to  know  whether  or  not  he  should 
be  given  notice  of  the  non-payment  or  non-acceptance  of  the  in- 
strument. If  we  hold  this  person  who  is  irregular  or  anomalous 
upon  the  back  of  the  instrument  as  an  indorser,  then  we  must  per- 
form the  conditions  which  should  be  performed  toward  an  in- 
dorser in  order  to  hold  him,  and  one  of  the  conditions  is,  that  he 
shall  be  given  notice.  It  becomes  important  to  know  whether  the 
name  of  B,  or  rather  whether  B  himself  is  an  indorser,  or  what 
his  obligation  is.  Now,  suppose  B's  signature  was  there  when 
A  took  the  note.  Suppose  when  A  took  the  note,  he  didn't  know 
the  maker;  he  said  to  B,  "I  don't  know  this  man ;  I  am  not  will- 
ing to  count  anything  on  his  financial  responsibility,  but  I  tell 
you  what  I  will  do.  If  you  will  put  your  name  on  the  back  of 
that  instrument.  I  will  accept  that  as  payment,  because  I  know 
your  responsibility:  now,  if  you  will  lend  credit  to  this  instru- 
ment by  putting  your  name  on  it,  I  will  take  the  instrument." 

«4  Camp  V.  Simmons.  62  Ga.  IZ ;  39  N.  W.  49 ;  Knox  v.  Dixon.  4  La. 
Brewer  v.  Boynton,  71   Mich.  254,      466,  23  Am.  Dec.  488. 


124  NEGOTIABLE    INSTRUMENTS.  §  109 

B  says,  "All  right,"  and  does  so.     But  B  is  a  stranger  to  the 
instrument.    What  is  B's  liability  ? 

Regularly,  A,  the  payee,  should  indorse  first  because  the  instru- 
ment is  made  payable  to  him,  and  consequently,  being  the  first 
indorser  and  no  one  before  him  on  the  instrument,  he  could 
only  hold  the  parties  on  the  face  of  the  instrument  liable ;  but 
suppose  the  name  of  this  irregular  person  precedes  him  on  the 
paper  as  an  indorser.  Wouldn't  the  facts  indicate  that  he  took 
that  instrument  because  the  name  of  this  irregular  indorser  is 
there  ?  In  the  absence  of  the  Negotiable  Instruments  Law,  differ- 
ent jurisdictions  have  different  rules. 
The  Negotiable  Law  provides: 

"Where  a  person  not  othcrzmse  ai  party  to  an  instrument 
places  thereon  his  signature  in  blank  before  delivery,  he  is  liable 
as  indorser  in  accordance  with  the  following  rules:  (1)  If  the 
instrument  is  payable  to  the  order  of  en  third  person  he  is  liable 
to  the  payee  and  to  all  subsequent  parties.  (2)  If  the  instru- 
ment is  payable  to  the  order  of  the  maker  or  drawer,  or  is  payable 
to  bearer,  he  is  liable  to  all  parties  subsequent  to  the  maker  or 
'drazver.  (3)  If  he  signs  for  the  accommodation  of  the  payee,  he  is 
liable  to  all  parties  subsequent  to  the  payee."^^ 

As  above  stated,  different  jurisdictions  have  applied  different 
rules  as  to  the  liability  of  the  irregular  or  anomalous  indorser. 
Some  hold  him  as  indorser,®*  some  as  maker,*'^  and  some  as  guar- 
antor;®* different  jurisdictions  make  different  liabilities  for  him. 
We  must  know  what  the  liability  of  the  anomalous  indorser  is 
that  we  may  protect  ourselves.  If  an  irregular  indorser  is  a 
maker  or  surety,  it  is  not  necessary  to  give  him  notice  if  the 
instrument  is  not  paid,  because  if  he  is  a  joint  maker  he  is  pri- 
marily liable  and  he  says  absolutely  that  he  will  pay  it.  But 
if  he  is  to  be  held  as  an  indorser,  his  contract  is  to  pay  provided 
he  is  given  notice,  and  if  we  have  not  given  him  notice,  we  can- 
not hold  him  liable. 

The  most  general  rules  in  the  absence  of  the  Negotiable  In- 
struments Law,  are  as  follows: 

A  person  whose  name  is  on  the  back  of  a  bill  or  note,  trans- 

®5  Neg.    Inst.    Law,    §  64,    where  S'"  Dow  Law  Bank  v.  Godfrey,  126 

all  cases  directly  or  indirectly  bear-  Mich.  521 ;  McGraw  v.  Union  Trust 

ing    upon    or   citing   the    Law    are  Co.  (Mich.),  99  N.  W.  758;  Union 

grouped.     See   not«s    18   L.   R.   A.  Bank   v.    Willis,   8   Mete.    (Mass.) 

2>2>,  and  72  Am.  St.  Rep.  676.  504;  Childs  v.  Wyman,  44  Me.  441. 

6«  Blakeslee   v.   Hewett,   76  Wis.  68  Ranson  v.  Sherwood,  26  Conn. 

341;    Phelps   V.   Vischer,   50   N.   Y.  437;    Knight   v.   Dunsmore,    12   la. 

69;    Gilbert   v.    Finkbeiner,   68   Pa.  .35;   Chandler  v.  Westfall,  30  Tex. 

St.  243.  \.A77;  Webster  v.  Cobb,  17  111.  459. 


§  110  TRANSFER  BY  INDORSEMENT,  125 

ferable  by  delivery,  or  payable  to  bearer,  is  to  be  deemed  an 
indorser.  A  person  signing  on  the  back  of  a  bill  or  note  payable 
to  order  before  the  payee  is  prima  facie  presumed  to  be  a  second 
indorser,  and  not  liable  to  the  payee;  but  this  may  be  rebutted 
by  showing  that  his  indorsement  was  made  to  give  the  maker 
credit  with  the  payee,  and  he  thus  becomes  Hable  as  first  in- 
dorser, the  payee  being  permitted  to  indorse  to  him  without 
recourse. 

Parol  evidence  is  always  admissible  in  these  cases  to  show 
what  he  intended  to  do  under  the  circumstances.*^ 

The  Negotiable  Instruments  Law  provides  as  follows: 
"A  person  placing  his  signature  upon  an  instrument  otherwise 
than  a  maker,  drawer  or  acceptor  is  deemed  to  be  an  indorser, 
unless  he  clearly  indicates  by  appropriate  words  his  intention  to 
be  bound  in  some  other  capacity. '^^^ 

§  110.  Presumptions  as  to  indorsement.  Some  matters  as 
to  presumptions  will  be  treated  more  fully  in  the  Chapter  on  Evi- 
dence,''" but  for  several  reasons  it  is  best  to  consider  presump- 
tions as  to  indorsements  at  this  place. 

The  Law  provides: 

"Except  where  an  indorsement  bears  date  after  the  maturity 
of  the  instrument  every  negotiation  is  deemed  prima  facie  to 
have  been  effected  before  the  instrument  was  overdue."'^^ 

And  where  the  plaintiff  on  the  trial  produced  the  instrument, 
proved  the  indorsement  of  the  payee  and  the  signature  of  the 
maker  and  introduced  it  in  evidence  he  established  prima  facie 
that  he  became  the  owner  of  the  note  before  it  became  due." 

This  presumption  is  important  since  that,  in  order  to  constitute 
one  a  holder  in  due  course,  he  must  have  taken  the  instrument 
before  it  was  overdue.'^ 

Another  important  presumption  is  that  as  to  the  place  where 
the  indorsement  was  made.  In  the  absence  of  evidence  to  the 
contrary,  a  note  is  presumed  to  have  been  made  at  the  place 
where  it  bears  date.'^* 

The  place  where  an  indorsement  was  made  often  becomes 
important  where  the  law  in  different  states  varies.  An  indorse- 
ment in  Massachusetts  of  an  instrument  executed  and  payable 

«9Good  V.  Martin,  95  U.  S.  90;  'i  Neg.  Inst.  Law,  §45. 

Kohn    V.    Consolidated    Butter    &  "^^  German     American     Bank     v. 

Egg.  Co.,  30  Misc.  725,  63  N.  Y.  S.  Cunningham,  97  App.  Div.  (N.  Y.) 

265.    See  note  18  L.  R.  A.  36.  246. 

«»a  Neg.  Inst.  Law,  §  63.  ^3  Neg.  Inst.  Law,  §  52. 

70  Chapter  XXV.  "  Finch  v.  Calkins,  183  Mich.  298. 


126  NEGOTIABLE   INSTRUMENTS.  §  110a 

in  New  York  is  governed  by  the  law  of  Massachusetts  as  to  the 
contract  of  indorsement^' 

§  110a.  Effect  of  transfer  without  necessary  indorsement. 
One  who  is  the  holder  of  negotiable  paper  payable  to  his  order 
and  who  transfers  it  for  value  without  indorsing  it,  vests  in  the 
transferee  such  title  as  he  had,  and  in  addition  to  this,  the  trans- 
feree acquires  the  right  to  have  the  transferer's  indorsement. 
Thus  such  an  instrument  payable  to  the  order  A  may  be  effectu- 
ally transferred  by  mere  delivery,  and  the  assignee  takes  the  legal 
title  and  may  sue  in  his  own  name  subject  to  defenses  of  prior 
parties.'^®  The  negotiation  takes  effect  as  of  the  time  when  the 
indorsement  is  actually  made  when  it  is  necessary  to  determine 
whether  the  transferee  is  a  holder  in  due  course,  thus  the  in- 
dorsement is  required  to  constitute  the  transferee  a  holder  in  due 
course."  And  an  intention  by  both  parties  to  have  the  paper 
indorsed  is  not  sufficient,  as  it  is  the  act  of  indorsement,  not  the 
intention,  which  negotiates  the  instrument.''^ 

An  indorsement  after  notice  of  a  defense  does  not  relate  back 
to  the  transfer,  so  as  to  cut  off  intervening  rights  and  remedies.'^® 
The  holder,  however,  is  protected  against  everything  subsequent 
to  delivery,  as  the  indorsement  relates  back  to  the  time  of  delivery 
as  to  any  equity  outside  of  the  instrument  itself.^® 

The  Negotiable  Instruments  Law  on  these  principles  of  law 
states : 

"Where  the  holder  of  an  instrument  payable  to  his  order  trans- 
fers it  for  value  without  indorsing  it,  the  transfer  vests  in  the 
transferee  such  title  as  the  transferrer  had  therein,  and  the  trans- 
feree acquires,  in  addition,  the  right  to  have  the  indorsement  of 
the  transferrer.  But  for  the  purpose  of  determining  whether  the 
transferee  is  a  holder  in  due  course,  the  negotiation  takes  effect 
as  of  the  time  ivhen  the  indorsement  is  actually  made."^^ 

If  the  holder  claims  title  under  the  above  section  he  should  from 
the  special  circumstances  which  bring  him  within  this  section  of 
the  Law,  rather  than  as  in  the  ordinary  case,  prove  the  indorse- 
ment of  the  payee  as  a  part  of  his  case. 

§  110b.  Indorsement  stricken  out.  The  holder  of  a  nego- 
tiable instrument  may  at  any  time  strike  out  any  indorsement 
which  is  not  necessary  to  his  title;  he  may  strike  out  all  inter- 
vening indorsements  and  aver  that  the  first  blank  indorser  in- 

''^  Glidden     v.     Chamberlin,     167  ^^  Goshen  National  Bank  v.  Bing- 

Mass.   486.  ham,  118  N.  Y.  349. 

''6  Smith  V.  Nelson,  212  Fed.  Rep.  ''^  Meuer     v.     Phcenix     National 

56;  Martz  v.   State  National  Bank,  Bank.  42  Misc.  (N.  Y.)  341. 

147  App.  Div.  (N.  Y.)  250.  so  Beard  v.  Dedolph,  29  Wis.  136. 

'■'■  Mayers  v.  McRimmon,  140  N.  si  Neg.  Inst.  Law,  §  49. 
C.   640. 


§§  llOc-llOd  TRANSFER  P.Y  INDORSEMENT.  127 

dorsed  immediately  to  him.^^  The  striking  out  of  such  indorse- 
ment does  not  destroy  the  presumption  that  the  one  in  posses- 
sion is  the  holder  thereof.^^  Nor  is  the  fact  material  that  one 
or  more  of  the  intermediate  indorsements  is  restrictive.^^ 

The  striking  out  of  the  indorsements  may  take  place  at  the 
trial  and  after  the  plaintiff  has  finished  his  case.*'* 

The  following  is  the  provision  of  the  Negotiable  Instruments 
Law : 

"The  holder  may  at  any  time  strike  out  any  indorsement  which 
is  not  necessary  to  his  title.  The  indorser  whose  indorsement  is 
struck  out,  and  all  indorsers  subsequent  to  him,  are  thereby  re- 
lieved from  liability  on  the  instrument."^^ 

Where  an  instrument  is  transferred  by  a  special  indorsement, 
the  holder  has  no  right  to  strike  out  the  name  of  the  person 
mentioned  in  such  indorsement  and  insert  his  own  name  in  the 
place  thereof;  nor  can  he  strike  out  such  name  and  convert 
such  special  indorsement  into  a  blank  indorsement. 

§  110c.  Negotiable  character  continued.  As  a  general  rule 
it  may  be  stated  that  an  instrument  negotiable  in  its  origin  is 
always  negotiable,  in  other  words,  once  negotiable  is  always  nego- 
tiable. But  there  are  exceptions  to  this,  namely,  when  an  instru- 
ment has  been  restrictively  indorsed  or  has  been  discharged  by 
payment  or  otherwise. 

The  Negotiable  Instruments  Law  provides : 

"An  instrument  negotiable  in  its  origin  continues  to  be  nego- 
tiable until  it  has  been  restrictively  indorsed  or  discharged  by 
payment  or  otherwise ."^"^ 

§  nod.  Negotiation  by  prior  party,  A  prior  party  back  to 
whom  a  negotiable  instrument  has  been  negotiated  may,  under 
certain  circumstances,  reissue  and  further  negotiate  the  instru- 
ment, but  he  is  not  entitled  to  enforce  payment  thereof  against 
any  intervening  party  to  whom  he  was  personally  liable. 

The  Negotiable  Instruments  Law  has  the  following  provision 
to  such  effect: 

"Where  an  instrument  is  negotiated  back  to  a  prior  party, 
such  party  may,  subject  to  the  provision  of  this  act,  reissue  and 
further  negotiate  the  same.  But  he  is  not  entitled  to  enforce 
payment  thereof  against  any  intervening  party  to  whom  he  was 
personally  liable."^^ 

82  Preston  v.  Mann.  25  Conn.  127.  ^'^  Neg.  Inst.  Law,  §47,  where  all 

83  King  V.  Bellamy,  82  Kans.  301.      cases  are  grouped.     As  to  the  dis- 
^'•Jerman   v.    Edwards,   29    App.      charge    of    negotiable    instruments, 

cases  (D.  C.)  535.  see  §§  119-125  of  the  Law. 

85  Ensign  v.  Fogg,  177  Mich.  317*  88  Neg.  Inst.  Law,  §  50. 

8' Neg.  Inst.  Law,  §48. 


CHAPTER  X. 

TRANSFER— BY  DELIVERY  AND  BY  OPERATION  OF  LAW. 

§  111.  In  general.  §  113.  By   operation   of   law. 

112.  By  delivery. 

§111.  In  general.  Transfer  without  indorsement  may  be 
made  by  one  of  two  methods,  either  by  delivery^  or  by  opera- 
tion of  law.^ 

§112.  By  delivery.  The  law  provides:  "An  instrument  is 
negotiated  when  it  is  transferred  from  one  person  to  another  in 
such  manner  as  to  constitute  the  transferee  the  holder  thereof. 
If  payable  to  bearer,  it  is  negotiated  by  delivery. "^^ 

The  Negotiable  Instruments  Law  has  changed  the  law  in  those 
states  where  it  was  held  that  notes  made  payable  to  a  person 
named  therein  or  bearer  must  have  been  indorsed  to  pass  the 
legal  title.^"    Another  provision  of  the  Law  is  as  follows : 

"An  indorsement  in  blank  specifies  no  indorsee.  And  an  instru- 
ment so  indorsed  is  payable  to  bearer  and  may  be  negotiated  by 
delivery."^ 

One  holding  an  indorsement  in  blank  may  transfer  it  without 
writing  upon  the  instrument,  and  in  this  way  he  escapes  some 
liability  which  he  would  otherwise  have.  He  is  only  liable  to 
the  party  who  receives  it  from  him,  and  as  his  name  does  not 
appear  on  the  instrument,  he  has  not  added  any  credit  to  it.^ 

1  Dunham  v.  Peterson,  5  N.  D.  276;  Roberts  v.  Hall,  37  Conn.  20S, 
414,  67  N.  W.  293,  57  Am.  St.  Rep.  9  Am.  Rep.  308 ;  Earhart  v.  Grant, 
556,  36  L.  R.  A.  232 ;  United  States      32  la.  481. 

V.    Vermilye,    10   Blatchf.    (U.    S.)  ^^Neg.   Inst.   Law,    §30. 

280,   28   Fed.    Cas.   No.    16,618,   af-  2b  pavis   v.   First  National   Bank 

firmed  21  Wall   (U.  S.)   138;  Mar-  of    Blakeley,    192    Ala.    8,    68    So. 

skey  V.  Turner,  81  Mich.  62,  45  N.  261. 

W.  644 ;  Kohn  v.  Watkins,  26  Kan.  3  Neg.  Inst.  Law,  §  34^  where 
691,  40  Am.  Rep.  336;  O'Conor  v.  all  cases  directly  or  indirectly  bear- 
Clarke  (Cal.,  1896),  44  Pac.  482.  ing  upon  or  citing  the  Law  are 
See  also  note  12  U.  S.  L.  Ed.  399.  grouped. 

2  Wooley  V.  Lynn,  117  111.  244,  6  4  McDonald  v.  Bailey,  14  Me.  101 ; 
N.  E.  885,  57  Am.  Rep.  867;  Crist  Crenshaw  v.  Jackson,  6  Ga.  509,  50 
V.  Crist,  1  Ind.  570;  Hendric  v.  Am.  Dec.  361;  Smith  v.  Garden,  1 
Richards,    57    Neb.   794,    78    N.   W.  Swan.   (Tenn.)  28. 

378;    Billings    v.    Collins,    44    Me. 

128 


8  112  TRANSFER  BY  INDORSEMENT, 


129 


When  a  person  offers  you  an  instrument  by  delivery  when  it 
is  payable  to  bearer,  you  are  not  obliged  to  take  that  instrument 
without  indorsement ;  if  it  is  not  indorsed  by  the  person  offering 
it,  you  need  not  take  it. 

"Where  an  instrument  payable  to  hearer  is  indorsed  specially, 
it  may  nevertheless  be  further  negotiated  by  delivery,  but  the 
person  indorsing  specially  is  liable  as  indorser  to  only  such 
holders  as  make  title  through  his  indorsement."^ 

"The  rule  adopted  in  this  section  may  be  inconvenient  in  prac- 
tice at  times  as,  for  example,  when  paper  drawn  payable  to 
bearer  is  sent  through  the  mail.  But  to  permit  the  holder  to 
make  the  instrument  payable  to  a  specified  person,  or  to  his  order, 
would  be  to  allow  him  to  vary  the  contract  of  the  acceptor  or 
maker.  Thus,  if  A  makes  his  note  payable  to  B  or  bearer,  he 
does  not  assume  the  obligation  of  seeing  that  the  instrument  is 
properly  indorsed ;  and  upon  no  rational  legal  theory  would  it  be 
in  the  power  of  the  holder  to  impose  upon  him  a  duty  which,  by 
the  express  terms  of  his  contract,  he  refused  to  take  upon  himself. 

"The  section  cannot  apply  where  the  paper  is  originally  made 
payable  to  order  and  indorsed  in  blank ;  for  by  section  9  a  note 
or  bill  which,  upon  its  face,  is  payable  to  order,  becomes  payable 
to  bearer,  only  when  the  last  indorsement  is  in  blank ;  and 
hence,  when  a  blank  indorsement  is  followed  by  a  special  in- 
dorsement the  instrument  is  not  within  the  terms  of  section  9. 
Thus,  if  a  check  drawn  to  the  order  of  A  is  indorsed  in  blank  by 
the  payee,  and  delivered  to  B,  and  B  indorses  it  to  the  order  of 
C,  it  is  not  payable  to  bearer,  for  the  reason  that  the  last  indorse- 
ment, which  by  section  9  is  made  the  test,  is  a  special  indorse- 
ment. The  reason  for  making  a  distinction  in  this  respect  be- 
tween instruments  originally  drawn  payable  to  bearer  and  in- 
struments which  have  become  so  payable  because  indorsed  in  blank 
is  obvious.  In  the  one  case,  the  maker  or  drawer  has  expressly 
provided  that  the  instrument  shall  be  payable  to  bearer,  and  it  can- 
not be  made  payable  to  order  without  modifying  these  terms. 
But  where,  upon  its  face,  it  is  payable  to  order,  a  transferee, 
taking  under  a  blank  indorsement  does  not.  by  indorsing  it  special- 
ly, change  its  tenor  as  originally  drawn."''* 

Another  provision  of  the  Negotiable  Instruments  Law  states: 

"The  holder  may  convert  a  blank  indorsement  into  a  special 

indorsement  by  zvriting  over  the  signature  of  the  indorser  in 

5  Neg.    Inst.    Law,    §  40i,    where  '^^  Crawford's  Annotated  Negoti- 

all  cases  directly  or  indirectly  bear-  able  Instruments  Law.  §  40,  pp.  83. 

ing    upon    or    citing   the    Law    are  84. 
grouped. 


130  NEGOTIABLE   INSTRUMENTS.  §113 

blank  any  contract  consistent  with  the  character  of  the  indorse- 
ment.'"^ 

The  person  who  in  getting  a  negotiable  note  or  bill  of  ex- 
change payable  to  order,  neglects  to  have  the  indorsement  put 
on  it,  gets  it  just  as  if  he  had  received  it  by  assignment  and 
takes  it  subject  to  the  equities.^  It  is  his  duty  to  notify  the 
parties  on  the  instrument  the  same  as  in  an  assignment.  If  any 
equities  accrue  between  the  time  he  received  the  instrument  and 
the  time  he  secured  the  indorsement,  the  equities  would  run 
against  it.**  This  is  provided  for  in  the  Negotiable  Instruments 
Law  as  follows: 

"Where  the  holder  of  an  instrument  payable  to  his  order 
transfers  it  for  value  zvithoiit  indorsing  it,  the  transfer  vests  in 
the  transferee  such  title  as  the  transferrer  had  therein,  and  the 
transferee  acquires  in  addition  the  right  to  have  the  indorse- 
ment of  the  transferrer.  But  for  the  purpose  of  determining 
whether  the  transferee  is  a  holder  in  due  course,  the  negotiation 
takes  effect  as  of  the  time  zvhen  the  indorsement  is  actually 
made."^ 

§  113.  By  operation  of  law.  Suppose  A  becomes  a  bankrupt 
and  has  in  his  possession  an  instrument  calling  for  $500,  payable 
to  him.  That  instrument  vests  in  A's  assignee  in  bankruptcy. 
There  is  a  transfer  by  operation  of  law.*®  So,  if  a  person  dies 
leaving  a  certain  note  payable  to  himself,  his  administrator  or 
executor  gets  title  to  that  paper  by  operation  of  law.** 

The  person  who  gets  the  paper  gets  just  as  good  title  as  the 
dead  man  had,  if  it  passes  or  is  transferred  by  operation  of  law.*^ 

e  Neg.  Inst.  Law,  §  35,  where  all  N.  Y.  349,  23  N.  E.  180.     But  see 

cases    directly    or    indirectly    bear-  Beard  v.  Dedolph,  29  Wis.  130. 
ing    upon    or    citing    th0   Law    are  » Neg.  Inst.  Law,  §  49,  where  all 

grouped.  cases  directly  or  indirectly  bearing 

'■  Hopkins  v.  Manchester,  16  R.  I.  upon  or  citing  the  Law  are  grouped. 
663.  2Z  S  .E.  630,  55  Am.  St.  Rep.  lo  Roberts  v.  Hall,  2>7  Conn.  205, 
779;  Hersey  v.  Elliott,  67  Me.  526,  9  Am.  Rep.  308. 
24  Am.  Rep.  50;  Pavey  v.  Stauffer,  "  Wooley  v.  Lyon,  117  111.  244,  6 
45  La.  Ann.  353,  12  So.  512,  19  L.  N.  E.  885,  57  Am.  Rep.  867;  Crist 
R.  A.  716.  But  see  Brown  v.  Wil-  v.  Crist,  1  Ind.  570;  Rand  v.  Hub- 
son,  45  S.  C.  519.  23  S.  E.  630,  55  hard.  4  Mete.  (Mass.)  256. 
Am.  St.  Rep.  779.  *^  Billings  v.  Collins,  44  Me.  271 ; 

s  Osgood   V.    Artt,    17    Fed.    575:  Earhart  v.  Cant,  32  la.  481;  Nichols 

Goshen  Nat.  Bank  v.  Bingham,  118  v.  Hill,  42  S.  C.  28,  19  S.  E.  1017. 


CHAPTER  XL 

TRANSFER— BY  ASSIGNMENT. 

§114.  In  general.  §  118a.  Some  differences  as  to   lia- 

115.  Assignment     by     a     separate  bility  of  different  transfer- 

writing,  rers. 

116.  Liability  of  assignor  of  bills         HSb.  Several       indorsements      in 

and  notes.  blank,  also  combination  of 

117.  Rights  of  parties.  in    blank    and    special    in- 

118.  Transfer  by  legal  process.  dorsements. 

§  114,  Assignment  in  general.  Bills  of  exchange  and  prom- 
issory notes  are  negotiated  either  by  indorsement,  transfer  by 
delivery  without  indorsement,  by  operation  of  law  or  by  assign- 
ment. Only  negotiable  instruments  can  be  transferred  by  in- 
dorsement. An  instrument  payable  to  bearer  may  be  negotiated 
by  delivery  without  indorsement.^  A  non-negotiable  instrument 
is  transferred  by  assignment.^  The  difference  between  the  trans- 
fer of  a  negotiable  and  a  non-negotiable  instrument  is  that  the 
latter  is  transferred  subject_to_all  defenses  that  might  have  been 
set  up  against  the~oi^f^flaT  payee,^  while  the  former  is  taken  free 
from  equitable  defenses  by  a  bona  fide  holder.  Therefore  the 
effect  of  the  assignment  of  a  non-negotiable  instrument  is  that 
the  party  holding  the  right  drops  out  of  the  contract  and  another 
takes  his  place.  The  assignee  is  substituted  in  place  of  the  as- 
signor. The  assignee  and  every  subsequent  person  to  whom  the 
instrument  comes  by  assignment  may  be  considered  as  the  person 
who  made  the  instrument  in  the  first  instance,  and  as  having  said 
and  done  everything  in  making  the  instrument  which  the  original 
assignor  said  or  did.  Hence  if  the  original  assignor  said  or  did 
something  which  under  the  ordinary  law  of  such  contracts  would 
prevent  him  from  enforcing  the  contract,  or  asserting  his  right 
against  the  other  party  to  the  original  contract^the  assignee, 

although  he  Imows  liOTin^_oOb^  ^^^gi^^^  t^  "^^^  ^^ 

deemed  to  have  said  and_don£Jthe_same  things.  And  further,  if 
any  subsequent  assignee  from  whom,  as  an  assignor,  the  holder 
in  turn  derives  the  contract,  has  done  anything  to  prevent  its 
enforcement  against  the  original  party,  the  said  holder  cannot 

1  Dunham   v.   Peterson,   5  N.   D.  3  Trustees   of    Union    College  v. 

414,  67  N.  W.  293,  57  Am.  St.  Rep.  Wheeler,  61  N.  Y.  88 ;  Warner  v. 

556,  36  L.  R.  A.  232.  Whittaker,   6   Mich.    133 ;    Tims  v. 

a  Franklin  v.  Twogood,  18  la.  515.  Shannon,  19  Md.  296. 

131 


132  NEGOTIABLE    INSTEUMENTS.  §115 

enforce  it  against  the  original  party.  Each  assignee  takes  his 
chances  as  to  the  exact  position  in  which  any  party  making  an 
assignment  of  it  stands.  And  as  it  is  called  in  law,  the  assignee 
takes  the  contract  subject  to  equities ;  that  is,  to  defenses  to  the 
contract  which  would  avail  in  favor  of  the  original  party  up  to 
the  time  the  notice  of  the  assignment  is  given  to  the  person 
against  whom  the  contract  is  sought  to  be  enforced. 

A  person  taking  an  instrument  negotiable  by  the  law  merchant 
and  writing  an  assignment  of  that  instrument  on  a  separate 
piece  of  paper,  takes  it  subject  to  the  rules  applying  to  assign- 
ments ;  that  is,  he  takes  it  subject  to  the  equities  the  p'JTrtfes  had 
on  the  instrument  before  the  assignment  had  been  made  to  him. 
One  might  think  that  a  certain  instrument  is  in  the  hands  of  A, 
and  that  he  being  indebted  to  A,  say,  in  the  sum  of  $500,  that 
when  A  comes  to  him  and  wants  to  become  indebted  to  him  to  the 
extent  of  that  sum,  he  would  be  safe  in  making  those  advances 
to  A.  He  is,  until  he  gets  notice  to  the  contrary.  If  the  original 
instrument  has  gotten  into  the  hands  of  someone  else  by  assign- 
ment, it  is  his  duty  to  notify  the  obligor  instantly  of  that  fact  so 
that  the  conditions  existing  between  him  and  the  party  will  re- 
main unchanged.  In  other  words,  when  you  get  an  instrument  by 
assignment,  it  is  your  duty  immediately  to  notify  the  person  liable 
on  the  instrument  that  you  hold  that  instrument  and  that  you 
hold  it  by  assignment.'*  But  it  is  not  your  duty  so  to  do  if  the 
paper  is  negotiable  by  the  law  merchant. 

§  115.  Assignment  by  a  separate  writing.  The  mode  of  as- 
signment of  non-negotiable  instruments  differs  in  no  respect 
from  that  of  any  other  contract.**  Although  some  sort  of  writ- 
ten assignment  is  customarily  employed,  it  may  be  written  either 
on  the  instrument  itself  or  on  a  separate  piece  of  paper.*  The  in- 
strument may  be  assigned  on  a  separate  paper  so  as  to  authorize 
an  action  thereon  in  the  name  of  the  assignee.'^  But  the  assignment 
of  a  mortgage  which  was  given  as  security  for  the  payment  of  a 
promissory  note  will  not  operate  of  itself  in  some  jurisdictions 
as  an  assignment  of  the  note.^     This  is  the  result  of  statutes  in 

^  Van   Buskirk  v.   Insurance  Co.,  '^Morris  v.  Poillon,  SO  Ala.  403; 

14  Conn.  141  ;  Merchants  &  Mechan-  Thornton  v.  Crowther,  24  Mo.  164; 

ics  Bank  v.  Hewett,  3  la.  93 ;  Rich-  Clapp  v.  Cedar  County,  5  la.  15,  68 

ards  V.  Griggs,  16  Mo.  416.  Am.  Dec.  678. 

5  Maxwell  v.  Goodman,  10  B.  ®  French  v.  Turner,  15  Ind.  59; 
Mon.  (Ky.)  286;  Stiles  v.  Farrar,  Doll  v.  Hollenbeck,  19  Nebr.  639, 
18  Vt.  444;  Halsey  v.  Dhart,  1  N.  J.  28  N.  W.  286.  But  see  Coombs  v. 
L.  109.  Warren,   34    Me.   89;    Cortelyou   v. 

6  Mitchell  V.  Walker,  17  Fed.  Cas.  Jones  (Cal.,  1900),  61  Pac.  918. 
No.  9,670;  Deshler  v.  Guy,   5  Ala. 

186. 


§116  TRANSFER — BY    ASSIGNMENT.  133 

many  states  which  declare  that  the  legal  title  of  the  note  cannot 
be  assigned  by  a  separate  instrument.  It  is  presumable  that  an 
oral  assignment,  accompanied  by  a  delivery  of  the  instrument, 
would  pass  a  good  title  to  the  assignee.^ 

§  116.  Liability  of  assignor  of  bills  and  notes.  The  assignor 
of  bills  and  notes  assumes  certain  liabilities  by  way  of  guaranty. 
But  his  liability  is  not  so  extensive  as  that  of  an  indorser  of  nego- 
tiable paper.^®  The  liability  of  an  assignor  and  indorser  differs 
principally  in  respect  to  the  guaranty  of  the  solvency  of  the  parties 
to  the  instrument  and  in  the  guaranty  that  the  instrument  will  be 
honored  at  maturity.^*  The  assignor  is  not  responsible  for  the 
solvency  of  the  parties  to  a  bill  or  note,  neither  can  he  be  held 
responsible  if  the  instrument  is  not  paid  when  due,  unless  he 
had  knowledge  of  the  insolvency  of  the  parties.  The  assignor 
warrants  that  the  parties  to  the  instrument  were  competent  to 
contract  and  if  any  one  of  them  is  incompetent,  on  account  of 
infancy,  marriage,  lunacy  and  the  like,  the  assignor  is  responsible 
to  his  assignee.-^^  There  is  one  exception  to  this  rule,  and  that 
is  in  the  case  of  government  securities.  It  is  not  warranted  that 
all  prior  parties  on  an  instrument  had  capacity  to  contract  as  there 
is  an  exception  in  case  of  "persons  negotiating  public  or  cor- 
porate securities,  other  than  bills  and  notes."^^'- 

The  assignor  of  an  instrument  warrants  that  the  signatures  and 
the  body  of  the  instrument  are  genuine,^^  so  that  if  either  proves 
to  be  a  forgery,  the  money  he  received  for  the  transfer  can  be 
recovered  back.  The  assignor  also  warrants  that  he  does  not 
know  anything  affecting  the  validity  or  value  of  the  instrument. 
To  attempt  to  sell  an  instrument  which  one  knows  to  be  worth- 
less is  a  fraud  upon  the  purchaser,  and  naturally  vitiates  the  con- 
tract of  sale.^^ 

9  Moore  v.  Miller,  6  Oreg.  254,  25  Rose,  5  N.  J.  L.  547,  18  Atl.  748, 

Am.    Rep.    518;    Sackett   v.    Mont-  14   Am.    St.    Rep.    704;    Lobdell   v. 

gomery,   57   Nebr.   424,   77   N.    W.  Baker,  3  Mete.  (Mass.)  469. 

1083,  73  Am.  St.  Rep.  522 ;  Guy  v.  I2a  Neg.    Inst.    Law,    §    65,    last 

Briscoe,  6  Bush.  (Ky.),  687.  clause. 

1®  Cochran  v.  Strong,  44  Ga.  636 ;  ^^  Rhodes  v.  Jenkins,  18  Colo.  49, 

Boylan  v.  Dickerson,  3  N.  J.  L.  24.  31  Pac.  491,  36  Am.  St.  Rep.  263 ; 

11  Hecht  V.  Batcheller,  147  Mass.  Wood  v.  Sheldon,  42  N.  J.  L.  421, 
335,  17  N.  E.  651,  9  Am.  St.  Rep.  36  Am.  Rep.  523;  Zwazey  v.  Par- 
708;  Lyons  v.  Miller,  6  Gratt.  ker,  50  Pa.  St.  441,  88  Am.  Dec.  549. 
(Va.)  427,  52  Am.  Dec.  129;  Milli-  i"*  Brown  v.  Montgomery,  20  N. 
gan  V.  Chapman,  75  Me.  306,  46  Y.  287,  75  Am.  Dec.  404;  Delaware 
Am.  Rep.  486.  Bank  v.  Jarvis,  20  N.  Y.  226;  May 

12  Butler  V.  Slocomb,  33  La.  Ann.  v.  Dyer,  57  Ark.  441,  21  S.  W.  1064. 
170,  39  Am.  Rep.  265;  Edmunds  v. 


134  NEGOTIABLE    INSTRUMENTS.  §  117 

The  assignor  also  guarantees  to  the  purchaser  that  he  has  a 
good  title  to  the  instrument  and  that  he  has  a  right  to  convey 
it  away.  If  he  attempts  to  transfer  property  to  which  he  has 
no  title  he  is  held  to  have  committed  an  actual  or  constructive 
fraud  upon  the  purchaser,  according  to  the  knowledge  or  igno- 
rance of  the  vendor  in  respect  to  his  want  of  title.-^** 

The  Negotiable  Instruments  Law  provides: 

"A  qualified  indorsement  constitutes  the  indorser  a  mere  as- 
signor of^the  title  to  the  instrument.  It  may  he  made  by  adding 
to  the  indorse/s  signature  the  words  'luithout  recourse'  or  any 
words  of  similar  import.  Such  an  indorsement  does  not  impair 
the  negotiable  character  of  the  instrument. "^^'^ 

§117.  Rights  of  parties.  In  the  transfer  of  a  negotiable  in- 
strument by  indorsement  the  indorsee  is  the  holder  in  due  course 
and  takes  it  free  from  all  defenses,  while  in  the  transfer  of  a 
non-negotiable  instrument  by  assignment  the  assignee  takes  the 
same  subject  to  any  equities  between  the  original  parties  thereto, 
and  any  defenses  which  may  be  interposed  by  the  maker.  The 
assignment  of  a  negotiable  instrument  confers  upon  the  holder 
only  such  rights  as  he  would  acquire  upon  the  assignment  of  a 
non-negotiable  instrument.^^  The  assignee  of  a  non-negotiable 
instrument  holds  it  subject  to  all  equities  or  counterclaims  be- 
tween the  original  parties  existing  at  the  time  of  the  assign- 
ment.^'' The  maker  of  a  note  may  set  up  the  same  defenses 
against  it  in  the  hands  of  the  assignee  that  he  might  set  up  if 
it  were  held  by  the  payee.  But  all  such  defenses  and  equities 
must  have  existed  in  favor  of  the  maker  prior  to  the  assign- 
ment. The  equities  and  defenses  which  can  be  asserted  against 
the  assignee  are  only  such  as  relate  to  the  contract  between  the 
original  parties,  and  therefore  it  has  been  held  that  the  assignee 
of  a  non-negotiable  note  is  not  bound  to  inquire  whether  the 
note  was  made  to  defraud  creditors.^^ 

The  rights  of  the  parties  are  often  provided  for  by  statute  in 
the  different  states.  These  statutes  usually  provide  that  the  as- 
signee of  such  an  instrument  may  in  his  own  name  recover 
against  the  person  who  made  the  same  and  whatever  defense  or 

I'Furgerson   v.    Staples,   82   Me.  Mon.      (Ky.)      122;     Cochran     v. 

159,   19  Atl.   158,   17  Am.   St.   Rep.  Strong,  44  Ga.  6Z6. 

470;     Merchants     Nat.     Bank     v.  ^"^  Rockwell    v.    Daniels,    4    Wis. 

Spates,  41  W.  Va.  27,  23  S.  E.  681,  432;  Young  v.  South  Tredegar  Iron 

56  Am.  St.  Rep.  828.  Co.,  85  Tenn.  189,  4  Am.  St.  Rep. 

15a  Neg.  Inst.  Law,  §  38.  752. 

i«May  V.  Dyer,  57  Ark.  441,  21  i*  Dalrymple   v.    Hillenbrand,   62 

S.  W.  1064;  Johnson  v.  Welby,  2  B.  N.  Y.  5,  20  Am.  Rep.  438. 


§118  TRANSFER — BY  ASSIGNMENT.  135 

set-off  the  maker  of  such  instrument  had,  before  notice  of  as- 
signment against  an  assignor,  or  against  the  original  payee,  he 
shall  also  have  against  their  assignees. 

The  Negotiable  Instruments  Law  provides: 

"Where  the  holder  of  an  instrument  payable  to  his  order  trans- 
fers it  for  value  without  indorsing  it,  the  transfer  vests  in  the 
transferee  such  title  as  the  transferrer  had  therein,  and  the  trans- 
feree acquires  in  addition  the  right  to  have  the  indorsement  of 
the  transferrer.  But  for  the  purpose  of  determining  whether  the 
transferee  is  a  holder  in  due  course,  the  negotiation  takes  effect 
as  of  the  time  zuhen  the  indorsement  is  actually  made."^^'^ 

In  Alabama  the  word  "holder"  and  "said  holder"  are  sub- 
stituted for  transferrer.  But  the  use  of  "holder"  in  this  con- 
nection is  confusing;  for  by  section  191  "holder"  is  defined  to 
mean  the  payee  or  indorsee  who  is  in  possession  of  the  instru- 
ment, and  where  the  transfer  is  without  indorsement  neither  the 
transferrer  nor  the  transferee  answers  to  this  description.  In 
Colorado  the  words  "if  omitted  by  mistake,  accident  or  fraud" 
are  added  at  the  end  of  the  first  sentence.  In  Illinois  and  Mis- 
souri, the  words  "to  have  the  indorsement  of  the  transferrer" 
are  struck  out,  and  the  following  substituted  therefor:  "to  en- 
force the  instrument  against  one  who  signed  for  the  accommo- 
dation of  the  transferrer,  and  the  right  to  have  the  indorsement 
of  the  transferrer  if  omitted  by  accident  or  mistake."  If  this  is 
to  be  taken  literally,  the  right  of  the  transferee  to  enforce  the 
instrument  against  a  prior  party  is  limited  to  cases  where  such 
prior  party  has  signed  for  the  accommodation  of  the  transferrer. 
This  is  not  very  clear.  In  Wisconsin  the  following  is  added  at 
the  end  of  the  section :  "When  the  indorsement  was  omitted  by 
mistake,  or  where  there  was  an  agreement  to  indorse  made  at 
the  time  of  the  transfer,  the  endorsement  when  made  relates 
back  to  the  time  of  transfer." 

As  stated  in  the  previous  chapter*^"*  a  person  who  in  getting 
a  negotiable  note  or  bill  of  exchange  payable  to  order,  neglects 
to  have  the  indorsement  put  on  it,  gets  it  just  as  if  he  had  re- 
ceived it  by  assignment  and  takes  it  subject  to  the  equities.  It  is 
his  duty  to  notify  the  parties  on  the  instrument  the  same  as  in  an 
assignment.  If  any  equities  accrue  between  the  time  he  received 
the  instrument  and  the  time  he  secured  the  indorsement,  the 
equities  would  run  against  it. 

§  118.  Transfer  by  legal  process.  Property  may  be  trans- 
ferred to  a  creditor  in  satisfaction  of  his  claim  by  attachment, 

18a  Neg.  Inst.  Law,  5  49.  is^  Sec.  112  of  this  work. 


136  NEGOTIABLE   INSTRUMENTS.  §  118a 

garnishment  and  execution.  These  processes  are  created  by 
statute,  and  whether  commercial  paper  can  be  transferred  by 
them  for  the  satisfaction  of  the  holder's  debts  depends  upon  the 
language  of  the  particular  statute  under  which  the  question 
arises.^® 

It  is  generally  held  that  promissory  notes  and  other  commer- 
cial instruments  cannot  be  garnisheed  in  the  hands  of  an  agent, 
in  an  attachment  proceeding  against  the  payee.  Nor  is  commer- 
cial paper  attachable  for  the  debts  of  the  payee,  when  it  is  in 
the  hands  of  a  receiver  for  the  benefit  of  creditors,  nor  when 
it  is  placed  in  the  hands  of  an  agent  to  collect  and  apply  the 
proceeds  to  the  payment  of  a  specific  debt ;  and  even  when  it  is 
merely  placed  in  the  hands  of  an  agent  for  collection  or  for  any 
other  purpose,  resulting  in  benefit  to  the  payee.  It  is  not  even 
subject  to  attachment,  if  the  agent  delivers  it  up  to  the  attach- 
ing officer. 

§  118a.  Some  differences  as  to  liability  of  different  trans- 
ferrers. Since  we  have  now  considered  the  liability  as  to  the 
various  transferrers  of  negotiable  instruments,  it  might  be  well 
to  summarize  or  set  out  in  outline  some  of  the  differences,  as  fol- 
lows: 

Some   differences   as   to   liability   of   transferrers   of  negotiable 

instruments. 

1.  Indorser  in   full  or   special  indorser.     The  liability   of  such 

transferrer  is  the  complete  liability  of  indorser;  and  proof 
of  at  least  two  signatures  is  necessary  to  recover  against 
such  transferrer  unless  the  parties  are  immediate  parties  to 
the  instrument. 

2.  Indorser  in  blank.     The  liability  of  such  a  transferrer  is  the 

complete  liability  of  indorser;  proof  of  one  signature  is  all 
that  is  necessary  before  recovery. 

3.  Indorser  or  rather  transferrer  by  delivery.     The  liability  of 

such  transferrer  is  binding  only  as  to  immediate  parties. 

4.  Indorser  without  recourse.    An  indorser  without  recourse  (a) 

does  not  guarantee  the  financial  ability  or  solvency  of  any 
of  the  parties;  (b)  as  distinguished  from  assignment  no 
notice  to  the  original  obligor  is  required  to  be  given  by  the 
holder  to  such  transferrer, 

10  Sheets  v.  Culver,  14  La.  Ann.      Williams,  1  Minn.  54,  55  Am.  Dec. 
449,  33  Am.  Dec.  593;  Hubbard  v.      66. 


§  118b  TRANSFER BY   ASSIGNMENT.  137 

5.  Transferrer  by  assignment.    A  transferrer  by  assignment  (a) 

is  not  responsible  for  the  solvency  of  the  parties,  that  is, 
he  does  not  warrant  solvency;  (b)  the  holder  through  such 
transferrer  takes  the  instrument  subject  to  equities;  and  (c) 
the  holder  must  notify  the  original  obligor  of  the  assignment. 

6.  Transferrer  holding  title  by  operation  of  law.     A  transferrer 

holding  title  by  operation  of  law  should  use  care  or  he  will 
be  bound  personally  when  he  indorses  the  instrument. 

7.  Anomalous  indorser.    The  rules  as  to  the  anomalous  indorser 

are  laid  down  in  certain  cases  by  the  Negotiable  Instru- 
ments Law,  that  is,  in  those  cases  where  the  signature  of 
such  indorser  is  written  in  blank  on  the  instrument  before 
delivery.  There  is  a  liability  by  such  indorser  to  the  payee 
as  follows:  (a)  There  is  liability  of  a  first  indorser,  that 
is  to  the  payee,  if  the  instrument  is  payable  to  the  order  of 
a  payee  who  is  a  third  party;  (b)  there  is  liability  of  said 
indorser  not  to  the  payee  but  as  a  second  indorser  if  it 
is  payable  to  the  order  of  the  maker  or  drawer,  or  payable 
to  bearer;  (c)  there  is  liability  not  to  payee,  that  is,  there 
is  a  liability  as  a  second  indorser  if  the  signature  is  for 
the  accommodation  of  the  payee;  (d)  no  other  cases  are 
covered  by  the  Negotiable  Instruments  Law. 

§  118b.  Several  indorsements  in  blank,  also  combination  of 
in  blank  and  special  indorsements.  By  way  of  summary  and 
illustration  suppose  we  have  five  indorsements  in  blank  upon  an 
instrument  payable  to  bearer ;  suppose  the  five  blank  indorsements 
are  by  A,  B,  C,  D,  and  E,  respectively,  and  the  instrument  is 
now  in  the  hands  of  X.    X  may  do  any  one  of  four  things : 

(1)  Fill  up  the  first  to  himself. 

(2)  Deduce  his  title  through  all. 

(3)  Strike  out  any  or  all. 

(4)  Turn  the  instrument  over  to.  a  stranger  without  indorse- 
ment by  himself. 

Suppose  again  a  case  of  a  combination  of  in  blank  and  special 
indorsements,  that  is,  suppose  X  makes  a  promissory  note  pay- 
able to  A  or  order,  which  is  now  in  the  hands  of  Y,  the  holder, 
and  the  indorsements  are  as  follows: 

(1)  A  (in  blank;  just  signs  his  name). 

(2)  B   (in  blank;  just  signs  his  name). 

(3)  Pay  to  order  of  D  (signed)  C. 

(4)  D   (in  blank;  just  signs  his  name). 

(5)  Pay  to  order  of  F  (signed)  E. 

(6)  F  (in  blank;  just  signs  his  name). 


138  NEGOTTABT.K    INSTRUMENTS.  §118b 

In  the  hands  of  Y,  the  holder,  and  as  against  X,  the  maker, 
and  A,  the  payee,  the  instrument  is  payable  to  bearer,  because 
indorsed  in  blank.  Also  against  the  indorser  B  it  is  payable  to 
bearer.  As  against  C  the  special  indorser  title  must  be  made 
through  D  and  the  holder  must  prove  both  C  and  D's  signatures. 


CHAPTER  XII. 
OF  THE  NATURE  OF  THE  LIABILITIE^OF  THE  PARTIES. 

§  119.  In  general.  h^^3.  Indorser. 

120.  Maker.  '>  124.  Accommodaton  and  accom- 

121.  Drawer.  ,   \^    I    S  K  modated  parties. 

122.  Acceptor.  /  ^  I  $h       ■*■        125.  Agent. 


§JJAr"'Th  general.  The  different  parties  to  Negotiable  In- 
struments have  different  HabiHties.  Some  parties  are  primarily 
liable,  while  others  are  secondarily  liable. 

The  Negotiable  Instruments  Law  provides 

"The  person  primarily  liable  on  an  instrument  is  the  person 
who  by  the  terms  of  the  instrument  is  absolutely  required  to  pay 
the  same.  All  other  parties  are  secondarily  liable."'^  This  is 
also  the  law  generally. 

§  120.  Maker.  As  to  the  liability  of  the  maker  of  a  nego- 
tiable instrument,  the  Negotiable  Instruments  Law  provides: 

"The  maker  of  a  negotiable  instrument  by  making  it  engages 
that  he  will  pay  it  according  to  its  tenor  and  admits  the  existence 
of  the  payee  and  his  then  capacity  to  indorse/'^ 

He  not  only  promises  the  payee  to  pay  it  according  to  its 
tenor,  but  he  promises  any  subsequent  holder  who  is  legally 
entitled  to  the  instrument  the  same.^  He  admits  that  the  payee 
is  the  real  owner^*  and  as  against  a  bona  fide  holder  he  admits 
the  legal  existence  of  the  payee  and  his  capacity  to  contract.^'' 
When  the  instrument  is  payable  to  bearer,  it  is  not  necessary 
that  the  name  of  every  one  through  whose  hands  it  passes  should 
appear  on  the  instrument,  because  it  is  made  payable  to  bearer.'* 
Anyone  bearing  the  paper  can  recover  against  any  party  on  the 
instrument,  the  maker,  the  payee  or  any  of  the  indorsers.  In 
order  to  recover  against  one  who  has  made  it  payable  specially 

1  Neg.  Inst.  Law,  §  192,  where  all  ^  ggg  bona  fide  holder.  Chap, 
cases  directly  or  indirectly  bear-      XIII. 

ing  upon  or   citing  the   Law  are  ^a  Wheeler  v.  Barr,  7  Ind.  App. 

grouped.  381. 

2  Neg.  Inst.  Law,  §  60,  where  3b  gj-ickley  v.  Edwards,  131  Ind. 
all    cases    directly    or    indirectly  3. 

bearing  upon  or  citing  the  Law  '*  Bitzer  v.  Wagar,  83  Mich.  223, 

are  grouped.  47  N.  W.  210;  Goodpaster  v.  Voris, 

8  la.  334,  74  Am.  Dec.  313. 
139 


140  NEGOTIABLE    INSTRUMENTS.  §  121 

to  some  one,  It  is  necessary  to  prove  the  signature  of  the  one 
who  has  made  it  payable  and  the  signature  of  the  one  to  whose 
order  it  is  made  payable,  and  also  the  signature  of  any  other 
party  you  are  trying  to  recover  against.  The  payee,  when  he 
indorses  the  instrument,  becomes  liable  to  parties  who  take  the 
instrument  after  his  signature  is  upon  it. 

§  121.  Draviter.  The  general  law  as  to  the  liability  of  the 
drawer  is  clearly  set  out  in  the  Negotiable  Instruments  Law  in 
the  following  language : 

"The  drazver  by  drawing  the  instrument  admits  the  existence 
of  the  payee  and  his  then  capacity  to  indorse ;  and  engages  that 
on  due  presentment  the  instrument  will  be  accepted  or  paid,  or 
both,  according  to  its  tenor,  and  that  if  it  be  dishonored  and 
the  necessary  proceedings  on  dishonor  be  didy  taken,  he  will  pay 
the  amount  thereof  to  the  holder  or  to  any  subsequent  indorser 
who  may  be  compelled  to  pay  it,  but  the  drawer  may  insert  in 
the  instrument  an  express  stipidation  negativing  or  limiting  his 
own  liability  to  the  holder."^ 

The  Colorado  and  Illinois  Acts  omit  the  word  "subsequent" 
before  "indorser."  The  District  of  Columbia,  North  Dakota  and 
New  York  Acts  read  "accepted  and  paid." 

The  drawer  by  signing  the  instrument  thereby  states  to  the 
payee  that  if  he  will  take  it  to  the  drawee  that  the  latter  will 
accept  it  and  pay  it,  and  if  he  does  not  and  the  payee  gives  notice 
to  the  drawer  of  the  failure  on  the  part  of  the  drawee,  then  the 
drawer  agrees  to  pay  it  himself.  He  agrees  to  pay  it  if  the 
drawee  does  not,  provided  notice  in  a  reasonable  time  is  given 
him  of  that  fact  so  that  he  can  make  himself  safe. 

The  Negotiable  Instruments  Law  contains  the  following  pro- 
vision as  to  the  liability  of  the  drawer  or  indorser  in  case  of  a 
qualified  acceptance : 

"The  holder  may  refuse  to  take  a  qualified  acceptance,  and  if 
he  dfes  not  obtain  an  unqualified  acceptance,  he  may  treat  the 
bill  as  dishonored  by  non-acceptance.  Where  a  qualified  accept- 
ance is  taken,  the  drawer  and  indorsers  are  discharged  from  lia- 
bility on  the  bill,  unless  they  have  expressly  or  impliedly  au- 
thorised the  holder  to  take  a  qualified  acceptance,  or  subsequently 
assent  thereto.  When  the  drawer  or  an  indorser  receives  notice 
of  a  qualified  acceptance,  he  must,  zvithin  a  reasonable  time,  ex- 
press his  dissent  to  the  holder,  or  he  will  be  deemed  to  hav^ 
assented  thereto."^ 

^  Neg.  Inst  Law,  §61.  ing   upon    or    citing   the    Law   are 

^  Neg.   Inst.   Law,    §    142,    where      grouped, 
all  cases  directly  or  indirectly  bear- 


§    122  NATURE    OF    LIABILITIES.  141 

§  122.  Acceptor.  The  general  law  as  to  the  liability  of 
the  acceptor  is  clearly  set  out  in  the  Negotiable  Instruments 
Law  in  the  following  section : 

"The  acceptor  by  accepting  the  instrument  engages  that  he 
zmll  pay  it  according  to  the  tenor  of  his  acceptance,  and  admits 

(1)  the  existence  of  the  drawer,  the  genuineness  of  his  signature, 
and   his  capacity  and   authority   to   draz0  the   instrument;   and 

(2)  the  existence  of  the  payee,  and  his  then  capacity  to  in- 
dorse:"^ 

When  the  acceptor  accepts  it,  being  the  drawee,  he  thereby 
says  to  the  payee,  "I  recognize  that  signature  as  that  of  the 
drawer ;  I  have  funds  in  my  possession  belonging  to  him  to  the 
amount  of  this  instrument,  and  I  promise  that  I  will  accept  this 
and  I  do  accept  it,  and  since  it  is  payable  ten  days  after  sight, 
you  bring  that  instrument  around  in  ten  days  and  I  will  pay  it." 
Now,  this  instrument  having  been  indorsed  by  the  payee  to  A, 
what  is  the  liability  of  the  acceptor  to  A?  Why,  the  acceptor 
says  to  A,  "You  present  that  instrument  to  me  and  I  will  pay 
it.  I  recognize  that  signature  of  the  drawer,  and  I  will  vouch 
for  that ;  the  payee  is  a  party  who  is  capable  and  has  capacity 
to  indorse  the  instrument ;  you  present  the  instrument  to  me 
and  I  will  pay  it."  That  is  his  contract  with  the  indorser  or 
holder,  A.  What  is  his  contract  with  the  drawer.  It  is,  that 
he  has  funds  in  his  hands  belonging  to  the  drawer,  and  he  says 
to  A,  the  drawer,  "You  draw  upon  me  any  time  and  I  will  ac- 
cept and  pay  the  bill.  If  I  don't,  then  I  am  liable  to  you  in 
such  damages  as  you  may  suffer  by  my  refusal  to  accept  and 
pay  the  instrument."*  The  liability  as  to  the  indorsers  on  th 
back  of  the  instrument  is  substantially  the  same. 

If  it  appear  that  the  acceptance  is  made  by  a  person  a/  the 
agent  of  another,  such  agent  is  not  personally  liable.** 

Other  provisions  as  to  the  liability  of  the  acceptor  fou^d  in 
the  Negotiable  Instruments  Law  are  as  follows : 

"When  the  acceptor  of  a  hill  drawn  in  a  set  pays  it  zvit 
requiring  the  part  bearing  his  acceptance  to  be  delivered  up 
him,  and  that  part  at  maturity  is  outstanding  in  the  hands  of 
a  holder  in  due  course,  he  is  liable  to  the  holder  thereon."^ 

^Neg.  Inst.  Law,  §62,  where  all       (N.  S.)   La.  301;  Drew  v.   Phelps, 
cases  directly  or  indirectly  bearing       18  N.  H.  572. 
upon  or  citing  the  Law  are  grouped.  **  Tousey  v.  Taw,  19  Ind.  212 

8    Pilkington    v.    Woods    10    Ind.  » Neg.  Ins.  Law,  §  182.  where  all 

432 ;  Thompson  v.  Flower,  1  Mart.      cases  directly  or  indirectly  bearing 

upon  or  citing  the  Law  are  grouped. 


142  NEGOTIABLE    INSTRUMENTS.  §  123 

"Except  as  herein  otherwise  proznded,  "where  any  one  part  of 
a  hill  drawn  in  a  set  is  discharged  by  payment  or  othenmse,  the 
zuhole  hill  is  discharged."''-^ 

§  123.  The  indorser.  The  indorser  engages  (a)  that  the  ne- 
gotiable instrument  will  be  accepted  or  paid,  as  the  case  may  be, 
according  to  its  purport  ;-^^  but  this  engagement  is  conditioned 
upon  due  presentment  or  demand,  and  notice  ;^^  (b)  that  it  is  in 
every  respect  genuine;*^*  (c)  that  it  is  the  valid  instrument  it  pur- 
ports to  be  ;^^  (d)  that  the  ostensible  parties  are  competent  i^"* 
(e)  and  that  he  has  good  title  to  it  and  the  right  to  indorse  it.-^® 
And  if  it  turns  out  that  any  of  these  engagements  except  that 
first  named  are  not  fulfilled,  the  indorser  may  be  sued  for  re- 
covery of  the  original  consideration  which  has  failed,  or  be  held 
liable  as  a  party,  without  proof  of  demand  and  notice. 

The  above  rights  inure  to  the  bona  fide  holder  of  the  bill,  and  he 
can  sue  upon  it  or  further  negotiate  it,  and  though  guilty  of  a 
fraud  in  parting  with  it,  nevertheless  he  can  give  title  to  a  bona 
fide  holder  for  value  v/ithout  notice  who  takes  it  before  maturity. 
Any  irregularity,  as  a  torn  paper,  or  something  similar,  patent  on 
the  face  of  a  bill,  is  equivalent  to  notice,  and  the  holder  who  takes 
such  an  instrument  will  not  be  considered  an  innocent  holder.*® 
In  an  action  by  the  de  facto  holder,  it  may  be  shown  that  he  holds 
adversely  to  the  true  owner,  and  that  he  is  agent  or  trustee  for 
another  person,  and  then  any  defense  or  set-ofif  available  against 
such  person  is  available  against  the  holder. 

10  Neg.  Ins.  Law,  §  183.  where  all  159,  19  Atl.  158,  17  Am.  St.  Rep. 
cases  directly  or  indirectly  bearing  470;  Thrall  v.  Newell,  19  Vt.  202, 
upon  or  citing  the  Law  are  grouped.  47  Am.  Dec.  682.     As  to  when  in- 

11  Van  Fleet  v.  Sledge,  45  Fed.  dorser  can  allege  defenses,  see  note 
743;   Prentiss  v.  Savage,   13  Mass.  7  U.  S.  L.  Ed.  744. 

20;   Woodward   v.    Lowry,   74   Ga.  i*  By^Jej.  v.  Slocomb,  33  La.  Ann. 

148.     As  to  endorser's  liability  see  170,  39  Am.  Rep.  265;  Edmunds  v. 

11  Arf.  St.  Rep.  930.  Rose,  51  N.  J.  L.  547.  18  Atl.  748, 

learner    v.    Brainerd,    7    Utah  14  Am.  St.  Rep.  704. 

26  Pac.  299,  12  L.  R.  A.  434;  15  Purgerson  v.  Staples,  82  Me. 
^'lie  v.  Colter,  170  Mass.  356,  49  159,  19  Atl.  158,  17  Am.  St.  Rep. 
N.  E.  746,  64  Am.  St.  Rep.  305;  470;  Merchants  Nat.  Bank  v. 
Nash  V.  Harrington,  1  Aik.  (Vt.)  Spates,  41  W.  Va.  27,  23  S.  E.  681, 
39,  16  Am.  Dec.  672 ;  McLanahan  v.  56  Am.  St.  Rep.  828.  As  to  war- 
Brandon,  1  Mart.  (N.  S.)  La.  321,  ranty  implied  by  indorsement  see 
14  Am.  Dec.  188.  See  note  16  U.  S.  note  7  Am.  St.  Rep.  365. 
L.  Ed.  260.  i«  Skillman  v.  Titus,  32  N.  J.  L. 

12a  Baldwin   v.   Threlkeld,  8  Ind.  96;    Chattanooga   First    Nat.    Bank 

App.   312;   Clark  v.   Trueblood,   16  v.    Stockwell,  92   Tenn.  252,  21    S. 

Ind.  App.  98.  W.  523,  20  L.  R.  A.  605. 

i^Furgerson  v.   Staples.  82   Me. 


§  123  NATURE  OF  LIABILITIES.  143 

"Every  indorscr  who  indorses  without  qualification  warrants 
to  all  subsequent  holders  in  due  course  (1)  the  matter  and  things 
mentioned  in  subdivisions  one,  two  and  three  of  the  next  pre- 
ceding section;  and  (2)  that  the  ifistrument  is  at  the  time  of  his 
indorsement  valid  and  subsisting.  And,  in  addition,  he  engages 
thai  on  due  presentmient  it  shall  be  accepted  or  paid,  or  both,  as 
the  case  may  be,  according  to  its  tenor,  and  that  if  it  be  dishon- 
ored, and  the  necessary  proceedings  on  dishonor  be  didy  taken,  he 
will  pay  the  amount  thereof  to  the  holder,  or  to  any  subsequent 
indorser  who  may  be  compelled  to  pay  it."^'^ 

The  indorser  is  estopped  to  deny  the  legality  or  validity  of  the 
note*'^*  and  he  undertakes  that  if  tlie  note  is  not  paid  at  maturity 
and  he  has  due  notice  of  its  dishonor,  he  will  pay  it.^^" 

"Where  a  person  places  his  indorsement  on  an  instrument 
negotiable  by  delivery  he  incurs  all  the  liabilities  of  an  in- 
dorser."^^ 

"As  respects  one  another,  indorsers  are  liable  pritna  facie  in 
the  order  in  which  they  indorse;  but  evidence  is  admissible  to 
shozv  that  as  betzveen  or  among  themselves  they  have  agreed 
othervAse.  Joint  payees  or  joint  indorsers  who  indorse  are 
deemed  to  indorse  jointly  and  severally."^^ 

What  liability  does  an  indorser  have  to  the  preceding  in- 
dorsers? He  can  recover  against  any  who  precede  him,  but 
none  who  succeed  him. 

"The  indorsement  or  assigntnent  of  the  instrument  by  a  cor- 
poration or  by  an  infant  passes  the  property  therein,  notzmth- 
standing  that  from  tvant  of  capacity  the  corporation  or  infant 
may  incur  no  liability  thereon."^^ 

In  other  words,  the  parties  who  have  received  the  instrument 
and  passed  it  on  to  someone  else  are  estopped  to  set  up  that 
the  other  parties  did  not  have  capacity.  Of  course,  a  minor  has 
a  right  to  set  up  the  defense  that  he  himself  did  not  have  the 
capacity.  These  parties,  then,  guarantee  or  warrant  the  capacity 
of  the  previous  parties  to  make  the  instrument,  but  this  does  not 
estop  the  party  who  is  really  incapacitated  from  setting  that  up. 

There  is  some  conflict  as  to  the  liability  of  an  indorser  with- 
out recourse,  but  the  general  rule  is  that  a  person  who  indorses 

^"^  Neg.  Inst.  Law,  §  66,  where  all  cases  directly  or  indirectly  bearing 

cases  directly  or  indirectly  bearing  upon  or  citing  the  Law  are  grouped, 

upon  or  citing  the  Law  are  grouped.  1»  Neg  Inst.  Law,  §  68,  where  all 

1^' Hoffman  v.  Hollingsworth,  10  cases  directly  or  indirectly  bearing 

Ind.  App.  353.  upon  or  citing  the  Law  are  grouped. 

i^"*  Alleman  v.  Wheeler,  101  Ind.  20  N^g  Inst.  Law,  §  22.  where  all 

141.  cases  directly  or  indirectly  bearing 

18  Neg.  Ins.  Law,  §  67,  where  all  upon  or  citing  the  Law  are  grouped. 


144  NEGOTIABLE    INSTRUMENTS.  §  124 

without  recourse  makes  all  warranties  any  other  indorser  does, 
except  that  he  does  not  warrant  the  capacity  financially  of  the 
other  parties  to  pay.  He  does  not  agree  to  indemnify  the  other 
parties  on  the  instrument.  The  indorser  without  recourse  makes 
this  representation  and  warranty  to  every  person  who  gets  the 
instrument,  that  the  parties  had  capacity  and  the  instrument  is 
a  valid  instrument  as  to  form,  etc.,^*  but  he  does  not  warrant  the 
financial  responsibility  of  the  parties.  By  placing  his  name  there, 
he  makes  that  contract  with  everybody  who  takes  the  instrument. 

When  an  instrument  is  made  payable  to  bearer  and  has  passed 
from  hand  to  hand  by  mere  delivery,  the  indorsee  or  holder  has 
no  right  to  recover  from  any  other  party  who  has  passed  it  on 
by  delivery  unless  that  party's  name  appears  on  the  instrument. 
There  can  be  no  recovery  against  the  party  whose  name  is  not 
on  the  instrument,  unless  the  party  who  is  endeavoring  to  re- 
cover from  him  has  immediately  received  that  instrument  from 
him.  Those  are  the  liabilities  of  the  indorser  without  recourse 
and  the  indorser  by  mere  delivery. 

The  Negotiable  Instruments  Law  covers  these  principles  in 
the  following  section : 

"Every  person  negotiating  an  instrument  by  delivery  or  by 
a  qualified  indorsement  warrants^^  (1)  that  the  instrument  is 
genuine  and  in  all  respects  what  it  purports  to  be;  (2)  that  he 
has  a  good  title  to  it;  (3)  that  all  prior  parties  had  capacity  to 
contract;  (4)  that  he  has  no  knoidedge  of  any  fact  zvhich  wotdd 
impair  the  validity  of  the  instrument  or  render  it  valueless.  But 
when  the  negotiation  is  by  delivery  only,  the  warranty  extends 
in  favor  of  no  holder  other  than  the  immediate  transferee.  The 
provisions  of  subdivision  three  of  this  section  do  not  apply  to 
persons  negotiating  public  or  corporate  securities,  other  than 
bills  and  notes." 

There  is  the  following  provision  as  to  the  liability  of  an  agent 
or  broker  who  negotiates  an  instrument  without  indorsement: 

"Where  a  broker  or  other  agent  negotiates  an  instrument  with- 
out indorsement,  he  incurs  all  the  liabilities  prescribed  by  section 
sixty- five  of  this  act,  unless  he  discloses  the  name  of  his  principal, 
and  the  fact  that  he  is  acting  only  as  agent."^^ 

§  124.  Accommodation  and  accommodated  parties.  The  fol- 
lowing provision  is  found  in  the  Negotiable  Instruments  Law: 

21  Lobdell     V.     Baker,     3     Mete.  22  Neg.  Inst.  Law,  §  65,  where  all 

(Mass.)   469;  Watson  v.  Cheshire,  cases  directly  or  indirectly  bearing 

18  la.  202,  87  Am.  Dec."' 382;  Han-  upon  or  citing  the  Law  are  grouped, 

mun  V.  Richardson,  48  Vt.  508,  21  23  Neg.  Ins.  Law,  §  69,  where  all 

Am.  Rep.  152;  Ware  v.  McCormack,  cases  directly  or  indirectly  bearing 

%  Ky.  139,  28  S.  W,  157.  upon  or  citing  the  Law  are  grouped. 


§  124  NATURE  OF  LIABILITIES.  145 

"An  accommodation  party  is  one  mho  has  signed  the  instru- 
ment as  maker,  drawer,  acceptor  or  indorser,  without  receiving 
value  therefor,  and  for  the  purpose  of  lending  his  name  to 
some  other  person.  Such  a  person  is  liable  on  the  instrument 
to  a  holder  for  value,  notzvithstanding  such  holder  at  the  time 
of  taking  the  instrument  knezsj  him  to  be  only  an  accommodation 
party."^'* 

Here  is  a  lending  of  the  credit  of  one  person  to  another  for 
accommodation.  A  wishes  to  pay  an  obligation  of  $500  and  he 
has  no  credit ;  he  says  to  B :  "Put  your  name  on  this  paper  and 
I  will  have  money  by  the  time  it  comes  due  and  pay  it  and  I 
will  see  that  you  do  not  suffer  any  damage."  So  B  signs.  When 
that  instrument  becomes  due,  if  A  does  not  pay  and  B  has  to, 
then  B  can  recover  from  him.  But  since  B  has  received  no  con- 
sideration there  can  be  no  recovery  as  against  him  by  A. 

As  stated  above,  an  accommodation  contract  may  be  described 
as  a  gift  by  A  to  B  of  A's  credit,  to  be  offered  to  another  on 
payment  of  value.  A  contract  of  such  a  nature  may  take  any 
of  the  forms  of  the  law  merchant ;  a  promissory  note  may  be 
made  or  indorsed  for  accommodation ;  a  bill  of  exchange  may  be 
drawn,  accepted  or  indorsed  for  accommodation,  that  is,  most 
any  party  to  the  instrument  may  be  an  accommodation  party. 
The  accommodation  party  is  the  one  who  has  signed  for  the 
purpose  of  lending  his  name  to  some  other  person  as  a  means 
of  credit — he  is  also  called  the  accommodating  party.  The  party 
to  whom  the  credit  is  loaned  is  called  the  accommodated  party. 

Certain  liabilities  arise  as  a  result  of  the  relations  established. 
The  accommodated  party  is  liable  to  the  accommodating  or  ac- 
commodation party.  Thus  the  drawer  may  show  that  he  accepted 
and  paid  the  bill  for  the  accommodation  of  the  drawer  and  then 
the  law  will  imply  an  undertaking  on  the  part  of  the  drawer,  to 
indemnify  the  acceptor  who,  on  such  implied  obligation,  may  have 
an  action  against  the  drawer.  Such  action  is  not  brought  upon 
the  bill,  for  when  the  instrument  is  paid  it  is  extinguished  and 
no  longer  exists  as  a  valid  instrument  and  consequently  the  in- 
strument not  being  in  existence,  the  acceptor  cannot  recover 
upon  the  instrument  itself.^** 

As  already  stated,  there  is  no  liability  of  the  accommodating 
party  or  accommodation  party  to  the  accommodated  party  or  the 
person  for  whose  accommodation  he  has  given  it,  as  the  obliga- 

24  Neg.  Inst.  Law,  §  29,  where  all  R.  A.  698,  and  31  Am.  St.  Rep.  745. 

cases  directly  or  indirectly  bearing  And  as  to  accommodation  indorse- 

upon  or  citing  the  Law  are  grouped.  ment  by  bank  see  note  23  L.  R.  A.. 

As    to    liability    of    accommodation  836. 
maker  and  indorser  see  notes  5  L.  24a  Dj(.]^gj.son  v.  Turner,  15  Ind.  4. 


146  NEGOTIABLE    INSTRUMENTS.  §  124 

tion  is  without  consideration  and  a  nudum  pactum.  The  accom- 
modating party  is  Hable  to  all  other  bona  fide  holders  who  take 
the  instrument. 

Suppose  A  lends  you  his  credit  for  a  special  purpose  and  you 
use  that  credit  for  some  other  purpose  and  the  person  who  takes 
that  credit  knows  that  it  has  been  loaned  for  a  particular  pur- 
pose, then  the  person  who  takes  that  credit  cannot  recover.  He 
cannot  recover  because  he  knows  that  the  credit  has  been  diverted 
from  the  purpose  for  which  it  was  given — he  has  notice. 

Where  a  bill  is  drawn  or  accepted,  or  a  note  made  or  indorsed 
for  accommodation,  with  an  agreement  that  it  shall  be  used  for 
a  particular  purpose,  any  diversion  in  its  use  operates  as  a  dis- 
charge of  the  accommodation  party  as  to  all  other  parties  who 
have  knowledge  of  such  diversion.^^ 

It  is  immiaterial  that  paper  executed  or  indorsed  for  accom- 
modation is  not  used  in  precise  conformity  with  agreement,  when 
it  does  not  appear  that  the  accommodation  party  had  any  interest 
in  the  manner  in  which  the  paper  was  to  be  applied.^®  No  change 
in  the  mere  mode  or  plan  of  raising  the  money,  though  not  ap- 
plied to  the  purpose  intended  by  the  accommodation  party,  will 
constitute  a  misappropriation.  In  order  to  constitute  a  mis- 
appropriation, there  must  be  a  fraudulent  diversion  from  the 
original  object  and  design ;  and  it  is  now  well  settled  that  where 
a  note  is  indorsed  for  the  accommodation  of  the  maker,  to  be 
discounted  at  a  particular  bank,  it  is  no  fraudulent  misappro- 
priation of  the  note,  if  it  is  discounted  at  another  bank^^*  or  used 
in  the  payment  of  a  debt  or  otherwise  for  the  credit  of  the 
maker.^'^  If  the  note  has  effected  the  substantial  purpose  for 
which  it  was  designed  by  the  parties  an  accommodation  maker 
or  indorser  cannot  object  that  the  accommodation  was  not  effected 
in  the  precise  manner  contemplated,  where  there  is  no  fraud, 
and  the  interest  of  the  indorser  is  not  prejudiced.^* 

It  is  the  general  rule  that  an  accommodation  party  lends  his 
credit  only  for  the  period  specified  in  the  instrument,  that  is, 
until  its  maturity ;  and  if  transferred  thereafter  such  party  should 
not  be  made  liable  except  as  an  ordinary  party  to  commercial 

25  Stoddard   v.   Kimball,  6   Cush.  27  Powell    v.    Waters,    17    Johns. 

(Mass.)    469;   Daggett  v.   Whiting,  (N.  Y.)   176;  Bank  of  Chenango  v. 

35    Conn.    372;    Small    v.    Smith,    1  Hyde,  4  Cow.  (N.  Y.)  567. 

Denio.  (N.  Y.)  583.  ssj^ckson  v.   Bank,  42   N.  J.  L. 

^epelters   v.   Muncie   Nat.   Bank,  178;  Dum  v.  Weston,  71   Me.  270; 

34  Ind.  256;  Quinn  v.  Hard,  43  Vt.  Briggs  v.  Boyd,  37  Vt.  538.     As  to 

375.  fraudulent    diversion    see    note    31 


/3.  traudulent    diver 

2«a  Reed  v.  Trentman,  53  Ind.  438.       Am.  St.  Rep.  748. 


§  124  NATURE  OF   LIABILITIES.  147 

paper.*®  However,  it  should  be  borne  in  mind  that  the  accom- 
modation indorser's  liability  may  become  fixed  by  presentment 
and  notice  and  so  survive  maturity,  and  he  would  thus  continue 
liable ;  but  of  course  if  not  issued  until  after  maturity  or  until 
overdue,  the  accommodating  indorser  is  not  liatile. 

The  presumption  is  that  such  an  indorser  is  subject  to  the 
same  liabilities  as  are  imposed  by  the  statute  upon  general  in- 
dorsers. 

And  their  rights  are  largely  the  same.  Thus  one  indorsing 
an  instrument  for  the  accommodation  of  the  maker  cannot  be 
charged  without  a  demand. 

While  a  corporation  has,  under  certain  circumstances,  the  gen- 
eral power  to  bind  itself  by  promissory  notes  and  contracts 
of  indorsement,  made  in  the  general  course  of  its  business,  it 
has  no  power  to  make  or  indorse  notes  for  the  accommodation  of 
others.*'**  The  validity  of  such  paper  can  also  be  assailed  upon 
the  theory  that  the  officer  of  a  corporation  who  executes  it  can- 
not so  bind  the  corporation  in  a  matter  not  connected  with  its 
business,  or  in  which  it  has  no  beneficial  interest.  But  in  the 
hands  of  a  bona  fide  purchaser  for  value,  accommodation  paper 
duly  executed  by  the  officers  of  a  corporation  can  be  enforced 
against  the  corporation.^®  The  rules  applicable  to  the  rights 
of  bona  fide  holders  of  accommodation  paper,  signed  by  one  of  a 
partnership  without  the  consent  of  his  copartners,  can  also  be 
applied  in  the  case  of  similar  paper  executed  by  the  officers  of 
a  corporation.  An  accommodation  bill  or  note  accepted,  made 
or  indorsed  by  one  member  of  a  firm  cannot  be  enforced  against 
the  firm  by  one  who  took  it  with  knowledge  of  the  accommoda- 
tion character  of  the  firm's  signature,  unless  all  the  partners 
assented  thereto.^**^ 

Successive  accommodation  parties  are  liable  to  each  other  in 
succession,  according  to  the  order  in  which  their  names  appear 
upon  the  instrument.^^  The  reason  for  this  rule  may  be  found 
in  the  presumption  that  each  accommodation  indorser  placed  his 
name  upon  the  instrument  trusting  in  the  strength  of  the  prior 
accommodation  indorsers.    Facts  may  be  shown  as  in  the  case  of 

29  Chester  v.  Dorr,  41  N.  Y.  279;  macy  Co.  v.  Trust  Co.,  97  Ga.  573, 
Bower  v.  Hastings.  36  Pa.  St.  285 ;      25  S.  E.  171. 

Battle  V.  Weems,  44  Ala.  105.  soa  Beach  v.   The   State   Bank,   2 

29'  Smead  v.  Railroad,  11  Ind,  104.  Ind.  488. 

30  Nat.  Bank  v.  Young,  41  N.  J.  31  Ajj^en  v.  Barklev.  2  Speers  (S. 
L.  531,  7  Atl.  488;  Am.  Trust  &  C.)  747,  42  Am.  Dec.  317;  U.  S.' 
Savings  Bank  v.  Gkick,  68  Minn.  Bank  v.  Beirne,  1  Gratt.  234,  42 
129,  70  N.  W.  1085 ;  Jacobs  Phar-  Am.  Dec.  551 ;  Moody  v.  Findley,  43 

Ala.  167. 


148  NEGOTIABLE    INSTRUMENTS.  §  125 

Other  indorsers  to  show  that  the  liabiUty  is  joint  because  of  an 
agreement  between  them  to  be  bound  jointly  and  not  severally. 
If  no  such  agreement  is  shown  such  indorsers  are  not  co-sureties 
and  there  can  be  no  right  of  contribution  among  them.^^ 

§  125.  Agent.  The  general  rule  as  to  the  liability  of  an 
agent  is  found  in  a  section  of  the  Negotiable  Instruments  Law 
which  reads  as  follows : 

"Whether  the  instrument  contains  or  a  person  adds  to  his 
signature  words  indicating  that  he  signs  for  or  on  behalf  of  a 
principal,  or  in  a  representative  capacity,  he  is  not  liable^  on  the 
instrument  if  he  zms  didy  authorised ;  but  the  mere  addition  of 
words  describing  him  as  an  agent,  or  as  Ulling  a  representative 
character  without  disclosing  his  principal,  does  not  exempt  him> 
from  personal  liability."^^ 

The  above  section  of  the  statute  as  to  the  non-liability  of  the 
agent  who  has  been  duly  authorized  changes  the  rule  in  many 
jurisdictions.  The  section  reaches  the  right  result  as  individual 
liability  should  not  be  imposed  upon  an  agent  who,  being  duly  au- 
thorized to  sign,  discloses  the  name  of  a  principal  on  the  instru- 
ment, and  indicates  that  he  himself  is  an  agent  or  officer,  without 
regard  to  the  form  in  which  this  is  done. 

It  has  been  argued  that  an  agent  signing  without  authority  of 
the  principal  is,  by  implication,  liable  on  the  instrument  under  this 
section.  In  support  of  this  it  is  stated  that  the  agent  should  know 
whether  he  has  authority  and  it  increases  negotiability  and  causes 
no  confusion  as  to  the  amount  recoverable. 

The  digest  of  the  annotated  cases  in  another  part  of  this  work 
should  be  consulted  as  to  the  course  of  judicial  decisions  on  this 
section. 

32  Kirschner  v.  Conklin,  40  Conn.  33  Neg.    Inst.    Law,    §    39    (20), 

77 ;    Moore   v.   Gushing,    162   Mass.  wher»  all  cases  directly  or  indirect- 

594,  39  N.  E.  177.  44  Am.  St.  Rep.  ly  bearing  upon  or  citing  the  Law 

393 ;  U.  S.  Bank  v.  Beirne,  1  Gratt  are  grouped. 
234,  42  Am.  Dec.  SSL 


CHAPTER  XIII. 

NATURE  AND  RIGHTS  OF  A  BONA  FIDE  HOLDER  OR  A  PUR- 
CHASER FOR  VALUE  WITHOUT  NOTICE. 

§  126.  Bona    fide    holder    for    value      §  127.  Good  faith  or  bona  fide. 
without     notice— In     gen-         128.  Holder  for  value. 
era!.  129.  Holder  without  notice. 

§  126.  Bona  fide  holder  for  value  without  notice— In  gen- 
eral. The  following  provisions  are  found  in  the  Negotiable 
Instruments  Law  and  contain  a  correct  statement  of  the  law 
generally : 

"A  holder  in  due  course  is  a  holder  who  has  taken  the  instru- 
ment under  the  following  conditions: 

1.  That  it  is  complete  and  regular  upon  its  face. 

2.  That  he  became  the  holder  of  it  before  it  zms  overdue,  and 
without  notice  that  it  had  been  previously  dishonored,  if  such 
was  the  fact. 

3.  That  he  took  it  in  good  faith  and  for  value. 

4.  That  at  time  it  ztxis  negotiated  to  him  he  had  no  notice 
of  any  infirmity  in  the  instrument  or  defect  in  the  title  of  the 
person  negotiating  it."^ 

"A  holder  in  due  course  holds  the  instrument  free  from  any, 
defect  of  title  of  prior  parties,  and  free  from  defenses  available 
to  prior  parties  among  themselves,  and  may  enforce  payment  of 
the  instrument  for  the  full  amount  thereof  against  all  parties 
liable  thereon."^ 

"In  the  hands  of  any  holder  other  than  a  holder  in  due  course, 
a  negotiable  instrument  is  subject  to  the  same  defenses  as  if  it 
were  non-negotiable.  But  a  holder  who  derives  his  title  through 
a  holder  in  due  course,  and  who  is  not  himself  a  party  to  any 
fraud  or  illegality  affecting  the  instrument,  has  all  the  rights 
of  such  former  holder  in  respect  of  all  parties  prior  to  the  latter."^ 

"Every  holder  is  deemed  prima  facie  to  be  a  holder  in  due 
course;  but  when  it  is  shown  that  the  title  of  any  person  who 

1  Neg.  Inst.  Law,  §  52,  where  all  ^  Neg.  Inst.  Law,  §  57,  where  all 

cases  directly  or  indirectly  bearing  cases  directly  or  indirectly  bearing 

upon  or  citing  the  Law  are  grouped.  upon  or  citing  the  Law  are  grouped. 

As  to  rights  of  bona  fide  holder,  see  ^  Neg.  Inst.  Law,  §  58,  where  all 

notes  5  U.  S.  L.  Ed.  87,  also  10  U.  S.  cases  directly  or  indirectly  bearing 

L  ed  473.  upon  or  citing  the  Law  are  grouped. 

149 


150  NEGOTIABLE   INSTRUMENTS.  §  128 

has  negotiated  the  instrument  was  defective,  the  burden  is  on 
the  holder  to  prove  that  he  or  some  person  under  whom  he  claims 
acquired  the  title  as  a  holder  in  due  course.  But  the  last  men- 
tioned rule  does  not  apply  in  favor  of  a  party  who  became  bound 
on  the  instrument  prior  to  the  acquisition  of  such  defective  title."* 

§  127.  Good  faith  or  bona  fide.  The  term  "bona  Me  holder" 
or  holder  in  good  faith,  means  a  holder  according  to  the  law 
merchant,  without  knowledge  or  notice  of  equities  of  any  sort 
which  could  be  set  up  against  a  prior  holder  of  the  instrument.** 
Absence  of  knowledge  of  the  defense,  when  the  instrument  was 
taken,  is  the  essential  element  in  the  matter  of  bona  fide.^ 

That  is,  the  holder,  in  order  to  be  entitled  to  protection  against 
offsets  and  equities  and  defenses  based  upon  frauds,  pleaded  by 
prior  parties,  must  have  acquired  the  paper  in  good  faith  from 
his  predecessor.  If  the  holder's  acquisition  of  the  paper  be  in  any 
respect  fraudulent  he  cannot  claim  the  position  of  a  bona  fide 
holder.'' 

The  Negotiable  Instruments  Law  provides : 

"The  title  of  a  person  who  negotiates  an  instrument  is  defect- 
ive within  the  meaning  of  this  act  zvhen  he  obtained  the  instru- 
ment, or  any  signature  thereto,  by  fraud,  duress,  or  force  and 
fear,  or  other  unlawful  means,  or  for  an  illegal  consideration, 
or  zvhen  he  negotiates  it  in  breach  of  faith,  or  under  such  circum- 
stances as  amount  to  a  fraud."^ 

§  128.  Holder  for  value.  We  have  taken  up  the  considera- 
tion of  the  expression  "bona  fide  holder  for  value  without  no- 
tice"**  and  "bona  fide  purchaser  for  value  without  notice."^®  This 
expression  becomes  important  in  case  of  equities  or  personal  de- 
fenses. If  there  are  certain  equities  or  personal  defenses  against 
an  instrument  a  bona  fide  holder  for  value  without  notice  may 
nevertheless  recover  against  any  party  to  the  instrument.  Of 
course,  any  party  to  an  instrument  who  had  an  equity  or  per- 

4  Neg.  Inst.  Law,  §  59,  where  all  cases  directly  or  indirectly  bear- 
cases  directly  or  indirectly  bearing  ing  upon  or  citing  the  Law  are 
upon  or  citing  the  Law  are  grouped.  grouped. 

5  Stephens  v.  Olson,  62  Minn.  295,  ^  Matthews  v.  Poythress,  4  Ga. 
64  N.  W.  898;  Whistler  v.  Forster,  287;  Limerick  Nat.  Bank  v.  Adams, 
14  C.  B.  N.  S.  248,  108  E.  C.  L.  248.  40  Atl.  166,  70  Vt.  132. 

OHelner  V.  Krolick,  36  Mich.  371;  lo  Young   v.    Schofield,    132    MoT 

Raphael    v.    Bank    of    England,    17  650,   34   S.   W.   497;   Ten    Eyck   v. 

C.  B.  161,  84  E.  C.  L.  161.  Whitbeck,  135  N.  Y.  40,  31   N.   E. 

7  Angier  v.  Brewster,  69  Ga.  362;  994,  31  Am.  St.  Rep.  809;  Scott  v. 
Hickson  v.  Earley,  62  S.  C.  42,  39  McGraw,  3  Wash.  St  ^5.  .29  Pac. 
S.  E.  782.  260. 

8  Neg.  Inst.  Law,  §  55,  where  all 


§  128  RIGHTS  OF  BONA  FIDE  HOLDER.  151 

sonal  defense  can  be  recovered  against  by  a  bona  fide  holder  for 
value  without  notice,  but  the  bona  fide  holder  for  value  cannot 
recover  against  one  who  has  an  absolute  defense,  for  such  de- 
fense attaches  to  the  thing  itself  and  can  be  set  up  against  any- 
body. But,  if  the  defense  is  a  personal  defense,  it  cannot  be  set 
up  successfully.^^  There  is  considerable  in  the  expression  "bona 
fide  holder  for  value."  What  is  a  "holder  for  value"  and  a 
"bona  fide  holder  without  notice?"  A  person  is  a  holder  for 
value  who  has  given  in  return  value,  just  the  same  as  in  any  con- 
tract, or  according  to  the  Negotiable  Instruments  Law:  "Value 
means  valuable  consideration."-^^  "] 

A  bank  that  has  acquired  possession  of  a  negotiable  instrument 
and  given  credit  to  the  one  who  presented  it  in  his  deposit  ac- 
count for  the  proceeds  has  given  value  so  as  to  be  a  holder  in 
due  course.-^^* 

There  are  two  different  classes  of  cases,  where  there  is  some 
conflict  of  authority  as  to  whether  or  not  value  has  been  given. 
One  instance  is  where  an  instrument  is  given  as  collateral  secur- 
ity. A  not  only  makes  his  own  note  but  gives  the  note  of  B  as 
collateral  security,  and  the  better  opinion  is,  that  a  note  given  as 
collateral  security  has  been  given  for  value,  and  a  person  who 
has  an  equity  or  a  personal  defense  which  he  could  set  up  against 
another  could  not  set  it  up  successfully  in  such  a  case,  because  the 
person  who  holds  the  security  holds  it  for  value.-^*  Some  juris- 
dictions hold  that  the  collateral  note  must  be  given  at  the  time  of 
the  loan  ;**  they  say  it  must  be  in  forbearance  to  sue,  or  extension 
of  time,  in  order  that  some  consideration  may  arise  for  the 
giving  of  the  security.-^^  By  the  weight  of  authority,  the  better 
rule  is  to  the  effect  that  the  holder  of  a  collateral  note  is  a  holder 
for  value  and  may  recover  from  the  parties  liable  upon  the  in- 
strument.*® 

11  As   to   personal    and    real    de-  ^^  Smith    v.    Bibber,    83   Me.    34, 

fenses  see,  Chap.  XIV.  19   Atl.   89,    17  Am.    St.    Rep.   464; 

i2Neg.  Inst.  Law,  §  191,  where  all  Porter  v.  Andrus,  10  N.  D.  558,  88 

cases  directly  or  indirectly  bearing  N.  W.  567. 

upon  or  citing  the  Law  are  grouped.  ^^Maitland      v.      Citizens'      Nat. 

12a  Old  National  Bank  of  Spokane  Bank,    40    Md.    540,    17   Am.    Rep. 

V.  Gibson,  -  Wash.  —  179  Pac.  117,  620;  Best  v.  Krell,  23  Kan.  482,  33 

6  A.  L.  R.  247.     See  note  6  A.  L.  Am.   Rep.    185;   Birket  v.   Edward, 

R.  252.  68  Kan.  295,  74  Pac.  1100. 

l^Silbley  v.   Robinson,    10   Shep.  Contra,  Porter  v.  Andrus,  10  N. 

(Me.)   70;  Swift  v.  Tyson,  16  Pet.  D.  558,  88  N.  W.  567;  Rosborough 

1 ;  Grocers'  Bank  v.  Penfield.  69  N.  v.  Messich,  6  Ohio  St.  448,  67  Am. 

Y.  502,  25  Am.  Rep.  231.  Dec.  346;  Vollertein  v.  Howell,  37 

i^Vann  v.  Marbury.  100  Ala.  438,  Tenn.   (5  Sneed)  441. 
46  Am.  St.  Rep.  75,  14  So.  273,  23 
L.  R.  A.  325. 


152  NEGOTIABLE    INSTRUMENTa  §  128 

It  is  now  settled  in  those  states  which  have  adopted  the  act" 
.that  a  note  transferred  before  maturity  to  a  holder  in  due  course, 
as  collateral  security  for  a  pre-existing  debt,  is  transferred  for 
value,  and  the  holder  takes  it  free  from  defenses  or  set-offs  exist- 
ing between  the  original  parties. 

The  Negotiable  Instruments  Law  provides  as  follows: 

"Value  is  any  consideration  sufficient  to  support  a  simple  con" 
tract.  An  antecedent  or  pre-existing  debt  constitutes  value,  and 
is  deemed  such  whether  the  instrument  is  payable  on  demand  or 
at  a  future  time."^"^^ 

The  second  class  of  instruments  is  where  a  note  is  given  for  a 
pre-existing  debt ;  for  example  when  an  account,  or  something  of 
that  kind  comes  due,  a  note  is  given  for  the  debt.  What  was 
the  consideration?  All  the  goods  have  been  bought  and  used; 
it  is  a  debt ;  can  we  say  there  has  been  a  consideration  ?  In  some 
jurisdictions,  the  note  itself  is  enough  consideration ;  other  juris- 
dictions say  that  there  must  be  some  new  consideration,  forbear- 
ance or  something  of  that  nature.  Still  other  jurisdictions  hold 
that  it  must  be  in  extinguishment  of  the  debt.  In  other  words, 
if  A  had  an  account  of  $50  and  that  account  is  due  and  unpaid, 
and  A  gives  a  promissory  note  for  $50  and  that  is  taken  in 
extinguishment  of  the  debt,  and  if  afterward  any  proceeding 
is  brought  on  that  note,  the  holder  of  the  note  would  be  a  holder 
for  value;  or,  if  an  extension  of  time  has  been  given,  then  the 
holder  of  the  instrument  would  be  a  holder  for  value. 

Conceding  that  it  is  an  established  rule  that  an  antecedent  or 
pre-existing  debt  constitutes  value,  there  can  be  no  question  but 
that  where  paper  is  transferred  in  payment  of  a  pre-existing 
debt,  the  transferee  becomes  a  holder  for  value,  and  takes  the 
paper  free  from  all  defenses  and  equities  existing  between  the 
original  parties.*^ 

Those  two  classes  of  cases  are  the  ones  upon  which  there  is  a 
great  diversity  of  opinion.  In  all  other  cases  it  is  whether  or  not 
value  was  given,  that  is,  the  principles  of  contract  are  applied. 

"Where  value  has  at  any  time  been  given  for  the  instrument 
the  holder  is  deemed  a  holder  for  value  in  respect  to  all  parties 
who  became  such  prior  to  that  time."'^^ 

i'"  Neg.  Inst.  Law,  §  25,  where  all  243 ;     Breckenridge    v.     Lewis,     84 

cases  directly  or  indirectly  bearing  Me.    349,   24  Atl.   864,   30   Am.    St. 

upon  or  citing  the  Law  are  grouped.  Rep.    353  ;    Herman   v.    Gunter,   83 

!''»  Neg.  Inst.  Law,  §  25,  where  all  Tex.  66,  18  S.  W.  428,  29  Am.  St. 

cases  directly  or  indirectly  bearing  Rep.  312. 

upon  or  citing  the  Law  are  grouped.  i»  Neg.  Inst.  Law,  §  26,  where  all 

IS  Yellowstone      Nat.      Bank     v.  cases  directly  or  indirectly  bearing 

Gagnon,  19  Mont.  402,  48  Pac.  762,  upon  or  citing  the  Law  are  grouped. 
61  Am.  St.  Rep.  520,  44  L.  R.  A. 


§    129  RIGHTS  OF  RONA   FIDE  HOLDER.  153 

If  one  becomes  a  bona  fide  holder  for  value  of  a  bill  of  ex- 
change before  acceptance,  it  is  not  essential  to  his  right  to  enforce 
it  against  a  subsequent  acceptor  that  any  additional  consideration 
should  proceed  from  him  to  the  drawer.** 

"Where  the  holder  has  a  lien  on  the  instrument,  arising  either 
from  contract  or  by  implication  of  laiv,  he  is  deemed  a  holder  for 
value  to  the  extent  of  his  lien."^^ 

A  banker's  lien  would  protect  a  bank  having  possession  of  the 
bills  or  notes  of  a  customer  to  the  extent  of  the  balance  due 
such  bank  from  such  customer;'^  and  a  transfer  of  such  an 
instrument  to  any  other  holder  as  collateral  security  for  the  pay- 
ment of  a  debt  due  such  holder  from  the  person  who  transfers 
the  note,  makes  the  holder  a  pledgee  and  gives  him  a  lien  to  the 
extent  of  the  debt.*^ 

§  129.  Holder  vi^ithout  notice.  The  third  part  of  the  prin- 
ciple is  that  the  holder  must  be  one  "without  notice,"  a  bona 
fide  holder,  a  holder  for  value  "without  notice."  By  that  we 
mean  that  the  person  must  not  have  any  notice,  either  actual  or 
constructive,  of  these  defenses.*^  If  he  does  have  notice,  he 
cannot  recover  against  any  one  who  has  these  defenses.  If  a 
person  takes  an  instrument  knowing  of  the  equities,  they  can 
be  set  up  against  him. 

That  a  note  is  payable  to  the  order  of  the  maker  is  not  suffi- 
cient to  excite  the  suspicion  of  a  purchaser  so  as  to-  prevent  his 
becoming  a  bona  fide  holder.*** 

The  Negotiable  Instruments  Law  provides : 

"Where  the  transferee  receives  notice  of  any  infirmity  in 
the  instrument  or  defect  in  the  title  of  the  person  negotiating 
the  same  before  he  has  paid  the  fidl  amount  agreed  to-  be  paid 
therefor,  he  unll  be  deemed  a  holder  in  due  course  only  to  the 
extent  of  the  amount  theretofore  paid  by  him."^^ 

An  amount  paid  for  an  instrument,  if  a  trifling  sum,  may  of 
itself  establish  notice.     But  it  is  difficult  to  lay  down  the  exact 

20  Heuertematte  v.  Morris,  101  N.  ^^  Limerick  Nat.  Bank  v.  Adams, 

Y.  70.  70  Vt.  132,  40  Atl.  168;  Stalker  v. 

2iNeg.  Inst.  Law,  §  27,  where  all  McDonald,    (N.   Y.)   6  Hill   93,  40 

cases  directly  or  indirectly  bearing  Am.  Dec.  389. 

upon  or  citing  the  Law  are  grouped.  24a  Ochsenreiter   v.    Block,   —   S. 

22  Nat.  Bank  v.  Ins.  Co.,  104  U.  Dak.  — ,  173  N.  W.  734.  See  note 
S.   54 ;    Straus   v.   Tradesman    Nat.  6  A.  L.  R.  458. 

Bank,    122    N.    Y.    379;    Qark    v.  25  Neg.  Inst.  Law,  §  54,  where  all 

Bank,  160  Mass.  26.  cases  directly  or  indirectly  bearing 

23  Anderson  v.  Bank,  98  Mich.  upon  or  citing  the  Law  are  grouped. 
543;  Stoddard  v.  Kimball,  6  Cush. 

469. 


154  NEGOTIABLE    INSTRUMENTS.  §  129 

line  of  demarcation  and  state  what  proportion  the  amount  paid 
must  bear  to  the  face  of  the  paper  in  order  to  charge  the  pur- 
chaser prima  facie  with  notice  or  raise  the  presumption  of  bad 
faith  on  his  part.^®  But  it  may  be  said  that  the  consideration 
should  be  so  utterly  trifling  as  to  bear  upon  its  face  the  impress 
of  fraud  to  leave  open  no  reasonable  conjecture  but  that  the 
purchaser  must  have  known,  from  the  very  nature  of  the  facts, 
that  they  could  not  have  originated  from  any  but  a  corrupt 
source.  The  known  solvency  of  prior  parties  would  of  course 
strengthen  the  argument  of  implied  notice  and  bad  faith  wher- 
ever they  were  alleged.  If  the  amount  paid  for  the  paper  were 
not  so  insignificant  as,  per  se,  to  charge  the  transferee  with  no- 
tice, it  might  still  be  so  inadequate  as  to  be  a  pregnant  fact,  to  be 
given  due  consideration  in  connection  with  others  in  determining 
whether  he  should  be  charged  with  notice  or  not.^'' 

If  the  amount  v/hich  the  holder  offers  to  take  for  a  negotiable 
instrument  is  insignificant  as  compared  to  its  face  value,  it  might 
be  under  the  circumstances  implied  notice  that  there  was  some- 
thing wrong  about  it;  and  taken  without  inquii*y,  one  should  not 
be  protected.  For  it  is  obvious  that  a  bona  fide  owner  would  not 
throw  away  his  property  for  a  trifle,  and  that  the  purchaser 
acted  in  bad  faith  when  he  acquired  it  for  comparatively  nothing. 

"To  constitute  notice  of  an  infirmity  in  the  instrument  or 
defect  in  the  title  of  the  person  negotiating  the  same,  the  person 
to  whom  it  is  negotiated  must  have  had  actual  knowledge  of  the 
infirmity  or  defect,  or  knozvledge  of  such  facts  that  his  action  in 
taking  the  instrument  amounted  to  had  faith."^^ 

Actual  knowledge  of  a  defect  or  infirmity  in  an  instrument 
on  the  part  of  the  indorsee,  although  purchased  by  him,  for  value 
and  otherwise  in  good  faith,  will  destroy  the  protection  which 
the  law  affords  to  a  holder  in  due  course.  The  fact  that  full 
value  was  given  for  an  instrument  will  not  benefit  the  holder 
where  it  appears  that  he  had  actual  knowledge  of  the  facts  which 
impeach  the  title  thereof  or  prevent  a  recovery  thereon  by  him. 
Knowledge  of  the  agent  acting  within  the  scope  of  his  authority 
is  notice  to  the  principal. 

Now,  there  is  one  principle  that  is  rather  confusing  in  con- 
nection with  a  holder  for  value  without  notice,  and  yet  it  works 

2«  Williams    v.     Huntington,     68  27  Smith  v.  Jansen,  12  Nebr.  125, 

Me.    590.    13   Atl.    336,   6    Am.    St.  10   N.   W.   537,  41   Am.   Rep.   761; 

Rep.   477;   Joy  v.    Diefendorf,    130  Jordan   v.   Grover,  99  Cal.   194,  2,2 

N.   Y.  6,  28  N.   E.  602,  40  N.  Y.  Pac.   889;   Knowlton   v.    Schultz,  6 

St.    491,    27    Am.    Sit.    'Rep.    484;  N.  D.  417,  71  N.  W.  550. 

Kitchen    v.    Loudenbach,    48    Ohio  ^sjyTgg  j^gj.   l^w,  §  56,  where  all 

St.   177,  26  N.  E.  979,  29  Am.   St.  cases  directly  or  indirectly  bearing 

Rep.  540.  upon  or  citing  the  Law  are  grouped. 


§  129  RIGHTS   OF  BONA   FIDE    HOLDER.  155 

out  justice,  and  that  is  this  principle:  That  if  A  receives  an 
instrument  from  B  and  B  was  a  bona  fide  holder  for  value  with- 
out notice,  even  though  A  has  notice  when  he  receives  it,  if  he  is 
a  holder  for  value,  he  may  recover  upon  the  instrument.  That 
is,  if  B  secures  the  instrument,  say  for  $50,  and  there  are  certain 
equities  against  that  instrument,  as  for  example,  the  note  has 
been  procured  by  fraud ;  B  does  not  have  notice  of  that  fraud 
when  he  gets  that  instrument,  B  having  that  instrument  and 
being  lawfully  entitled  to  it  can  pass  that  on  to  anybody  he 
desires,  and  if  A  has  notice  of  the  fraud  which  B  did  not  have 
notice  of,  A  can  recover  against  those  parties  who  did  not  have 
notice.  What  good  would  the  instrument  do  B  calling  for  $50 
in  his  hands?  His  hands  would  be  tied  and  he  could  not  dispose 
of  it  until  he  disposed  of  it  to  somebody  who  did  not  have  notice. 
The  principle  of  the  law  merchant  is  that  it  can  pass  from  hand 
to  hand  the  same  as  money  does.  The  law  merchant  says,  "Yes, 
B  can  dispose  of  that  instrument  to  anybody ;  it  does  not  matter 
if  that  person  has  notice  of  the  fraud ;  that  person  who  had  notice 
can  recover  upon  the  instrument.  A  bona  Ude  holder  for  value 
without  notice  can  dispose  of  the  paper  to  a  bona  fide  holder  for 
value  who  has  notice."^^ 

It  is  provided  in  the  Negotiable  Instruments  Law  as  follows: 
"*  *  *  But  a  holder  zvho  derives  his  title  through  a  holder  in 
due  course,  and  who  is  not  himself  a  party  to  any  fraud  ot 
illegality  affecting  the  instrument,  has  all  the  rights  of  such  former 
holder  in  respect  of  all  parties  prior  to  the  latter.''-^^ 

The  above  section  of  the  Law  has  some  slight  changes  in 
several  of  the  states.  By  this  section  a  purchaser  from  a  holder 
in  due  course  is  entitled  to  recover  against  the  maker,  even 
though  he  have  notice  of  fraud.^'^'" 

"Where  an  instrument  payable  on  demand  is  negotiated  an 
unreasonable  length  of  time  after  its  issue,  the  holder  is  not 
deemed  a  holder  in  due  course."^^ 

The  same  is  true  as  to  paper  which  is  overdue.  An  instrument 
has  been  received  and  it  is  one  month  overdue.  A  looks  at  the 
instrument  and  says,  "Why,  that  was  due  the  first  of  Februar}'' 
and  this  is  the  first  of  March ;  why  does  the  maker  of  that  prom- 
issory note  refuse  to  pay  it?    Why  do  those  indorsers  refuse  to 

29  Butterfield  v.  Town  of  Ontario,  cases  directly  or  indirectly  bearing 

82    Fed.    891 ;    Armstrong    v.    Am.  upon  or  citing  the  Law  are  grouped. 

Ex.  Nat.  Bank.  133  U.  S.  433,  33  h.  ^'^*'  McMurray  v.  McMurray,  285 

Ed.  747;  Fowler  v.   Strickland,   107  Mo.  405,  167  S.  W.  513. 

Mass.  552 ;  Bodley  v.  Emporia  Nat.  so  jsj^g  i„gt  j^^^^^  g  53_  where  all 

Bank,  38  Kan.  59,  16  Pac.  88.  cases  directly  or  indirectly  bearing 

20a  ]sjgg  jj^5t  L^^^  §  5g^  where  all  upon  or  citing  the  Law  are  grouped. 


156  NEGOTIABLE  INSTRUMENTS.  §    129 

pay  it?  Do  not  misunderstand,  because  the  instrument  is  over- 
due, that  does  not  make  it  void,  for  if  an  instrument  is  all  right 
before  it  is  due,  it  is  all  right  afterguards.  If  A  receives  an 
instrument  payable  to  himself  at  maturity,  he  has  a  right  to 
transfer  that  instrument  after  it  is  due.  If  A  has  good  title 
to  it,  he  can  transfer  it  to  anybody  at  any  time.  But,  if  A  re- 
ceives an  instrument  before  it  is  due  and  receives  it  with  notice 
of  equities  against  it,  such  as  fraud,  etc.,  and  he  has  notice  of 
that  before  maturity,  and  then  after  the  note  becomes  due  and 
is  not  paid  X  comes  along  and  A  offers  it  to  him,  and  he  says, 
"That  instrument  is  for  $500,  is  it  all  right?"  and  A  says,  "Yes" 
— then  X  gives  $500  for  it,  he  is  a  bona  fide  holder  for  value  but 
gets  it  after  maturity.  X  gets  no  better  title  than  A  had.  A  had 
notice  and  X  receiving  it  after  maturity  gets  it  also  with  no- 
tice, because  A  had  notice  and  A  cannot  transfer  any  better  title 
than  he  had.^^ 

After  maturity  negotiable  paper  still  passes  from  hand  to  hand 
ad  infinitum  until  paid.  Moreover,  the  indorser,  after  maturity, 
wTites  in  the  same  form,  and  is  bound  only  upon  the  same  con- 
dition of  demand  upon  the  drawer  and  notice  of  non-payment, 
as  any  other  indorser.  The  paper  retains  its  commercial  attri- 
butes, and  circulates  as  such  in  the  community ;  but  there  is 
this  vital  distinction  between  the  rights  of  a  transferee  who 
received  the  paper  before  and  of  one  who  received  it  after 
maturity.  The  transferee  of  negotiable  paper  to  whom  it  is 
transferred  after  maturity,  acquires  nothing  but  the  actual  right 
and  title  of  the  transferrer.^^  The  transferee  takes  overdue 
paper  subject  to  all  the  equities  with  which  it  was  encumbered 
m  the  hands  of  the  party  from  whom  he  received  it.^^  Thus  if 
he  took  it  from  a  thief,  or  finder,  or  from  a  bankrupt  incapaci- 
tated by  law  to  make  the  transfer,  he  can  not  recover  on  it,  inas- 
much as  the  thief,  finder,  or  bankrupt  could  not. 

Bills  payable  in  installments  are  considered  overdue  in  toto, 

31  Greenwell    v.    Haylan,    78   Ky.  merely    makes    it    subject    to    the 

332,    29    Am.    Rep.    234;    Aver    v.  equities     that     may     exist     against 

Hutchins,  4  Mass.  370,  3  Am.  Dec.  it  and   does   not  permit   an   attack 

232 ;   Comstock  v.  Draper,  1   Mich.  on  the  purchaser's  title.    Sanderson 

481,    53    Am.    Dec.    78;    Lancaster  v.  Crane,  14  N.  J.  L.  506. 
Bank  v.  Woodard,  18  Pa.   St.  357,  3a  Powler    v.    Brenbley,    14    Pet. 

57  Am.  Dec.  618.     As  to  rights  of  318.     See  note  46  L.  R.  A.  573. 
holder    of    instruments    transferred  ^3  Speck  v.   Car  Co.,   121    111.  57, 

after  maturity  see  notes  18  U.  S.  L.  12  N.  E.  213;  Church  v.  Clapp,  47 

Ed.  931  and  46  L.  R.  A.  753.  Mich.  257,  10  N.  W.  362 ;  Morgan  v. 

The  purchase  of  paper   overdue  U.  S.,  113  U,  §.  500. 


§  129  RIGHTS  OF  BONA  FIDE  HOLDER.  157 

when  any  installment  is  past  due,  but  not  from  the  fact  that 
interest  is  past  due.** 

The  position  of  a  holder  who  takes  a  bill  when  overdue  is  this : 
He  is  a  holder  with  notice.  He  may  or  may  not  be  a  holder  for 
value  and  his  rights  will  be  regulated  accordingly.  He  is  a  holder 
with  notice  for  this  reason ;  he  takes  a  bill  which,  on  the  face  of 
it,  ought  to  have  been  paid.  He  is  therefore  bound  to  make  two 
inquiries.  1.  Has  what  ought  to  have  been  done  really  been 
done,  i.  e.,  has  the  bill  in  fact  been  discharged?  2.  If  not,  why 
not?  Is  there  any  equity  attaching  thereto?  i.  e.,  was  the  title  of 
the  person  who  held  it  at  maturity  defective?  If  his  title  to  the 
instrument  was  complete,  it  is  immaterial  that  for  some  collateral 
reason,  e.  g.,  set-off,  he  could  not  have  enforced  the  bill  against 
some  one  or  more  of  the  parties  liable  thereon. 

The  rule  that  a  party  taking  an  overdue  bill  or  note  takes  it 
subject  to  the  equities  to  which  the  transferrer  is  subject  does 
not  extend  so  far  as  to  admit  set-off's  which  might  be  available 
against  the  transferrer.^  A  set-off  is  not  an  equity,  and  the 
general  rule  stated  is  qualified  and  restricted  to  those  equities 
arising  out  of  the  bill  or  note  transaction  itself,  and  the  trans- 
feree is  not  subject  to  a  set-off  which  would  be  good  against  the 
transferrer,  arising  out  of  collateral  matters. 

34  Vinton  v.   King,  4  Allen  562 ;  35  Robinson  v.  Lyman,   10  Conn. 

Field   V.   Tibbetts,   57   Me.   358,   99  30;  Edney  v.  Willis,  23  Neb.  56,  36 

Am.  Dec.  779;  Nat.  Bank  of  Battle  N.  W.  300;  Young  v.   Shriner,  80 

Creek  v.  Dean,  86  la.  656,  53  N.  W.  Pa.  St.  463. 
338. 


CHAPTER  XIV. 
REAL  OR  ABSOLUTE  DEFENSES. 

§  130.  Defenses — In  general.  §  136.  Incapacity       to       contract — 

131.  Real  defenses — In  general.  Drunkenness. 

132.  Incapacity     to     contract — In-  137.  Illegality        oi        contract — 

fancy.  Gaming,  usurious  and  Sun- 

133.  Incapacity        to        contract —  day  notes. 

Coverture.  138.  Forgery. 

134.  Incapacity        to       contract—  139.  Duress    when    amounting    to 

Where  corporation  prohib*  forgery. 

ited.  140.  Statute  of  limitations. 

135.  Incapacity       to       contract —         141.  Failure  to  stamp. 

Insanity. 

§  130.  Defenses — In  general.  The  defenses  which  may  be 
interposed  to  an  action  upon  a  negotiable  instrument  may  be 
grouped  or  arranged  into  two  classes :  ( 1 )  real  or  absolute  de- 
fenses, and  (2)  personal  defenses. 

Real  or  absolute  defenses  are  those  which  attach  to  the  instru- 
ment itself,  and  are  good  against  all  persons,  thus  they  are  good 
against  a  bona  fide  holder  for  value.  Real  defenses,  like  real 
actions,  are  founded  upon  a  right,  good  against  the  world.  They 
are  called  real  because  they  attach  to  the  res,  i.  e.,  the  instrument 
itself,  regardless  of  the  merits  or  demerits  of  the  plaintiff.  So  a 
purchaser  for  value  without  notice  is  powerless  against  a  real 
defense.-^ 

Personal  defenses  are  those  which  grow  out  of  the  agreement  or 
conduct  of  a  particular  person  in  regard  to  the  instrument,  which 
renders  it  inequitable  for  him,  though  holding  the  legal  title,  to 
enforce  it  against  the  defendant,  but  which  are  not  available 
against  bona  fide  purchasers  for  value,  without  notice.  They 
are  called  personal  defenses  because  they  are  available  only 
against  that  person  or  a  subsequent  holder  who  stands  in  privity 
with  him.^ 

The  purpose  of  our  consideration  of  these  defenses  on  nego- 
tiable paper  is  to  determine  whether  or  not  when  an  instrument 
gets  into  the  hands  of  a  bona  fide  holder  for  value  without  notice, 
there  is  any  right  which  may  be  set  up  against  him.     We  might 

*  Ames  Cases  on  Bills  and  Notes,  ^  Ames  Cases  on  Bills  and  Notes, 

811.    As  to  defenses  in  general,  see      812. 
note  46  L.  R.  A.  760. 

158 


§  130  REAL  OR  ABSOLUTE  DEFENSE,  159 

say,  as  between  the  immediate  parties,  all  defenses  are  real  de- 
fenses, because  as  between  the  immediate  parties  any  defense 
can  be  set  up  just  as  in  an  ordinary  contract*  As  between  you 
and  A  if  the  instrument  has  passed  from  you  to  A,  you  have 
the  right  to  set  up  any  defense  you  could  on  any  ordinary  con- 
tract. But  it  becomes  important  to  know  whether  they  run  when 
it  gets  into  the  hands  of  some  third  party. 

Now,  there  is  another  matter  which  is  confusing  in  these 
defenses.  We  see  that  a  real  defense  is  a  defense  which  attaches 
to  the  thing  itself.  Now,  we  must  not  confuse  the  idea  that  that 
instrument  in  the  hands  of  everybody  cannot  be  recovered  upon, 
for  the  real  defense,  in  many  instances,  applies  only  to  the 
person  who  has  made  the  instrument.  As  a  matter  of  fact,  we 
may  state  it  as  a  general  rule,  that  a  real  defense  is  a  defense 
which  the  person  against  whom  you  are  endeavoring  to  recover 
may  set  up,  and  that  person  is  usually  the  person  primarily 
liable  upon  the  instrument. 

The  real  defenses  are  so-called  here  because  they  attach  to  the 
thing  irrespective  of  the  parties  to  it.  The  right  sought  to  be 
enforced  has  never  existed  or  ceased  to  exist ;  it  is  a  real  or  abso- 
lute defense.  It  is  a  defense  against  everybody — against  the 
party  who  receives  it  immediately  from  me,  against  A,  B,  C, 
or  D,  holders  for  value — against  everybody.  Now,  those  defenses 
which  are  absolute  are : 

1.     Want  of  capacity  to  make  a  binding  contract. 
■    2.     Downright  illegality  of  contract.  \    / 

3.  Forgery —  V 

a.  Ordinary  forgery. 

b.  Fraud  when  it  amounts  to  forgery. 

c.  Alteration  when  material  and  made  by  a  party  and 

not  a  stranger. 

4.  The  statute  of  limitations. 

5.  Fraud  or  duress  when  amounting  to  a  forgery. 

The  personal  defenses  or  those  free  from  which  the  purchaser 
for  value  without  notice  acquires  title  are : 

1.  Alteration. 

2.  Simple  fraud. 

3.  Duress. 

4.  Want  or  failure  of  consideration. 

5.  Illegality,  unless  the  contract  is  declared  void  by  the  statute. 

6.  Payment  or  renunciation,  or  release  before  maturity. 

SKulenkamp  v.  Groff,  71  Mich.  Gratt.  (Va.)  246;  Wright  v.  Irwin. 
675,  40  N.  W.  57;  Clark  v.  Pease,  2>Z  Mich.  32;  Mills  v.  Barber,  1 
41   N.  H.  414;   Voltier  v.  Zane,  6      Mees.  &  W.  425. 


160  NEGOTIABLE    INSTRUMENTS.  §  131 

§  131.  Real  defenses — In  general.  As  heretofore  set  out 
there  are  five  divisions  of  real  or  absolute  defenses. 

The  first  is  "The  incapacity  of  the  defendant  to  make  the 
contract."  (1)  As  infancy,^  which  may  be  a  real  defense  at  the 
option  of  the  infant,  and  in  some  jurisdictions  it  is  a  real 
defense  even  in  case  of  necessaries.  (2)  As  coverture** — for 
example  in  some  jurisdictions  today  married  women  are  not 
bound  by  becoming  surety.  (3)  So  ultra  vires^  is  a  real  defense  ; 
this,  however,  is  an  unusual  case.  It  is  a  real  defense  to  the  cor- 
poration only.  (4)  Insanity'^  is  a  real  defense  when  the  party  has 
been  adjudged  insane.  It  is  a  real  defense  to  the  insane  person 
only.  (5)  And  last  is  drunkenness.^  It  is  a  real  defense  to  the 
drunkard  only. 

The  second  division  is  downright  illegality  of  contract  as  "By 
statute."^  ( 1 )  Where  the  statute  declares  the  contract  void,  as  a 
gaming  contract  in  some  jurisdictions.  This  is  a  real  defense 
to  the  maker  of  the  instrument,  or  to  one  who  has  made  the  in- 
strument to  pay  a  gambling  debt.  (2)  Under  the  statute  as 
when  the  statute  connects  a  penalty,  as  notes  made  on  Sunday. 
It  would  be  a  real  defense  as  against  anybody ;  against  a  bona  fide 
holder  for  value,  since  he  would  not  be  a  bona  fide  holder  for 
value,  because  he  would  have  notice  that  it  was  made  on  Sunday 
by  the  date  upon  it.  (3)  Under  the  statute  as  "usury."  Usury 
is  a  real  defense  in  some  jurisdictions  as  to  the  excess  over  the 
legal  rate  and  in  others  as  to  all  the  interest  and  in  still  other 
jurisdictions  as  to  both  principal  and  interest. 

The  third  division  is  "Forgery."^** 

The  fourth  division  is  the  "Statute  of  Limitations,"  which  is  a 
real  defense  at  the  option  of  the  party  who  is  entitled  to  set  up 
that  statute. 

The  fifth  and  last  is  "Duress,""  which  is  a  real  defense  where 
it  amounts  to  a  forgery. 

These  will  now  be  considered  in  their  order. 

§  132.  Incapacity  to  contract — Infancy.  Suppose  a  note 
was  made  by  a  minor  and  you  endeavor  to  recover  against  him 
and  he  sets  up  the  defense  that  he  is  a  minor,  that  he  did  not  have 
the  capacity  to  make  that  contract,  and  is  therefore  not  liable. 
It  is  a  defense  which  the  minor  can  set  up  against  all  the  world.** 

4Pojf,  §132.  11  Po.y/,  §  139. 

^Post,%UZ.  i2Des    Moines    Ins.    Co.    v.    Mc- 

«Po^^§134.  Intire,   89   la.   50,   68    N.    W.    565; 

7  Post,  §  135.  Howard   v.    Simpkins,   70   Ga.   322 ; 

8Poj/,§136.  Fitts  V.  Hall.  9  N.  H.  441;  Conroe 

^Post.  §137.  V.  Birdsall,  1  Johns.  Cas.   (N.  Y.) 

'^^Post,  §  138.  127,  1  Am.  Dec.  105. 


§  131  REAL  OR  ABSOLUTE  DEFENSE.  161 

It  is  a  defense  which  no  one  can  set  up  for  him  but  he  must  set 
it  up  for  himself.^^  Now,  if  that  instrument  passes  through  the 
hands  of  A,  B,  and  C,  the  succeeding  parties  can  recover  from  the 
preceding  parties  on  the  instrument,  because  of  these  imphed 
warranties  which  we  have  considered.  If  A  makes  a  note  pay- 
able to  B,  a  minor,  A  would  be  estopped  from  setting  up  that  B 
could  not  indorse."  And  so,  the  instrument  is  not  void  as  to 
everybody,  but  the  minor  has  a  right  to  set  up  that  the  instru- 
ment is  void  as  to  himself,  but  the  other  parties  do  not  have  that 
right.^^  In  other  words,  if  the  minor  indorses  an  instrument 
it  does  not  bind  him  on  the  indorsement,  but  at  the  same  time  he 
transfers  certain  rights;  he  is  not  incapacitated  to  contract  and 
transfer  those  rights.*^ 

The  Negotiable  Instruments  Law  provides: 

"The  indorsement  or  assignment  of  the  instrument  *  *  * 
hy  an.  infant  passes  the  property  therein,  notzvithstanding  that 
from  zvant  of  capacity  the  *  =i^  *  iyifant  may  incur  no  liabil- 
ity thereon."^^" 

As  to  a  note  made  by  a  minor  for  necessaries  different  juris- 
dictions have  different  rules.  The  law  in  some  jurisdictions  is 
that  such  a  note  made  by  a  minor  is  voidable."  Of  course,  if 
he  does  not  set  up  the  fact  that  he  is  a  minor  he  can  go  ahead 
and  pay  it,  and  the  person  w^ho  receives  the  money  would  be 
entitled  to  receive  it.  It  is  voidable  then  and  not  absolutely 
void.  In  some  other  jurisdictions  the  courts  hold  that  a  note  made 
for  necessaries  by  a  minor  is  valid  and  he  may  be  proceeded 
against  the  same  as  an  adult.^^ 

If  a  bill  of  exchange  is  drawn  by  an  infant,  the  acceptor  cannot 
set  up  as  a  defense  that  the  minor  was  without  legal  capacity 
to  draw  the  bill  ^^* 

The  Law  provides:  "The  acceptor  by  accepting  the  instru- 
ment *  *  *  admits  *  *  *  the  existence  of  the  payee 
and  his  then  capacity  to  indorse."^^*' 

13  Nightingale  v.  Withington,  15  l' Ayers  v.  Burns.  87  Ind.  245, 
Mass.  272,  8  Am.  Dec.  101;  44  Am.  Rep.  759;  Fenton  v.  White, 
Hertness  v.  Thompson,  5  Johns.  4  N.  J.  L.  115;  Swasey  v.  Vander- 
(N.  Y.)   160.  heyden,  10  Johns.  (N.  Y.)  33;  Price 

14  Frazier  v.  Massey.  14  Ind.  382 ;  v.  Sanders,  60  Ind.  310. 
Nightingale      v.      Withington,      15  i^  Duboise    v.    Wheddon,    4    Mc- 
Mass.  271,  8  Am.  Dec.  101.  Cord    (S.  C.)   221;   Earle  v.  Reed, 

15  Hastings  v.  Dollarhide,  24  Cal.  51  Mass.  (10  Mete.)  387;  Bradley 
195 ;  Hardy  v.  Waters,  38  Me.  450.  v.   Pratt,  23  Vt.  378 ;   Conn  v.  Co- 

i«Grey  v.   Cooper,  3   Doug.   54;  burn,  7  N.  H.  368,  26  Am.  Dec.  746. 

Taylor  v.  Croker.  4  Esp.  187 ;  Baker  l^**  Jones  v.  Darch,  4  Price  300. 

V.  Kennett,  54  Mo.  82.  18"  Neg.  Inst.  Law,  §  62. 

16»  Neg.  Inst.  Law,  §  22. 


162  NEGOTIABLE    INSTRUMENTS.  §§  133-134 

§  133.  Incapacity  to  contract — Coverture.  A  second  real 
defense  growing  out  of  the  incapacity  to  contract,  particularly  at 
common  law,  was  coverture.^'*  A  married  woman  could  not  make 
that  form  of  contract  known  as  a  negotiable  instrument.^"  There 
is  a  diversity  of  the  law  is  to  married  women's  ability  to  contract 
today,  but  a  married  woman  generally  has  the  same  capacity, 
just  as  if  she  were  a  single  woman.^^  In  some  juris*.,  ictions  the 
contract  of  a  married  woman  as  to  surety  is  void  c:nd  conse- 
quently on  such  a  contract  she  would  have  a  real  defense.^^ 

§  134.  Incapacity  to  contract— Where  corporation  prohib- 
ited. If  a  corporation  has  power  to  make  a  note  for  any  pur- 
pose, it  cannot,  against  a  bona  fide  holder,  set  up  as  a  defense 
that  it  had  no  power  to  make  a  note  for  a  particular  purpose.*^ 
Where  a  corporation  is  prohibited  by  its  charter  or  by  statute 
from  issuing  negotiable  paper  under  any  circumstances,  such 
paper  is  absolutely  void,  even  in  the  hands  of  a  bona  fide  holder 
for  value,*^  since  what  is  absolutely  void  ab  initio  cannot  acquire 
validity  by  being  transferred  to  a  third  person  any  more  than  a 
forged  instrument  can  acquire  validity  in  that  way.  When  a 
corporation  has  received  the  benefit  of  the  proceeds  of  a  bill  or 
note  it  cannot  set  up  the  defense  of  ultra  vires  in  an  action  on 
such  bill  or  note. 

It  is  not  usual,  however,  for  a  corporation  to  be  prohibited  by 
its  charter  or  by  statute  from  issuing  negotiable  paper  under  any 
circumstances,  as  above  stated. 

19  Dollner,  Potter  &  Co.  V.  Snow,  413;  Vlie't  v.  Eastburn,  62  N.  J. 
16  Fla.  86;  Cummins  v.  Leedy,  114  L.  450,  43  Atl.  741 ;  Voreis  v.  Muss- 
Mo.  454,  21  S.  W.  804;  Simpson  v.  baum,  131  Ind.  267,  31  N.  E.  70, 
Soan,  5  Cal.  457.  16  L.  R.  A.  45. 

20  Fernando  v.  Beshoar,  9  Colo.  The  common  law  rule  is  not 
291,  12  Pac.  196;  Lackey  v.  Boruff,  changed  except  in  the  particular 
152  Ind.  371,  53  N.  E.  412 ;  Radican  cases  provided  by  statute.  Wilcox 
V.  Radican,  22  R.  I.  405.  48  Atl.  143.  v.  Arnold,  116  N.  C.  708,  21  S.  E: 

21  Goar  V.  Moulton,  67  Cal.  536,  434 ;  Rowe  v.  Kohle,  4  Cal.  285. 

8    Pac.    63;    Rodenmeyer   v.    Rod-  23  Jacobs    v.    Southern    Banking 

man,  5  la.  426;  Barrow  v.  Mitten-  Co.,    97    Ga.    573,    25    S.    E.    171: 

berger.  21  La.  Ann.  396 ;  McVey  v.  Monument    Nat.     Bank    v.     Globe 

Contrell,  70  N.  Y.  295,  26  Am.  Rep.  Works,  101  Mass.  57,  Z6  Am.  Rep. 

605;    Williamson   v.    Cline,   40    W.  322;    Auerbach   v.    Le    Sueur   Mill 

Va.  194,  20  S.  E.  917.  Co.,  28  Minn.  291,  9  N.  W.  799,  41 

Note:    In  order  to  determine  the  Am.  Rep.  285;  Blunt  v.  Walker,  11 

status  of  married  women  reference  Wis.  334,  78  Am.  Dec.  709. 

must  be  made  to  the  statutes  of  the  24  Scott    v.    Bankers'    Union,    73 

several  states.  Kan.  575,   85   Pac.  604;   Chillicothc 

2awiltbank    v.    Toblcr,    181    Pa.  Bank  v.   Dodge,    8   Barb.    (N.   Y.) 

St.  103.  2,7  Atl.  188;   Stores  &  Co.  233;  Root  v.  Godard,  3  McLean  102, 

V.  Wingate,  67  N.  H.  190,  29  Atl.  Fed.  Cas.  No.  12,037. 


§§  135-136  REAL  OR  ABSOLUTE  DEFENSE.  163 

§  135.  Incapacity  to  contact — Insanity.  If  the  party  sued 
is  adjudged  insane  the  obhgation  is  a  non-enforceable  one.^^  This 
defense  is  available  not  only  as  between  immediate  parties,  but 
also  as  against  a  bona  fide  holder  for  value.^^  Some  courts  hold 
that  negotiable  paper  executed  by  an  insane  person,  who  has 
not  been  adjudged  insane  is  voidable,  but  not  void.-^^ 

In  some  jurisdictions  guardians  may  be  appointed  by  statute 
for  habitual  drunkards,  spendthrifts  and  for  old  persons  incapable 
of  transacting  business  ;  instruments  executed  by  any  such  persons 
who  are  under  guardianship  are  also  non-enforceable.^**" 

§  136.  Incapacity  to  contract — Drunkenness.  If  a  person 
become  so  drunk  as  to  be  deprived  of  understanding  and  reason, 
there  is  no  doubt  that  while  in  such  a  condition,  he  has  no  capa- 
city to  enter  into  a  contract  and  if  he  should  sign  a  negotiable 
instrument  either  as  maker,  drawer,  indorser  or  acceptor,  it 
would  certainly  be  void  as  to  all  parties  having  notice  of  the 
condition  in  which  he  signed  it.^''  If  the  drunkenness  were  so 
complete  as  to  suspend  all  rational  thought,  the  better  opinion  is 
that  any  instrument  signed  by  the  party  would  be  utterly  void 
even  in  the  hands  of  a  bona  fide  holder  without  notice,  for,  al- 
though it  may  have  been  the  party's  own  fault  that  such  an 
aberration  of  mind  was  produced,  when  produced  it  suspends 
for  the  time  being  his  capacity  to  consent,  which  is  the  first 
essential  of  a  contract.^** 

In  some  jurisdictions  as  in  Wisconsin  an  amendment  to  Section 
55  of  the  law  makes  such  an  instrument  absolutely  void.  This 
amendment  declares :  "The  title  of  such  person  is  absolutely  void 

25  Van  Patton  v.  Beals,  46  la.  62;  28  Caulkins  v.  Fry,  35  Conn.  170. 

Wirebach  v.  Easton  Bank,  97  Pa.  St.  As    against    a    bona    fide    holder, 

543,  39  Am.  Rep.  82.  however,  it  has  been  determined  in 

See    Carrier    v.    Sears,    86    Mass.  some  jurisdictions  that  intoxication 

(4  Allen)  336,  81  Am.  Dec.  707.  is  no  defense.    The  reason  underly- 

28  Rice  V.  Peet,  IS  Johns.  (N.  Y.)  ing  this  rule   is  that,  when  a  man 

503;    Taylor    v.    Dudley,    5    Dana  has  voluntarily  put  himself  in  such 

(Ky.)    308;   Moore  v.   Hershey,  90  a  condition  that  a  loss  must  fall  on 

Pa.   St.   196;   Hossler  v.   Beard,  54  one    of    two    innocent    persons    it 

Ohio  St.  398,  43  N.  E.  1040,  56  Am.  should  fall  on  him  who  occasioned 

St.  Rep.  1040,  35  L.  R.  A.  161.  it.     If  drunkenness  were  a  defense 

2Sa  McClain  v.  Davis,  77  Ind.  419.  it   would    clog   and    embarrass   the 

2ei>  Copenrath  v.  Kienby,  83  Ind.  circulation     of     commercial     paper. 

18.  Miller    v.     Finley,    26    Mich.     248, 

27  Burroughs  v.   Richman,   13   N.  12    Am.    Rep.    306;    McSpencer    v. 

J.  L.  233,  23  Am.  Dec.  717;  Stigler  Neeley,    91    Pa.    St.    17;    Smith   v. 

v.   Anderson,   —   Miss.   — ,    12    So.  Williamson,   8   Utah   219,    30    Pac. 

831 ;  Gore  v.  Gibson,  13  M.  &  W.  753. 
623. 


164  NEGOTIABLE    INSTRUMENTS.  §  137 

when  such  Instrument  or  signature  was  so  procured  from  a  person 
who  did  not  know  the  nature  of  the  instrument  and  could  not 
have  obtained  such  knowledge  by  the  use  of  ordinary  care."  Un- 
der this  amendment  an  instrument  signed  by  one  when  so  intoxi- 
cated as  wholly  to  destroy  the  vocational  faculties  of  his  mind, 
is  absolutely  void ;  and  negligence  in  getting  drunk  does  not  estop 
him  and  the  signing  of  an  instrument  is  not  a  usual  or  probable 
result  of  drunkenness.^^* 

§  137.  Illegality  of  contract — Gaming,  usurious,  Sunday 
and  other  illegal  instruments.  A  second  division  of  real  or  ab- 
solute defenses  is  illegality  of  contract,  where  by  force  of  statute 
certain  contracts  are  declared  to  be  absolutely  void,  e.  g.,  gaming 
notes,  usurious  notes  and  Sunday  notes. 

The  Negotiable  Instruments  Law  in  some  states  provides: 

"If  the  consideration  of  a  promissory  note  or  other'  negotiable 
instrument  consists  in  whole  or  in  part  of  the  purchase  price  of 
any  farm  product,  at  a  price  greater  by  at  least  four  times  than 
the  fair  market  value  of  the  same  product  at  the  time,  in  the 
locality,  or  of  the  membership  and  rights  in  an  association,  com- 
pany or  combination  to  produce  or  sell  any  farm  product  at  a 
fictitious  rate,  or  of  a  contract  or  bond  to  purchase  or  sell  any 
farm  product  at  a  price  greater  by  four  times  than  the  market 
value  of  the  same  product  at  the  time  in  the  locality,  the  words, 
'given  for  a  speculative  consideration,'  or  other  words  clearly 
showing  the  nature  of  the  consideration,  must  be,  prominently 
and  legibly  written  or  printed  on  the  face  of  such  note  or  instru- 
ment above  the  signature  thereof;  and  such  note  or  instrument, 
in  the  hands  of  any  purchaser  or  holder,  is  subject  to  the  same 
defenses  as  in  the  hands  of  the  original  owner  or  holder."^^^ 

The  maker,  indorser,  acceptor,  or  any  party  to  a  gaming  in- 
strument has  a  real  defense  in  his  favor  in  some  of  those  juris- 
dictions having  a  statute  to  the  effect  that  all  notes,  bills,  checks 
or  instruments  made  hereafter,  when  the  whole  or  any  part  of  the 
consideration  thereof  shall  be  for  money  or  other  valuable  thing 
won  on  the  result  of  any  wager,  or  for  repaying  any  money  lent 
at  the  time  of  such  wager  for  the  purpose  of  being  wagered,  shall 
be  void.^" 

28a  Green  v.  Gunster,  154  Wis.  69,  St.  Rep.  918,  7  L.  R.  A.  705 ;  Ayer 

142  N.  W.  261.  V.   Younker,    10  Colo.   App.   27,   50 

ss^Neg.  Inst.  Law  (New  York),  Pac.  218;  Sondheim  v.  Gilbert,  11^ 

§  331,  where  all  cases  directly  or  in-  Ind.  71,   18  N.   E.  687,   10  Am.   St. 

directly  bearing  upon  or  citing  the  Rep.  23,  5  L.  R.  A.  432;  Chapin  v. 

Law  are  grouped.  Duke,  57  111.  295,  11  Am.  Rep.  15. 

2»  Snoddy  v.  American  Nat.  Bk.,  See  note  18  U.  S.  L.  Ed.  423. 
38  Tenn.  573,  13  S.  W.  127,  17  Am. 


§  137  REAL  OR  ABSOLUTE  DEFENSE.  165 

There  is  much  conflict  of  authority  as  to  whether  illegality 
ceases  to  be  a  real  defense  under  the  Negotiable  Instruments  Law 
unless  made  so  by  a  subsequent  statute  and  whether  the  statutes 
previously  in  force  declaring  void  instruments  given  for  gaming 
or  upon  usurious  interest  or  other  forbidden  transactions  are  im- 
pliedly repealed  by  the  Negotiable  Instruments  Law. 

These  divergent  views  arise  from  the  fact  that  some  jurisdic- 
tions maintain  that  the  requirements  of  commerce  should  be  the 
controlling  consideration  in  deciding  the  rule  of  law  while  others 
maintain  that  the  controlling  consideration  should  be  the  protec- 
tion of  the  weak  and  ignorant  and  the  good  morals  of  the  matter. 
This  question  is  not  specifically  covered  by  the  Negotiable  Instru- 
ments Law,  except  in  the  states  of  Illinois  and  Wisconsin ;  in  those 
states  it  is  expressly  referred  to  and  covered  in  their  enactment 
and  the  defense  of  gaming  is  made  a  real  defense.  The  conflict 
in  other  jurisdictions  is  one  between  morals  and  commerce ; 
morals,  which  says  that  good  morals  should  permit  no  recovery 
on  gaming  instruments  even  when  in  the  hands  of  a  bona  fide 
holder,  and  commerce,  which  says  for  the  advantage  of  trade 
and  commerce  the  bona  fide  holder  should  be  protected  and  he 
should  be  entitled  to  recovery  on  such  an  instrument.  The  weight 
of  authority  varies  from  time  to  time  but  is  usually  in  favor  of 
the  commerce  side  of  the  question.  On  behalf  of  morals  it  is 
urged  that  gaming  is  against  the  best  interests  of  society  and  con- 
trary to  public  policy,  and  statutes  against  it  should  be  construed 
to  preclude  its  practice;  it  is  urged  that  no  legislative  enactment 
should  be  construed  to  have  been  repealed  unless  a  subsequent 
act  so  states  expressly,  or  unless  the  implication  is  so  necessary 
as  to  be  unescapable,  and  that  statutes  should  be  repealed  by  im- 
plication with  great  reluctance.  And  a  number  of  jurisdictions 
decide  this  question  on  the  side  of  morals.^"'  In  one  jurisdiction 
the  court  states:  "However,  this  act  (Negotiable  Instruments 
Law)  applies  only  to  paper  that  might  have  been  obligatory  be- 
tween the  parties — that  which  it  was  legally  possible  for  the  par- 
ties to  make.  Wliere  the  parties  were  never  bound  because  the  law 
made  the  note  void,  as  being  contrary  to  public  policy  as  ex- 
pressed in  the  statutes,  the  Negotiable  Instruments  Act  does  not 
have  any  application.  That  this  act  was  not  intended  to  inject 
life  into  a  written  instrument  that  was  by  law  null  and  void,  ab 

29«  Alexander  v.   Hazelrigg,   123  413,  222  S.  W.  SIS,  11  A.  L.  R.  207; 

Ky.  677,  97  S.  W.  353;  Martin  v.  Raleigh    County    Bank   v.    Toteet, 

Hess,  27  Pa.  Dist.  Ct.  19S ;  Holzbog  74  W.    Va.    511,    88    S.    E.    187; 

V.  Bakrow,  156  Ky.  161,  50  L.  R.  A.  Twentieth   Street  Bank  v.  Jacobs, 

(N.  S.)  1023;  Levy  v.  Fidelity  &  C  74  W.  Va.  528,  82  S.  E.  320.  Note 

Trust    Co.    or    Doerhofer,  188  Ky.  8  A.  L.  R.  314. 


NEGOTIABLE    INSTRUMENTS.  §  137 

initio,  is  apparent  from  the  use  of  the  word  'liable'  in  Section  57 
of  this  act.  The  liability  is  defined  to  be  the  situation  of  one 
who  is  bound  in  law  and  justice  to  do  something  which  may  be 
enforced  by  action." 

"The  maker  of  a  note  given  in  payment  of  a  gambling  transac- 
tion is  not  liable  on  such  instrument,  as  by  law  such  instrument 
is  null  and  void  and  of  no  effect.  It  is  questionable  whether  such 
a  note  ever  becomes  a  negotiable  instrument."*®" 

The  other  class  of  cases  proceeds  on  the  theory  that  the  re- 
quirements of  commerce  should  be  the  controlling  consideration, 
holding  an  instrument  given  as  the  result  of  a  wager  is  not  void 
under  a  statute  in  force  before  the  adoption  of  the  Negotiable  In- 
struments Law.  It  is  urged  that  the  great  object  sought  to  be 
accomplished  by  the  uniform  law  was  to  free  the  negotiable  in- 
strument as  far  as  possible  from  all  latent  or  local  infirmities 
which  otherwise  would  inhere  in  it  to  the  prejudice  and  disap- 
pointment of  innocent  holders  as  against  all  the  parties  to  the 
instrument  professedly  bound  thereby.  It  is  urged  that  this 
clearly  could  not  be  aft'ected  so  long  as  the  instrument  was  ren- 
dered absolutely  null  and  void  by  local  statute  as  against 
the  original  maker  or  acceptor.*""  In  furtherance  of  this  theory 
it  is  said  the  business  of  the  country  is  done  so  largely  by  means 
of  commercial  paper  that  the  interests  of  commerce  require  that 
a  negotiable  instrument  fair  on  its  face  should  be  as  negotiable 
as  a  government  bond ;  that  every  restriction  upon  the  circulation 
of  negotiable  paper  is  an  injury  to  the  state;  for  it  tends  to  de- 
range trade  and  hinder  the  transaction  of  business  and  if  such 
instruments  are  void  in  the  hands  of  the  holder  for  value,  then 
not  merely  is  that  instrument  affected  but  a  doubt  is  cast  upon  all 
commercial  paper  originating  in  that  community.*"'' 

It  has  been  decided,  however,  that  one  may  estop  himself  from 
setting  up  a  defense  of  a  gaming  consideration  under  certain  cir- 
cumstances even  in  a  jurisdiction  holding  the  instrument  as  or- 
dinarily void  in  the  hands  of  a  bona  fide  holder.*"^ 

Usury  in   some   jurisdictions   is   a   real   defense  by   statute.^" 

^Sb  Martin  v.  Hess,  27  Pa.  Dist.  Montreal   Bank   v.    Griffin,    154   111. 

Ct.  195.  App.  616;    Pritchett  v.   Ahrens,  26 

29oWirt  V.   Stubbelfield,   17  App.  Ind.  App.  56. 

Cas.   D.  C.  283 ;  Wood  v.   Babbitt,  30  Pearson  v.  Bailey.  23  Ala.  537 ; 

149  Fed.  818,  822.  Bridge   v.    Hubbard,    15    Mass.    96, 

^^ti  Chemical     National    Bank    v.  8  Am.  Dec.  86;  Solomons  v.  Jones, 

Kellogg,  183  N.  Y.  92,  75  N.  E.  1103.  3  Brev.  (S.  C.)  54,  5  Am.  Dec.  538; 

2  L.  R.   A.    (N.   S.)    299,   111   Am.  Hamilton  v.  Fowler,  99  Fed.  18. 

St.  Rep.  717.  In    the    absence    of    a    statutory 

29e  Holzbog    V.     Bakrow,     supra.  provision    the    better      doctrine    is 

Kyser  v.  Miller,  144  111.  App.  316;  that  usury  is  not  a  defense  which 


§  137  REAL  OR  ABSOLUTE  DEFENSE.  167 

Usury  is  defined  as  an  unlawful  contract  upon  the  loan  of  money, 
to  receive  the  same  again  with  exorbitant  increase.  In  other 
words  it  is  the  reserving  and  taking,  or  contracting  to  reserve 
and  take,  either  directly  or  by  indirection,  a  greater  sum  for  the 
use  of  money  than  the  lawful  interest.^^ 

In  some  jurisdictions  a  purchaser  for  value  without  notice 
cannot  recover  the  sum  called  for  by  the  instrument  from  persons 
who  were  parties  to  thg  instrument  at  its  inception,  when  the 
instrument  was  negotiated  in  its  inception  at  a  rate  greater  than 
the  legal  rate  of  interest. 

Interest  in  advance  is  not  usury ,^2  nor  does  a  sale  of  notes  at  a 
discount,  in  good  faith,  render  the  contract  usurious.^^  In  addi- 
tion to  the  legal  rate  of  interest  lenders  of  money  may  take  a 
reasonable  compensation  for  trouble  and  expense.^'*  And  as  a 
general  rule  compound  interest  is  not  allowed,^^  but  after  simple 
interest  is  due,  it  may  by  contract  be  allowed  in  consideration  of 
giving  time  for  payment.  By  the  weight  of  modern  authority,  it 
is  held  that  when  a  promissory  note  is  given  with  a  stipulation 
that  the  interest  is  to  be  paid  annually  or  semi-annually,  the  payee 
or  holder  is  entitled  to  interest  upon  the  interest  if  it  is  not  paid 
according  o  the  tenor  of  the  instrument.^®  In  some  states  it  is 
held  that  interest  may  be  allowed  on  interest,  if  the  promise  to 
pay  it  is  made  after  the  interest  matures,  but  not  if  the  promise 
was  made  before  the  maturity  of  the  interest.^''  In  other  states  in- 
terest is  allowed  on  such  interest  from  the  time  it  becomes  payable, 
without  any  subsequent  demand  by  the  creditor,  or  agreement  by 
the  debtor,  that  it  shall  be  paid,  giving  time  for  payment. 

is    available     against    a     bona   fide  265;    Hiller  v.   Ellis,   72   Miss.   701, 

holder  although  there  is  much  con-  18  So.  Rep.  95. 

flict     on     this     point.      Cheney     v.  33  Bgajg    y.    Benjamin,   23    N.   Y. 

Janssen,    20    Neb.    128.    29   N.    W.  61;   Borrows  v.   Cook,   17   la.  436; 

289;   Robinson  v.   Smith,  62  Minn.  Geurren  v.  Cullen,  20  Gratt.  439. 

62,  64  N.  W.  90;   Tilden  v.  Blair,  34Beadle    v.    Munson,    30    Conn. 

21  Wall.  (U.  S.)  241.  175;    McGill    v.    Ware,    5    111.    21 

SiBrundage  v.   Burke,   11   Wash.  Brummel  v.  Enders,  18  Gratt.  873. 

679,  40  Pac.  343 ;  Wilkie  v.  Roose-  35  e^.  parte   Bevan.   9  Ves.   223 

velt,  3  Johns.   (N.  Y.)   206,  2  Am.  Perkins  v.   Coleman,  51   Miss.  298 

Dec.    149;    Newton    v.    Wilson,    31  3«  Preston  v.  Walker,  26  la.  205 

Ark.  484.     As  to  effect  of  usury  in  96  Am.  Dec.  140;  Mathews  v.  Too- 

renewal  note  on  original,  see  note  good,  23  Neb.  536,  37  N.  W.  265,  8 

18  U.  S.  L.  Ed.  305.  A.  S.  R.  131 

32  Bank  of  Newport  v.  Cook,  60  37  Wheaton  v.  Pike,  9  R.  I.  132,  98 

Ark.  288,  30  S.  W.  35,  29  L.  R.  A.  Am.   Dec    377,   11    Am.    Rep.   227; 

761;  Scott  V.  Safiford,  37  Ga.  384;  Enkridge   v.    Thomas.    79    W.    Va. 

English  V.  Smock,  34  Ind.  115.  322,  91   S.  E.  7  L.  R.  A.   1918C  p. 

But   see   Lemer   v.    Cox,   65    Ga.  769;  Sabine  v.  Paine,  223  N.  Y.  401, 

119  N.  E.  849,  5  A.  L,  R.  1444. 


168  NEGOTIABLE    INSTRUMENTS.  §  137 

There  is  the  same  conflict  of  opinion  in  the  courts  of  the 
dififerent  states  as  to  the  effect  the  adoption  of  the  Negotiable 
Instruments  Law  has  upon  usury  statutes  as  it  has  upon  gambhng 
statutes  discussed  above. 

Some  jurisdictions  maintain  that  such  instruments  remain  void 
as  usurious  as  against  a  bona  fide  holder  upon  the  adoption  of 
the  Negotiable  Instruments  Law  when  the  state  statute  made  a 
usurious  contract  void.  In  many  courts  usury  and  gaming  are 
placed  exactly  upon  the  same  footing,  the  courts  frequently  say 
that  gambling  and  usury,  the  two  most  common  objects  of  statu- 
tory inhibition,  are  against  the  best  interests  of  society  and  con- 
trary to  public  policy,  and  statutes  against  them  should  be  con- 
strued to  preclude  their  practice;  and  no  legislative  enactment 
should  be  construed  to  have  been  repealed  unless  a  subsequent  act 
so  states  expressly  or  unless  the  implication  is  so  necessary  as 
to  be  unescapable,  and  statutes  should  be  repealed  by  implica- 
tion with  great  reluctance. 

In  some  other  jurisdictions  it  is  urged  that  for  the  benefit  of 
trade  and  commerce  negotiable  instruments  under  such  circum- 
stances should  not  be  void  for  usury  as  against  a  bona  fide  holder 
for  value.^'^^ 

And  where  the  statute  as  to  usury  does  not  expressly  make 
the  usurious  contract  void,  but  where  it  is  construed  by  the 
court  to  have  this  effect,  such  an  instrument  is  void.^'''' 

In  some  jurisdictions  negotiable  instruments  made  on  Sunday 
are  void  by  statute.  In  such  case  it  may  be  set  up  as  a  real 
defense^^"  The  reason  is  that  it  is  a  violation  of  statutes  for  the 
observance  of  Sunday  to  execute  contracts  on  that  day,  and  one 
who  has  himself  participated  in  a  violation  of  law  cannot  be 
permitted  to  assert  any  right  founded  on  an  illegal  transaction. 
If  the  negotiable  instrument  is  delivered  not  on  Sunday  but  on 
another  day,  it  will  not  be  invalid  because  it  was  agreed  to  and 
signed  on  Sunday. 

And  it  may  be  stated  as  a  general  rule  that  whenever  a  statute 
expressly  declares  a  consideration  void  the  holder  may  have  a 
real  defense  set  up  against  him. 

A  bona  fide  holder  is  entitled  to  recover  on  negotiable  paper 
given  in  payment  of  a  subscription  to  corporate  stock  in  viola- 
tion of  law  v.'here  the  statute  does  not  expressly  make  the  note 
void.^^" 

37a  See  Appendix  A,  Table  I  for  37o  Reeves  v.  Butcher,  3  N.  J.  L. 

the  law  as  to  the  penalty  for  usury  224;   Wadsworth   v.    Dunnam,     117 

in  the  various  jurisdictions.  Ala.  661,  23  So.  699. 

37b  Perry   Savings    Bank   v.    Fitz-  37d  Washer  v.  Smyer  —  Tex.  — , 

gerald,   167   Iowa,  446.   149  N.   W.  211  S.  W.  985,  4  A.  L.  R.  1320,  note 

497,  r  A.  L.  R.  1330;  Heard  v.  National 


§  138  REAL  OR  ABSOLUTE  DEFENSE.  169 

Where  the  instrument  has  been  executed  to  a  foreign  corpora- 
tion within  a  state  where  it  has  not  become  authorized  to  do 
business  in  accordance  with  the  statutory  requirements,  and  where 
such  corporation  has  transferred  the  instrument  to  the  plaintiff, 
who  sues  as  a  holder  in  due  course,  the  general  rule  is  that  the 
plaintiff  can  recover  unless  the  particular  statute  makes  the  note 
and  contract  void.^'^* 

§  138.  Forgery.  By  forgery  is  meant  the  counterfeit  mak- 
ing or  fraudulent  alteration  of  any  writing,  and  may  consist  in 
the  signing  of  another's  name,  or  the  alteration  of  an  instrument 
in  the  name,  amount,  description  of  the  person  and  the  like,  with 
intent  thereby  to  defraud.  The  intent  to  defraud  distinguishes 
forgery  from  innocent  alterations  and  spoliation.^*  A  forgery  or 
fraudulent  alteration  will  avoid  the  instrument  and  also  extin- 
guish the  debt  which  represents  the  consideration  of  the  instru- 
ment. 

The  Negotiable  Instruments  Law  provides  .^^ 

"Where  a  signature  is  forged  or  made  without  authority  of  the 
person  whose  signature  it  purports  to  he,  it  is  wholly  inoperative, 
and  no  right  to  retain  the  instrument,  or  to  give  a  discharge 
therefor,  or  to  enforce  payment  thereof  against  any  party  thereto, 
can  he  acquired  through  or  under  such  signature,  unless  the 
pa/rty  against  zvhont  it  is  sought  to  enforce  such  right  is  pre- 
cluded from  setting  up  the  forgery  or  want  of  authority." 

It  does  not  follow  from  the  provisions  of  this  section  that 
proof  of  one  forged  signature  on  an  instrument  must  of  neces- 
sity, and  in  all  cases,  be  given  effect  to  avoid  the  note  in  favor 
of  those  whose  signature  thereto  are  found  to  be  genuine,  it  is 
the  forged  or  unauthorized  signature  that  is  declared  to  be  in- 
operative.^^* 

The  last  clause  of  the  section  of  the  Law  above  refers  to 
estoppel  and  not  to  ratification.    A  forger  does  not  act  on  behalf 

Bank,    143    Ga.   48,   84    S.    E.    129;  55  L.  R.  A.  408,  88  Am.   St.   Rep. 

Cornell  v.  Hichens,  11  Wis.  368.  770. 

37eBank  v.   Utterbach,   L.   R.   A.  39  Neg.  Ins.  Law,  §  23,  where  all 

1918   B,   838;   McMann   v.   Walker,  cases  directly  or  indirectly  bearing 

31  Colo.  26,  72  P.  1055 ;  Ensign  v.  upon  or  citing  the  Law  are  grouped. 

Christiansen,  —   N.   H.  —   109   A.  As   to   payment   of   forged   bill   by 

g57  drawee  or  acceptor,  see  note  6  U.  S. 

3«  Commonwealth   v.   Wilson,   89  L.  Ed.  335.     As  to  liability  of  per- 

Ky.  157,  12  S.  W.  264,  25  Am.  St.  son  whose  signature  is  forged,  see 

Rep.  528 ;  Franklin  Fire  Ins.  Co.  v.  note  36  L.  R.  A   539. 
Bradford,  201   Pa.  32,  50  Atl.  286,  39a  Beam    v.    Ferrell,    135    Iowa 

670,  113  N.  W.  509. 


170  NEGOTIABLE    INSTRUMENTS.  §  139 

of,  nor  profess  to  represent  the  person  whose  handwriting  he 
counterfeits ;  and  the  subsequent  adoption  of  the  instrument  can- 
not supply  the  authority  which  the  forger  did  not  profess  to 
have.s"" 

Parties  may  be  estopped,  however,  to  dispute  the  genuineness 
of  their  signatures.**" 

An  acceptor  or  an  indorser  may  be  precluded  from  setting  up 
the  forgery  or  want  of  authority  as  to  the  drawer  or  maker. 

It  should  be  remembered  that  the  drawee  by  accepting  a  bill, 
warrants  the  genuineness  of  the  drawer's  signature,  and  the  in- 
dorsers  likewise  guarantee  the  genuineness  of  all  parties  to  the 
bill  at  the  time  of  the  indorsement.^" 

Since  an  acceptor  of  a  bill  warrants  the  genuineness  of  the 
signature  of  the  drawer  he  cannot  therefore  resist  payment  of  the 
bill  as  against  a  bona  fide  holder  if  the  drawer's  name  be 
forged.^-^  An  indorser  of  a  negotiable  instrument  admits  that, 
at  the  time  of  his  indorsement  the  instrument  was  valid  and  sub- 
sisting, and  he  is,  therefore,  bound  by  his  indorsement  to  subse- 
quent parties.^^  And  it  has  been  held  that  a  bank  is  entitled  to 
recover  against  the  second  indorser  of  a  note,  although  the  in- 
dorsement of  the  name  of  the  payee  is  a  forgery,  and  although  the 
note  was  offered  for  discount  by  the  maker  and  not  by  the  second 
indorser.^*  The  warranty  of  the  acceptor  only  extends  to  the 
genuineness  of  the  signature,  and  not  to  the  matters  contained 
in  the  bill  itself.  An  indorser,  by  his  indorsement,  contracts 
with  the  subsequent  bona  fide  holder  of  the  instrument,  that  the 
instrument  itself,  and  all  the  signatures  prior  to  his  indorsement, 
are  genuine ;  and  the  fact  that  the  name  of  the  maker  was  forged 
will  not  affect  his  liability.** 

§  139.  Duress  when  amounting  to  forgery.  When  duress 
amounts  to  a  forgery  it  is  held  in  some  jurisdictions  to  be  a  real 
defense.     Thus  when  the  signature  of  a  person  is  obtained  to 

39b  Henry  Christian  Building  and  '^  Cochran  v.  Atchinson,  27  Kan. 

Loan  Association    v.    Walton,    181  728;  Beattie  v.  Nat.  Bank,  174  111. 

Pa.  St.  201.  571,    66   Am.    St.    Rep.    318,    43    L. 

390  Crout  V.  DeWolf,  1  R.  I.  393 ;  R.  A.  654. 

Leather   Manufacturers'  Nat.  Bank  "^'^  State     Bank     v.     Feaning,     16 

V.  Morgan,  117  U.  S.  96.  Pick.  533,  28  Am.  Dec.  265. 

40  Olivier  v.  Audry,  7  La.  496;  44  QHvier  v.  Audry,  7  La.  496. 
Rambo  v.  Metz,  5  Strob.  (S.  C.)  As  to  effect  of  forgery  of  part  of 
108.  signatures  as  defense  against  bona 

41  Hoffman  &  Co.  v.  Bank  of  Mil-  fide   holder   by   makers   whose   sig- 
waukee,    12    Wall.    181,    20    L.    Ed.  natures   were  genuine,   see  note  13 
366;    Price   v.    Neal,    3    Bun.    1354;  L.  R.  A.   (N.  S.)  426. 
Redington  v.  Woods,  45  Cal.  406,  13 

Am.  Rep.  19. 


§  140  REAL  OR  ABSOLUTE  DEFENSE.  1/^1 

an  instrument  under  such  circumstances  as  make  the  instru- 
ment a  forgery,  the  person  signing  the  same  will  not  be  liable 
thereon  to  any  one.'*^ 

And  so  duress  might  be  a  real  defense  in  every  jurisdiction, 
as  where  A  takes  B's  hand  and  forces  him  to  sign  his  name.  In 
such  case  the  duress  amounts  to  a  forgery  and  is  a  real  defense. 

§  140.  Statute  of  limitations.  The  statute  of  limitations  is 
a  real  defense.  Holders  of  negotiable  instruments  do  not  neces- 
sarily have  notice  whether  the  period  of  limitation  has  run  out  or 
not.  The  instrument  may  not  be  dated,  or,  what  is  usual,  an  in- 
dorsement may  not  be  dated;  but  the  real  date  of  the  act,  or 
rather  of  the  delivery  following  it,  may  be  shown,  when  there  is 
nothing,  such  as  subsequent  payments  of  interest  or  installments, 
to  prevent  the  running  of  the  statute  from  that  time.^ 

§  141.  Failure  to  stamp."***^  Failure  to  put  a  revenue  stamp 
on  an  instrument  has  been  held  in  some  jurisdictions  under  some 
of  the  stamp  laws  to  be  a  real  defense,  while  in  others  not  to  be 
a  real  defense.'*'' 

In  construing  the  Federal  Stamp  Tax  Law  of  1898,  the  pro- 
vision declaring  an  unstamped  instrument  invalid  was  held  to 
apply  only  to  instruments  from  which  the  stamp  had  been  omitted 
fraudulently;^''*  and  it  has  been  held  that  the  purchaser  is  not 
precluded  from  becoming  a  bona  fide  holder  when  there  is  no 
intent  to  defraud  the  Government.'*^ 

The  present  law,  that  is,  the  Act  of  October  22,  1914,  contains 
no  provision  to  the  effect  that  an  unstamped  instrument  shall  be 
void.4» 

Some  jurisdictions  hold  that  a  promissory  note  which  is  not 
stamped  as  required  by  the  revenue  laws  is  not  complete  and  regu- 
lar on  its  face  and  the  purchaser  of  such  a  note  is  not  a  holder 
in  due  course,  and  the  instrument  in  his  hands  is  open  to  any 
defense  that  the  maker  had  against  the  original  payee.^®  Under 
such  circumstances  the  omission  of  the  stamp  is  relied  upon  not 

45  Mitchell  V.  Tomlinson,  91  Ind.  409;    Green   v.   Davies,   4   B.    &   C. 

167;  Webb  v.  Corbin,  78  Ind.  403;  233;   Ebert  v.  Gitt,  95  Md.  186,  52 

Cline  V.  Guthrie,  42  Ind.  227.  Atl.  900. 

See    also    Hatch    v.    Barrett,    34  47a  Rowe   v.    Bowlan,    183    Mass. 

Kan.  223;   Loomis  v.   Rush,  56  N.  488.  67  N.  E.  636. 

Y.  462.  48  Ebert  v.  Gitt  95  Md.  186,  52A. 

46  A.S   to  their   application,   see  900. 

statutes  of  the  various  states.  49  Cole  v.  Ralph,  252  U.  S.  286. 

4«a  See  also  §  57  of  this  book.  ^o  Lutton  v.  Baker,  —  Iowa  — , 

47  Robinson     v.    Fair,    31    la.    9;  174  N.  W.  599. 
Anderson   v.   Starkweather,  24  la. 


172  Negotiable  instruments.  §  140 

as  a  ground  of  defense  to  the  note,  but  as  defeating  the  bona  fides 
of  the  purchaser  and  thus  letting  in  an  independent  defense.'* 

Other  jurisdictions  hold  that  the  want  of  a  revenue  stamp  on  a 
promissory  note  is  not  such  a  circumstance  of  suspicion  as  to 
put  an  endorsee  upon  inquiry  in  taking  the  note,  and  the  note 
is  valid  and  can  be  enforced  without  a  stamp.'^ 

The  cancellation  of  the  revenue  stamp  by  one  other  than  the 
maker  whose  initials  were  used  is  not  a  suspicious  circumstance 
so  as  to  be  notice  of  any  equity  and  prevent  the  holder  from 
being  a  bona  fide  holder.** 

Many  of  the  state  courts  held  that  the  provisions  of  the  Acts 
of  1864,  1865  and  1866,  excluding  unstamped  instruments  from 
evidence,  did  not  apply  to  the  said  courts ;  some  denied  the  power 
of  Congress  to  prescribe  a  rule  of  evidence  for  the  state  courts.*'* 

f*!  Note  6  A.  L.  R.  1701  and  cases.  ^'*'Wa\hce    v.    Cavens,    34    Ind. 

»2  Burson  v.  Huntington,  21  Mich.  354.  See  48  L.  R.  A.  305  and  note 
415,  4  Am.  Rep.  497.  pp.  305-320. 

53  Martindale  v.  Stotler,  80  Kans. 
87,  101  P.  629. 


CHAPTER  XV. 
PERSONAL   DEFENSES   OR   EQUITIES. 

S  142.  In   general.  §  146.  Want    or    defect    of    consid- 

143.  Fraud.  eration. 

144.  Alteration.  147.  Illegality   of   consideration. 

145.  Duress.  148.  Payment. 

§  142.  Personal  defenses  or  equities — In  general.  The  real 
defenses  are  such,  that  the  party  who  has  a  right  to  set  them  up, 
can  set  them  up  against  anybody.  Every  other  person  does  not 
necessarily  have  a  real  defense  because  the  party  originally  liable 
does.  The  real  defense  is  one  which  the  person  alone  who  has  it 
may  set  up.  So,  when  we  say  that  a  real  defense  is  an  absolute 
defense  so  far  as  the  person  who  is  entitled  to  the  defense  is  con- 
cerned, we  do  not  necessarily  mean  that  that  extends  to  the 
other  parties.  A  personal  defense  is  of  an  equitable  nature.  It 
is  a  defense  which  depends  upon  circumstances,  it  is  a  defense 
which  a  person  has  a  right  to  set  up  under  certain  circum- 
stances, and  those  circumstances  are  dependent  upon  whether  or 
not  he  had  notice  and  whether  or  not  he  was  a  purchaser  for 
value.  In  the  real  defense,  it  is  not  a  matter  as  to  whether  the 
person  is  a  purchaser  for  value  and  had  notice,  and  the  like,  the 
defense  may  be  set  up  regardless  of  these  facts ;  but  a  personal 
defense  cannot  be  set  up  that  way  since  as  to  such  a  defense  a 
person  must  show  that  he  has  not  had  notice  and  that  he  is  a  pur- 
chaser for  value. 

As  to  equities  or  personal  defenses  it  is  important  to  know 
who  are  to  be  regarded  as  the  immediate  parties,  or  parties  be- 
tween whom  there  is  a  privity,  to  a  negotiable  instrument,  and 
who  are  remote.  Among  the  former  may  be  classed:  (1)  The 
drawer  and  acceptor  of  a  bill;*  or  (2)  the  drawer  and  payee  of 
a  bill  as  a  general  rule;*  (3)  the  maker  and  payee  of  a  note  ;^ 
and  (4)  the  indorser  and  immediate  indorsee*  of  a  bill  or  note. 

That  the  bill  or  note  has  been  lost  or  stolen^  or  was  executed 

1  Thomas  V.  Thomas.  7  Wis.  476.  4  Klein    v.    Keyes,    17   Mo.    326; 

'McCulloch  V.  Hoffman,  10  Hun  Holliday  v.  Atkinson,  5  Barn.  &  C. 

(N.  Y.)    133.  501. 

3  Kennedy  v.   Goodman,   14  Neb.  ^  Mills  v.  Berger,  1   Mees.  &  W. 

585,    16    N.    W.    834;    Jeflfries    v.  425, 
Austin,  1  Strange  674, 

173 


174  NEGOTIABLE    INSTRUMENTS.  §  142 

under  duress,  or  under  fraudulent  misrepresentations,  or  for 
fraudulent  consideration,''  or  for  illegal  consideration,*  or  has 
been  fraudulently  obtained  from  an  intermediate  holder,"  or  been 
in  any  way  the  subject  of  fraud  or  felony,  or  has  been  misappro- 
priated and  diverted,  or  for  a  loss  for  which  the  party  was  not 
liable,  or  that  otherwise  it  was  without  valuable  consideration, 
is  a  good  defense  as  between  the  parties  privy  to  it.  And  in 
some  cases  it  is  a  good  defense  that  it  was  given  by  mistake  for 
too  great  a  sum,  or  when  no  sum  was  due,  the  evidence  showing 
fraud  or  a  total  or  partial  want  of  consideration.  As  between 
the  immediate  parties  on  a  bill  or  note  no  question  arises  whether 
the  defense  is  real  or  personal.  Any  defense  is  valid  as  between 
immediate  parties  if  it  would  be  valid  on  an  ordinary  contract. 
But  when  the  parties  are  not  immediate,  then  the  question  arises 
as  to  whether  it  is  a  real  or  a  personal  defense.  Personal  de- 
fenses being  in  the  nature  of  equities,  two  principles  of  equity 
apply  to  them.  ( 1 )  One  is,  he  who  comes  into  equity  must  come 
with  clean  hands ;  he  must  not  be  a  party  to  any  fraud,  to  any 
illegality.  If  he  has  notice^"  of  any  of  these,  he  does  not  have 
clean  hands.  (2)  The  other  is,  of  two  innocent  parties,  he  whose 
act  or  omission  has  caused  the  loss,  must  stand  it.  Equity  says, 
as  between  two  innocent  parties,  the  one  should  suffer  whose  act 
or  omission  has  caused  the  loss."  If  a  person  has  no  notice  and 
he  is  the  party  who  has  made  this  loss  possible  there  can  be  a 
recovery  against  him. 

The  rule  is  the  person  who  enables  the  fraud  to  be  perpetrated 
must  stand  responsible-^^  where  the  instrument  is  gotten  possession 
of  in  such  a  manner  as  to  amount  to  a  forgery,  it  should  be  a  real 
defense  and  no  recovery  should  be  permitted  against  it.  Here, 
however,  we  find  a  conflict  of  authority.  The  better  opinion  is 
that  if  you  can  show  that  it  amounted  to  a  forgery  or  was  ob- 
tained by  duress,  there  can  be  no  recovery  against  you  if  you 
are  the  person  liable  on  the  instrument. 

e  Clark  v.   Pease.  41   N.   H.  414.  lo  Mass.  Nat.  Bank  v.  Snow,  187 

7  Wilson  V.  Ellsworth,  25  Neb.  Mass.  159;  Cheever  v.  The  Pitts- 
246.  41  N.  W.  177;  Macomb  v.  burg  etc.  R.  R.  Co.,  150  N.  Y.  59, 
Wilkinson,  83  Mich.  486,  47  N.  W.  55  Am.  St.  Rep.  646,  34  L.  R.  A. 
336.  69. 

8  Cummins  v.  Boyd,  83  Pa.  St.  ^  Ledwich  v.  McKim,  53  N.  Y. 
372;    Bierce   v.    Stocking,    11    Gray  307. 

(Mass.)   174.  12  Putnam    v.    Sullivan,    4    Mass. 

^  Rodgers    v.    Morton,    12   Wend.  45,    3    Am.    Dec.    206 ;    McCormick 

484;  Vither  v.  Zane,  6  Gratt.  (Va)  v.    Holmes,   41    Kan.   265,   21    Pac. 

246.  108. 


§  143  PERSONAL  DEFENSES  OR  EQUITIES.  175 

The  Negotiable  Instruments  Law  provides: 

"The  title  of  a  person  who  negotiates  an  instrument  is  defective 
within  the  meaning  of  this  act  when  he  obtained  the  instrument, 
or  any  signature  thereto,  by  fraud,  duress,  or  force  and  fear,  or 
other  unlawful  means,  or  for  an  illegal  consideration  or  when  he 
negotiates  it  in  breach  of  faith,  or  under  such  circumstances  as 
amount  to  a  fraud."^^ 

§  143.  Fraud.  Where  the  consideration  for  a  bill  is  clearly 
fraudulent  it  is  a  good  defense  against  an  immediate  party^*  or  a 
remote  party  unless  he  is  an  innocent  holder  for  value/^  and 
while  the  instrument  is  yet  in  the  hands  of  a  party  with  notice  a 
court  of  law  will  compel  its  surrender,  or  restrain  its  negotiation 
until  the  question  of  fraud  is  settled.-^® 

A  bill  is  affected  with  fraud  when  the  issue  or  any  subsequent 
negotiation  of  it  is  obtained  by  fraud,  coercion,  or  when  it  is 
negotiated  in  breach  of  faith,  or  in  fraud  of  third  parties. 

No  holder  of  a  bill  subsequent  to  its  being  affected  with  fraud 
can  enforce  payment  from  any  party  thereto,  or  retain  the  bill 
against  the  rightful  owner  unless  he  received  it  from  a  bona  fide 
holder  for  value  without  notice.  The  question  of  fraud  is  largely 
one  of  negligence.  Did  a  person  who  has  signed  the  instrument 
and  let  it  get  into  the  hands  of  other  parties,  or  into  circulation, 
act  with  negligence?  If  he  did  not,  then  fraud  is  a  real  defense, 
but  if  he  did  so  act,  it  is  a  personal  defense.^''  Where  a  person, 
in  case  of  fraud,  signs  an  instrument  believing  he  is  signing  a  dif- 
ferent instrument,  if  he  was  negligent  he  cannot  set  up  the  per- 
sonal defense.  Then,  in  case  of  delivery  through  fraud,  where  an 
instrument  has  been  delivered  to  an  agent  or  an  agent  has  fraud- 
ulently delivered  it  to  someone  else,  fraud  is  not  a  personal  de- 
fense, because  the  agent  was  entrusted  with  it.^^  As  to  a 
custodian    the    general    law    applies    the    same.^^       The    maker 

l^Neg.   Inst.  Law.   55,  where  all  by  fraud  in  its  origin,  see  note  11 

cases    directly    or    indirectly    bear-  Am.    St.   Rep.   309. 

ing    upon    or    citing    the    Law    are  i®  Hullhorst  v.  Schamer,  15  Neb. 

grouped.  57,  17  N.  W.  259;  Hodson  v.  Eu- 

"Carthers  v.  Levy,  111  Ga.  740,  gene  Glass  Co.,  156  111.  397,  40  N. 

36  S.  E.  958 ;   Alabama  Nat.  Bank  E.  971 ;  Sackett  v.  Hillhouse,  5  Day 

V.  Halsey,  109  Ala.  196,  19  So.  522;  551;  Wilcox  v.  Ryols,  110  Ga.  287, 

Still  V.  Snow,  66  Vt.  277,  29  Atl.  34  S.  E.  575. 

250.  17  Gardner   v.    Wiley    (Ore.),    79 

1^  Russ  Lumber  Co.  v.  Muscupi-  Pac.    341 ;    Howry   v.    Eppinger,   34 

able  Land  &  W.  Co.,  120  Cal.  521,  Mich.  29. 

52  Pac.  993 ;   Nichols  v.  Baker,  75  i^Hutchinson  v.  Brown.  19  Dist. 

Me.    334;     Hawley    v.     Hirsch,    2  Col.  136;  Jordan  v.  Jordan,  10  Lea 

Woodw.  Dec.   (Pa.;   158.  Bona  fide  (Tenn.)   124,  43  Am.  Rep.  294. 

holder  takes  instrument  unaffected  i®  Walker  v.  Ebert,  29  Wis.  194; 


176  NEGOTIABLE    INSTRUMENTS.  §  144 

of  the  instrument  would  not  be  entitled  to  set  up  the  fraud; 
and,  where  the  instrument  has  been  stolen  or  wrongfully  taken, 
then  the  question  becomes  largely  a  question  of  negligence.  If 
the  party  has  been  negligent,  then  he  has  no  right  to  set  up  fraud 
as  a  personal  defense.  If  he  has  not  been  negligent,  then  other 
circumstances  not  being  considered,  he  could  not  be  recovered 
against.*^* 

§  144.  Alteration.^'"'  The  following  is  the  provision  in  the 
Negotiable  Instruments  Law : 

"Where  a  negotiable  instrument  is  materially  altered  without 
the  assent  of  all  parties  liable  thereon,  it  is  avoided,  except  as 
against  a  party  zvho  has  himself  made,  authorised,  or  assented  to 
the  alteration  and  subsequent  indorsers.  But  when  an  instrii- 
ment  has  been  materially  altered  and  is  in  the  hands  of  a  holder 
in  due  course,  not  a  party  to  the  alteration,  he  may  enforce  pay- 
ment thereof  according  to  its  original  tenor."^^ 

A  material  alteration  is  defined  to  be  any  change  in  the  in- 
strument which  affects  or  changes  the  liability  of  the  parties  in 
any  way.^^  The  alteration  avoids  the  paper  regardless  of  whether 
it  is  favorable  or  unfavorable  to  the  party  making  the  altera- 
tion.^^ The  following  have  been  held  to  be  material  alterations: 
any  change  in  the  date  of  the  instrument,  but  not  in  the  date 
of  the  indorsement  f^  any  alteration  in  the  amount  of  principal 
or  interest  -^^  any  change  in  the  character  of  the  payment,  whether 
in  the  denomination  or  medium  of  payment  ;^^  any  alteration  in 
the  personality,  number  and  relations  of  the  parties  ;^*  any  change 
in  the  liability  of  the  parties  ;^'^  or  any  change  in  the  place  of  pay- 
ment.^* 

Baldwin    v.    Bricker,   86    Ind.    222;  Griffith  v.  Cox,  1  Tenn.  210;  Mers- 

Bedell  v.  Herring,  77  Cal.  572.  man  v.   Werges.   112   U.   S.   139,  28 

i9»As  to  title  of  bona  fide  holder  L.  Ed.  641. 
to  stolen  paper,   see  note  103  Am.  24  Harsh  v.  Klepper,  28  Ohio  St. 

St.  Rep.  983,  987.  200;    Draper   v.   Wood,    112   Mass. 

i^"  See  also  section  188  infra.  315;    Batchelder    v.    White,    80   Va. 

20  Neg.  Inst.  Law,  §  124,  where  103 ;  Nefif  v.  Horner,  63  Pa.  327, 
all  cases  directly  or  indirectly  bear-  3  Am.  Rep.  555. 

ing    upon    or    citing    the    Law    are  25  Poxworthy   v.    Colby,  64   Neb. 

grouped.  216,  89  N.  W.  800,  62  L.  R.  A.  393 ; 

21  Foxworthy  v.  Colby,  64  Neb.  Schwalen  v.  Mclntyre,  17  Wis.  232 
216,  89  N.  W.  800,  62  L.  R.  A.  26  Lamb  v.  Paine,  46  la.  551; 
393;  Organ  v.  Allison,  68  Tenn.  (9  Sneed  v.  Sabinal  Min.  &  Mill.  Co., 
Baxt.)  459.  71   Fed.  493,  18  C.   C.  A.  213. 

22  Franklin  Ins.  Co.  v.  Courtney,  27  Blake  v.  Coleman,  22  Wis.  415. 
60  Ind.  134;  Mersman  v.  Werges,  28  Codes  &  St.  Or.  1901,  §4527; 
112  U.   S.   139,  28  L.   Ed,  641.  Rev.  Codes,  N.  D.,  §  1053. 

23  Wood   V.    Steele,   6    Wall,    8; 


§  144  PERSONAL  DEFENSES  OR   EQUITIES.  177 

The  addition  of  the  name  of  a  witness  to  an  instrument  re- 
quired by  law  to  be  witnessed  is  a  material  alteration,  but  if  the 
instrument  need  not  be  witnessed  or  if  it  already  has  on  it  the 
number  of  witnesses  required  by  law,  the  alteration  is  imma- 
terial. An  innocent  alteration,  when  material,  is  held  by  some 
authorities  to  avoid  the  instrument  while  not  cancelling  the  debt, 
others  holding  that  so  long  as  the  alteration  has  caused  no  injury 
a  court  of  equity  may  restore  it  to  its  original  condition  so  that 
suit  may  be  brought  on  it.^* 

The  last  proposition  as  set  out  in  Section  124  of  the  Law  above 
that  a  holder  in  due  course  may  recover  according  to  the  original 
tenor  of  the  instrument  changes  the  law  in  some  jurisdictions.^®' 

What  constitutes  a  material  alteration  under  the  Negotiable  In- 
struments Law  is  set  out  in  Section  125  of  that  law  as  follows : 

"Any  alteration  which  changes  the  date;  the  sum  payable,  either 
of  principal  or  interest;  the  time  or  place  of  payment;  the  num- 
ber or  the  relations  of  the  parties;  the  medium  or  currency  or 
which  adds  a  place  of  payment  where  no  place  of  payment  is 
specified,  or  any  other  change  or  addition  which  alters  the  effect 
of  the  instrument  in  any  respect,  is  a  material  alteration."^^^ 

When  the  change  in  the  bill  or  note  is  made  by  a  stranger  it 
is  called  a  spoliation  instead  of  an  alteration.  Such  a  change  of 
an  instrument  is  held  in  most  jurisdictions  to  have  no  effect 
upon  it,  if  the  original  meaning  can  be  ascertained.  That  is,  if 
the  alteration  be  made  by  a  stranger  to  the  instrument  the  rights 
of  the  parties  are  not  affected.^'' 

Immaterial  alterations  are  those  which  do  not  change  the  legal 
effect  of  the  instrument,  as  adding  words  implied  by  law,  making 
marginal  figures  to  correspond  to  the  written  statement  in  the 
body  of  the  instrument,  the  adding  of  immaterial  memoranda, 
and  the  like.^*  Thus  the  correcting  of  a  mistake  to  conform  to 
the  intention  of  the  parties  is  an  immaterial  alteration.^^ 

In  those  jurisdictions  the  effect  of  a  material  alteration  is 
generally    as    follows :     Bona    fide    holders    are    only   protected 

29  Booth  V.  Powers,  56  N.  Y.  31;  Langenberger  v.  Kroeger,  48  Calif. 
Kountz  V.  Kennedy,  63  Pa.  St.  147.  See  note  18  U.  S.  L.  Ed.  725. 
187.  31  Smith   v.   Smith,   1   R.   I.   398; 

Contra,   Bigelow  v.   Stephens,   35  Bacheldor   v.   Priest,    12  Pick.  399; 

Vt.   525.  Keene,  Adm.  v.  Miller,  103  Ky.  628, 

29a  Tower  v.    Stanley,   220   Mass.  45   S.  W.   1041.     As   to   immaterial 

429.  alterations,  see  note  12  U.  S.  L.  Ed. 

29"  Neg.   Inst.  Law,   §  125,   where  443. 

all  cases  directly  or  indirectly  bear-  ^2  Bank    v.    Bank,    13    N.    Y.    309; 

ing    upon    or    citing    the    Law    are  Shepard   v.   Whetstone,   51    la.  457, 

grouped.  1  N.  W.  753,  ZZ  Am.  Rep.  143. 

30  Buckler  v.   Huff.   53   Ind.  474. 


178  NEGOTIABLE    INSTRUMENTS.  §  145 

against  material  alterations  discharging  the  party  liable,  when 
some  carelessness  or  negligence  on  the  part  of  the  person  whose 
liability  has  been  changed  by  the  alteration,  has  contributed  to 
the  negotiation  of  the  paper  without  suspicion  of  fraud,  as 
where  blank  spaces  have  been  left,^  or  it  is  written  partly  in 
pencil  so  as  to  be  easily  erased ;  so  a  memorandum  which  can 
be  detached  without  affecting  the  paper  will,  when  detached  in 
fraud,  not  be  allowed  to  avoid  the  paper  in  the  hands  of  a  bona 
fide  holder.^^ 

In  those  jurisdictions  the  effect  of  a  material  alteration  by  the 
holder  of  a  bill  is  to  discharge  all  parties  from  liability  on  the 
bill,  unless  they  consented  to  such  alteration.*^ 

§  145.  Duress.  Duress,  under  most  circumstances,  is  con- 
sidered a  personal  defense.^® 

It  is  provided  in  the  Negotiable  Instruments  Law  that  duress 
is  a  defense.  The  Law  states :  "The  title  of  a  person  who  nego- 
tiates an  instrument  is  defective  w-ithin  the  meaning  of  this  act 
ivhen  he  obtains  the  instrument,  or  any  signature  thereto  by 
duress,  or  force  and  fear,  or  other  unlaivful  means.     *     *     *"30a 

Threats  which  induced  the  execution  of  a  note  by  old  and  feeble 
persons  amount  to  duress,  even  though  they  would  not  influence 
ordinary  persons,"*®"  and  where  the  maker  of  a  note  is  prevented 
from  exercising  his  free  will  by  reason  of  payee's  threats,  the 
maker  may  repudiate  the  note  for  duress  whether  the  threat 
be  sufffcient  or  insufficient  to  overcome  the  mind  of  a  man  of  or- 
dinary courage,  and  in  such  cases  evidence  as  to  the  maker's 
mental  or  physical  health,  his  condition  in  life,  his  experience, 
education  and  intelligence  is  admissible.^®" 

Where  upon  the  threatened  insolvency  of  a  firm,  two  of  the 
creditors  and  their  attorney  went  to  the  home  of  the  aged  parents 
of  one  of  the  members  of  the  firm,  and  by  indirect  threats  to 

33Stratlon    v.     Stone,     15    Colo.  443.     As  to   fraudulent  alterations, 

App.  237,  61   Pac.  481 ;  Rainbolt  v.  see  note   13  U.  S.  L.  Ed.  266. 

Eddy,  34  la.  440,  11  Am.  Rep.  152;  36  Hogan  v.  Moore,  48  Ga.   156; 

Cannon  v.   Grigsby,   116   111.   151,   5  Mumly  v.   Whitmore,   15  Neb.  647. 

N.  E.  362,  56  Am.  Rep.  769;  Isnard  19  N.  W.  694;  Clarke  v.  Pease,  41 

V.  Tones,  10  La.  Ann.  103 ;  Zimmer-  N.  H.  414. 

man  v.  Rate,  75  Pa.  St.  188 ;  Har-  3«a  Neg.  Inst.  Law,  §  55,  where  all 

vey   V.   Smith,   55.   111.  224.  cases    directly    or    indirectly   bear- 

34  Noll  V.  Smith,  64  Ind.  511.  ing    upon    or    citing    the    Law    are 

35  Burrows  v.  Klunk,  70  Md.  451,  grouped. 

17  Atl.   378,   14  Am.    St.   Rep.   371,  3«b  Anthony  v.  Brown,  214  Mass. 

3  L.  R.  A.  576;  Mills  v.  Wilson,  3  439,  101  N.  E.  105^ 

Ore.    308;    Bank    v.    Lockwood,    13  3«o  (Cornwall     v.      Anderson,     85 

W.  Va.  392.     As  to  authorized  al-  Wash.  378,  148  Pac.  1. 
terations,  see  note  12  U.  S.  L.  Ed. 


§  146  PERSONAL  DEFENSES  OR  EQUITIES.  179 

prosecute  their  son,  induced  them  to  sign  a  note  for  his  indebted- 
ness, such  note  was  void  as  having  been  obtained  by  duress.^*^** 
The  abuse  of  any  process,  either  civil  or  criminal,  to  compel 
a  party,  by  imprisonment,  to  do  any  act  against  his  will  except 
to  pay  the  debt  for  which  he  is  arrested,  is  entirely  illegal,  and 
the  act  may  be  avoided,  on  the  ground  of  duress.^'  Thus  where 
an  arrest  was  without  any  warrant  or  lawful  authority  and  a 
note  was  signed  under  such  pressure.^*  Duress  is  a  perfect 
defense  to  an  action  between  the  original  parties  and  parties 
having  notice  of  it.*^ 

§  146.  Want  or  defect  of  consideration.  The  largest  num- 
ber of  defenses  concern  consideration.  Anything  which  is  a 
good  consideration  in  a  contract  is  a  good  one  in  a  bill  or  note, 
or  a  negotiable  instrument.  If  a  person  has  bought  something 
and  agreed  to  give  something  in  return,  the  court  will  not  look 
into  whether  he  has  gotten  value,  the  courts  do  not  look  into 
that,  but  the  court  will  look  into  some  other  matters.  If 
there  has  been  no  consideration  whatever,  the  court  will  look 
into  that  as  between  the  immediate  parties — that  is  a  personal 
defense.'*'*  As  between  the  parties,  one  who  has  notice  of  want  or 
failure  of  consideration,  that  is  a  defense  the  maker  can  set  up 
against  him.  For  instance,  A  makes  a  promissory  note  and  gives 
it  to  B  as  a  gift ;  there  is  no  consideration ;  A  only  thereby  prom- 
ises to  give  B  $50  in  the  future.  As  between  the  parties  there 
can  be  no  recovery ;  but  if  A  gives  B  a  note  of  a  third  person, 
it  is  held  there  is  sufficient  consideration  and  B  can  recover  from 
that  person,  but  he  cannot  recover  against  A  in  the  first  case 
on  account  of  the  want  of  consideration. 

By  failure  of  consideration,  we  mean  something  which  ap- 
parently had  a  good  consideration,  but  for  some  cause  or  other 
the  consideration  has  failed.*-^  A  thinks  he  owns  a  certain  piece 
of  property,  but  there  is  a  judgment  against  him  and  execution 
has  not  been  taken  and  A  conveys  that  property  to  B  for  B's 
note.     In  the  meantime,  the  property  is  taken  on  execution — 

36<'-Spoerer  v.  Wehland,  —       — ,  '**'  Farmers'     Savings     Bank     v. 

100  A.  287.  Hausman,  114  la.  49,  86  N.  W.  31; 

37Thurman  v.  Burt,  53  111.  129;  Chicago  Title  &  Trust  Co.  v.  Bary, 

Shauk  V.   Phelps,  6   111.   App.   612;  165  Mo.  197,  65  S.  W.  303;  Ho^an 

Sheu  V.   Spooner,  9  N.  H.   197,  32  v.  Bigler,  5  Okla.  575,  49  Pac.  1011. 

Am.  Dec.  348.  ^^  Shirk   v.    Neible,    156   Ind.   66, 

ssOsborn   v.   Robbins,   36  N.  Y.  59  N.  E.  281,  83  Am.  St.  Rep.  150; 

365.  Ingersoll  v.  Martin,  58  Md.  67,  42 

3»  Graham  v.   Marks,  98  Ga.  67,  Am.  Rep.  322. 
25  S.  E.  931. 


180  NEGOTIABLE    INSTRUMENTS.  §  147 

there  has  been  a  failure  of  consideration  and  that  note  could  not 
be  recovered  upon. 

Want  of  consideration  is  matter  of  defense  as  against  any 
person  not  a  holder  in  due  course.*^ 

Partial  failure  of  consideration  is  a  defense  pro  tanto  against 
an  immediate  party  when  the  failure  is  an  ascertained  and 
liquidated  amount  in  money .^^  But  it  is  not  a  defense  against  a 
remote  party  holder  for  value."*^  A  few  decisions  hold  that  a 
partial  failure  of  consideration  will  not  constitute  a  good  de- 
fense in  any  case  whether  definite  or  indefinite."*' 

The  Negotiable  Instruments  Law  has  the  following  provision: 
"Absence  or  failure  of  consideration  is  matter  of  defense  as 
against  any  person  not  a  holder  in  due  course;  and  partial  failure 
of  consideration  is  a  defense  pro  tanto,  whether  the  failure  is 
an  ascertained  and  liquidated  amount  or  otherwise .'"^^ 

Total  failure,  as  against  an  immediate  party  is  a  good  de- 
fense,^*' but  not  as  against  a  remote  party  who  is  a  bona  fide 
holder  for  value  without  notice."*'  Thus  where  the  consideration 
of  the  note  was  that  the  payee  should  act  as  executor  for  the 
maker,  and  the  payee  died  first,  the  note  could  not  be  enforced 
against  the  maker.  So  where  a  bill  is  drawn  by  one  party  on 
another  payable  to  his  own  order,  and  is  accepted,  if  the  con- 
sideration fails  as  between  these  two,  an  indorsee  for  value  who 
knows  that  the  consideration  has  failed  cannot  sue  the  acceptor. 

§  147.  Illegality  of  consideration.  Under  the  division  "Ille- 
gality of  Consideration"  there  are  three  classes  of  cases: 

(1)  Those  prohibited  by  statute,  unless  the  statute  renders 
the  contract  absolutely  void. 

(2)  Common  law  prohibitions. 

(3)  Those  against  public  policy. 

Where  the  consideration  is  illegal  in  whole  or  in  part  it  is 
a  defense  against  the  entire  note  while  in  the  hands  of  an  imme- 

43  Angler    v.    Brewster,    69    Ga.  ***  Edwards   v.    Porter,   42   Tenn. 

362;   Hickson   v.    Earley,  62   S.    C.  (2  Cold.)   42. 

42,   39   S.   E.  782;   Clarion   Second  45  Rgddick    v.    Mackler,    23    Fla. 

Nat.  Bank  v.  Morgan,  165  Pa.  St.  335.   2    So.   698;    Hinton    v.    Scott, 

199,  30  Atl.  957,  44  Am.   St.   Rep.  Dud.    (Ga.)    245;    Stocks   v.    Scott, 

652.  188  111.  266,  58  N.  E.  990. 

43  Russ  Lumber  Co.  v.  Muscupi-  ^oa  -^^g    j^gj.    l^^^   §  28. 

able  L.  &  W.  Co.,  120  Cal.  521,  52  •*«  r^ss  Lumber  etc.  Co.  v.  Mus- 

Pac.    995,    65    Am.    St.    Rep.    186;  cupiable  L.  &  W.  Co..  120  Cal.  52; 

Cook  V.  Mi.x,  11  Conn.  432;  Journal  Ingersoll  v.   Martin,  58  Md.  67,  42 

Printing  Co.  v.  Maxwell,  1  Pennew.  Am.  Rep.  322. 

(Del.)  511,  43  Atl.  615;  Wadsworth  47  Morrison  v.  Farmers'  &  Mer- 

V.     Smith,    10    Shep.     (Me.)     500;  chants'  Bank,  9  Okla.  697,  60  Pac. 

Truesdale  v.  Watts,  12  Pa.  St.  73.  275 ;  Trustees  v.  Hill,  12  la.  462. 


§  147  PERSONAL  DEFENSES  OR  EQUITIES.  181 

diate  party  or  one  who  is  not  a  bona  fide  holder  for  value  with- 
out notice.  In  general,  the  consideration  for  a  bill  is  illegal  when 
it  is  wholly  or  in  part  immoral,  contrary  to  public  policy,  or 
forbidden  under  penalties  by  statute.'** 

A  distinction  is  to  be  made  between  a  consideration  simply 
illegal  and  one  which  by  statute  expressly  makes  an  instrument 
void.  In  the  former  case  a  bona  fide  transferee  may  recover, 
though  not  in  the  latter."*^ 

Where  an  instrument  is  given  for  a  consideration  which  the 
statute  expressly  makes  void,  the  party  wlio  gave  the  paper  may 
set  it  up  as  a  defense  against  all  the  holders  whether  immediate 
or  remote,  but  the  holder  can  sue  the  indorser.^**  It  is  no  longer 
customary  by  law  to  make  notes  expressly  void  by  statute,  and 
where  such  statutes  do  exist  a  clause  frequently  saves  the  rights 
of  innocent  holders,  but  this  is  not  always  the  case.  The  holder 
of  commercial  paper  is  prima  facie  presumed  to  be  an  innocent 
holder  for  value,  but  where  there  is  evidence  affecting  the  bill 
or  note  with  fraud  or  illegality,  the  burden  of  proof  is  shifted 
to  the  holder  to  show  that  he  is  an  innocent  holder  for  value.^^ 
In  case  the  holder  can  show  that  he  paid  full  value  the  defend- 
ant must  then  show  that  the  holder  had  notice  of  the  fraud  or 
illegality.  So  it  is  held  that  where  the  holder  has  in  good  faith 
given  part  value  he  ma;^  recover  to  a  like  amount. 
Commercial  paper  based  upon  considerations  which  contravene 
public  policy  are  void.^^  Among  such  considerations  is  that  for 
the  purchase  and  sale  of  so-called  "Bohemian  Oats"  at  an  ex- 
orbitant price.®^ 

Where  one  gives  a  note  to  another  and  for  the  reason  that 
the  other  has  committed  a  crime  or  will  commit  a  crime — such 

48  Bell  v.  Putnam,  123  Cal.  134,  ningham  v.  Bank,  71  Ga.  400,  51 
55   Pac.  773;   Baker  v.   Parker,  23       Am.  Rep.  266. 

Ark    390;    Dickson    v.    Kittson,    75  ^i  Farmers'   &   Citizens'    Bank  v. 

Minn.   168,  77  N.  W.  820,   74  Am.  Noron,    45    N.    Y.    762;    Davis    v. 

St.  Rep.  447 ;  Irwin  v.  Margaret,  25  Bartlett,   12   Ohio   St.   584,  80  Am. 

Ind.  App.  383,  59  N.  E.  38.  Dec.  375;   Nickerson   v.   Ruger,   76 

49  Robinson     v.      Coleman,      141  N.  Y.  279. 

Mass.  231,  4  N.  E.  619,  55  Am.  Rep.  53  Yeats  v.  Williams,  5  Ark.  684; 

471 ;  Ferris  v.  Tavel,  87  Tenn.  386,  Ball   v.    Putnam,    123    Cal.    134,   55 

11  S.  W.  93,  3  L.  R.  A.  414;  Wood-  Pac.   773;   Stoutenberg   v.   Lyband, 

son  v.  Barrett,  2  Hen  &  M.  80,  3  13  Ohio  St.  228;  Meachem  v.  Dow, 

Am.  Dec.  612;  Snoddy  v.  Bank,  88  32  Vt.  721. 

Tenn.  573,  13  S.  W.   127,  7  L.  R.  53  Schmueckle  v.  Waters,  125  Ind. 

A.   705.  265,  25  N.  E.  281;   Payne  v.  Rau- 

50  Snoddy  v.  Bank,  88  Tenn.  573,  binck.  82  la.  587,  48  N.  W.  995 ; 
13  S.  W.  127,  7  L.  R.  A.  705;  Merrill  v.  Parker,  80  la.  542,  45 
Morton  v.  Fletcher,  2  A.  K.  Marsh  N.  W.  1076. 

(Ky.)  137,  12  Am.  Dec.  366;  Cun- 


182  NEGOTIABLE    INSTRUMENTS.  §  148 

note  is  a  violation  of  the  common  law  and  there  can  be  no  recov- 
ery on  it,  that  is,  it  is  a  personal  defense  which  can  be  set  up.^* 

§  148.  Payment.  Payment  in  due  course  is  the  discharge  of 
the  instrument  and  is  a  good  defense,^^  but  payment  by  one 
secondarily  liable  is  not  a  discharge  of  the  instrument.'® 

If  a  person  makes  an  instrument  and  it  becomes  due  and  pay- 
ment is  made,  then  it  is  discharged,  but  if  he  purchases  the  in- 
strument and  it  is  not  intended  as  in  payment,  it  is  not  discharged. 

54  Barker  V.  Parker,  23  Ark.  390;         seMorgan  v.  Rentzel,   7  Cranch. 

Baker  v.  Farris,  61  Mo.  389.  273 ;   West   Boston's   Sav.    Bank   v. 

55Swope  V.  Ross,  40  Pa.  St.  186;  Thompson,   124  Mass.  506;   Gallon 

Ballard  v.  Greenbush,  24  Me.  336;  v,  Lawrence,  3  Maule  &  S.  95, 
Gardner  v-  Maynard,  7  Allen  456. 


CHAPTER  XVI. 
PRESENTMENT,  NOTICE  OF  DISHONOR  AND  PROTEST. 


i  149.  Meaning  of  terms. 

150.  In    general. 

151.  Presentment    for    acceptance 

— When  essential. 

152.  Presentment    for    acceptance 

— Benefit. 

153.  Presentment    for    acceptance 

— Time. 

154.  When  instrument  dishonored 

by   non-acceptance. 

155.  Presentment    for    payment — 

In  general. 

156.  Presentment    for    payment — 

When  essential. 

157.  Presentment    for    payment — 

When   dispensed   with. 

158.  Presentment    for    payment — 

What  sufficient. 

159.  Presentment    for    payment — 

Date. 

160.  Presentment    for    payment — 

When  delay  excused. 

161.  Presentment    for    payment — 

Place. 

162.  Presentment    for    payment — 

To  whom. 

163.  Presentment    for    payment — 

Effect  of  failure  to  present. 

164.  When  instrument  dishonored 

by  non-payment. 


§  165.  Notice  of  dishonor — In  gen- 
eral. 

166.  Notice     of      dishonor — Con- 

tents. 

167.  Notice       of       dishonor — By 

whom   given  and   when   to 
be  given. 

168.  Notice       of       dishonor — To 

whom    given. 

169.  Notice  of  disnonor — Time  of. 

170.  Notice  of  dishonor — Place  of 

sending. 

171.  Notice    of    dishonor — Notice 

through  postoffice. 

172.  Notice    bf    dishonor — When 

notice  unnecessary. 

173.  Notice  of  dishonor — Excuses 

for  failure. 

174.  Notice     of     dishonor — Effect 

of   notice  as   to  prior  and 
subsequent  parties. 

175.  Protest— Method  of. 

176.  Protest — Purpose. 

177.  Protest— Notice. 

178.  Protest— What      should      be 

protested. 

179.  Protest— Waiver. 

180.  Protest — Miscellaneous    mat- 

ters. 


§  149.  Meaning  of  terms.  By  Presentment  is  meant  the 
production  of  a  bill  of  exchange  to  the  drawee  for  his  acceptance, 
or  to  the  drawee  or  acceptor  for  payment ;  or  the  production  of 
a  promissory  note  to  the  party  liable  for  payment  of  the  same.-"- 

By  Protest  is  meant  a  formal  statement  in  writing  made  by  a 
notary  under  his  seal  of  office,  at  the  request  of  the  holder  of  a 
bill  or  note,  in  which  it  is  declared  that  the  same  was  on  a  certain 
day  presented  for  payment  (or  acceptance,  as  the  case  may  be), 
and  that  such  payment  (or  acceptance)  was  refused,  whereupon 

1  Windham  Bank  v.  Norton,  22  Mete.  (Mass.)  216;  Fiske  v.  Beck- 
Conn.  213,  56  Am.  Dec.  397;  Fall  with,  19  Vt.  315,  46  Am.  Dec.  174. 
River   Union   Bank   v.   Willard,   5 

183 


184  NEGOTIABLE   INSTRUMENTS.  §  149 

the  notary  protests  against  all  parties  to  such  instrument,  and 
declares  that  they  will  be  held  responsible  for  all  loss  or  damage 
arising  from  its  dishonor.^ 

By  Notice  of  Dishonor  is  meant  a  notification  to  the  parties  on 
an  instrument  whom  it  is  desired  to  hold  liable  on  such  instru- 
ment. If  such  notice  were  given  by  a  notary  it  would  be  called 
a  protest.  When  a  negotiable  bill  or  note  is  dishonored  by  non- 
acceptance  on  presentment  for  acceptance,  or  by  non-payment 
at  its  maturity,  it  is  the  duty  of  the  holder  to  give  immediate 
notice  of  such  dishonor  to  the  drawer,  if  it  be  a  bill,  and  to  the 
indorser,  whether  it  be  a  bill  or  note.^ 

§  150.     In  general.     We  shall  now  consider  the  matter  of 

presentment  and  notice  of  dishonor.  What  was  the  contract  of 
the  drawer  and  the  indorser?  He  says,  "I  will  pay  this  instrument 
if  you  present  the  instrument  to  the  parties  to  whom  it  should 
be  presented  and  by  whom  it  should  be  accepted,  and  if  they  do 
not  pay  it  or  accept  it,  I  will  pay  it,  but  my  contract  is  that  it 
must  be  presented  to  them  first."  Now,  if  it  is  not  shown  that  the 
instrument  was  presented  for  acceptance  or  payment  then  he  will 
not  be  liable  on  it.  These  things  may  be  waived  by  contract,  but 
when  not  waived  they  must  be  established.  Presentment  for 
acceptance  or  presentment  for  payment  must  be  made  in  order  to 
hold  certain  parties  on  the  instrument  because  that  is  the  con- 
tract they  enter  into. 

As  to  presentment  for  payment  the  contract  of  the  drawer 
is  that  he  will  pay  the  instrument  providing  the  acceptor  does  not, 
and  he  is  duly  notified  of  that  fact.*  The  indorser  makes  the 
same  contract  with  his  subsequent  indorsers.  He  says,  "You 
notify  me  of  the  fact  that  the  drawee  does  not  pay  that  instru- 
ment and  I  will  pay  it."  Therefore,  if  we  are  going  to  hold  the 
indorsers,  we  must  perform  our  part  of  the  contract.**  The  in- 
strument may  be  dishonored  for  failure  to  accept  also.* 

^Ocoll     Bank     v.     Hughes,     42  Am.  Dec.  707;  In  re  Leeds  Bank- 

Tenn.     (Coldw.)    52;    Williams    v.  ing  Co.,  L.  R.  I.  Eq.  1. 

Parks,  63  Neb.  747,  89  N.  W.  395,  *  Los  Angeles  Nat.  Bank  v.  Wal- 

56  L.  R.  A.  759 ;  Anville  Nat.  Bank  lace,    101    Cal.    478,    36    Pac.    197 ; 

V.    Keltering,    106   Pa.   St.   531,   51  Baxter  v.  Graves,  2  A,  K.  Marsh 

Am.  Rep.  536.  (Ky.)   152,  12  Am.  Dec.  374;  Cru- 

3Jagger  v.   Nat.   German-Ameri-  ger   v.    Armstrong,    3   Johns.    Cas. 

can    Bank,    53   Minn.   386;    Juniata  (N.  Y.)  5,  2  Am.  Dec.  126.    As  to 

Bank  v.   Hale,    16   S.   &   R.    (Pa.)  presentment,  demand  and  notice  in 

157,    16   Am.    Dec.   558;    Brown   v.  general,  see  note  2  U.  S.  L.  Ed.  102. 

Ferguson,    4    Leigh    (Va.)    37,    24  5  Wilmington  Bank  v.  Cooper,   1 

99  la.   162,  68  N.  W.  677,  61  Am.  Han.  (Del.)   10;  Leonard  v.  Olson, 

St.  Rep.  230,  35  L.  R.  A.  381 ;  Pis-  « Bolton     v.     Harrod,     9     Mart, 

cataqua  Exch.  Bank  v.  Carter,  20  N.  (La.)  326,  13  Am.  Dec.  300;  Turner 

H.  246,  51  Am.  Dec.  217.  v.  Greenwood,  9  Ark.  44;  Hymar 


§§  151-153  PRESENTMENT — NOTICE  OF  DISHONOR.  185 

§  151.  Presentment  for  acceptance — When  essential.  In  a 
previous  chapter  we  have  discussed  acceptance^ 

We  shall  now  consider  presentment  for  acceptance.  In  certain 
cases  presentment  for  acceptance  is  not  essential,  and  in  others  it 
is.  In  those  jurisdictions  where  days  of  grace  are  recognized  a 
bill  payable  at  sight  must  be  presented  for  acceptance.  A  bill 
payable  after  sight,  say  five  days  after  sight,  should  be  presented 
for  acceptance  and  then  after  that  for  payment.*  So  many  days 
after  demand  requires  presentment  for  acceptance. 

The  Negotiable  Instruments  Law  provides : 

"Presentment  for  acceptance  must  be  made: 

1.  Where  the  hill  is  payable  after  sight,  or  in  any  other  case, 
where  presentment  for  acceptance  is  necessary  in  order  to  fix  the 
maturity  of  the  instrument ;  or, 

2.  Where  the  bill  expressly  stipulates  that  it  shall  be  presented 
for  acceptance;  or,        / 

3.  Where  the  bill  is  drawn  payable  elsewhere  than  at  the  resi- 
dence or  place  of  business  of  the  drawee. 

In  no  other  case  is  presentment  for  acceptance  necessary  in 
order  to  render  any  party  to  the  bill  liable."^ 

Where  a  bill  is  payable  at  a  day  certain  or  at  a  fixed  time  after 
its  date  it  need  not  be  presented  for  acceptance,  but  the  holder 
may  so  present  it,  and  if  acceptance  be  refused,  he  may  treat 
the  bill  as  dishonored."* 

§  152.  Presentment  for  acceptance — Benefit.  What  is  the 
benefit  of  presentment  for  acceptance?  A  draws  on  B  in  favor 
of  C.  Well,  you  can  see  it  is  an  advantage  to  A  if  C  notifies 
him  that  B  refuses  to  accept  that  instrument.  A  knows  he  must 
take  care  of  himself  in  regard  to  B,  and  it  helps  C  because  it 
makes  him  know  where  he  must  look  for  his  money,  that  is,  to  A. 

§  153.  Presentment  for  acceptance— Time.  The  time  for 
presentment  is  in  a  reasonable  time.^**    The  hour  of  the  day  for 

V.  Sheldon,  12  Wend.  (N.  Y.)  439,  640.    As  to  presentment  of  demand 

27  Am.  Dec.  137.  notes  to  hold  indorsers,  see  28  U. 

»  See  Chapter  VIII,  supra.  S.  L.   Ed.   1044. 

8  Oleson  V.  Wilson,  20  Mont.  544,  »  Neg.    Inst.    Law.    §143,    where 

52  Pac.  272,  63  Am.  St.  Rep.  639;  all  cases  directly  or  indirectly  bear- 

Aymar  v.   Beers,  7  Cow.    (N.  Y.)  ing   upon    or    citing    the    Law    are 

705,    17   Am.    Dec.    538;    Brown   v.  grouped. 

Turner     11    Ala.    752;    Mitchell    v.  »» National  Park  Bank  v.  Saitta, 

Degrand,  1  Mason   (U.  S.)   176,  17  127  App.  Div.  (N.  Y.)  624,  111  N. 

Fed.    Cas.    No.    9,661 ;    Kampmann  Y.  Supp.  927. 

V.  Williams,  70  Tex.  568,  8  S.  W.  lo  phoenix  Ins.  Co.  v.  Allen,  11 
310.  As  to  necessity  to  present  for  Mich.  501,  83  Am.  Dec.  756;  Thorn- 
acceptance,  see  note  1  U.  S.  L.  Ed.  burg  v.  Emmons,  23  W.  Va.  325; 


186  NEGOTIABLE    INSTRUMENTS.  §  154 

presentment,  if  you  are  presenting  it  to  a  business  man,  is  at 
his  office  during  his  office  hours.**  You  apply  your  common  sense 
as  to  the  time  of  day  for  the  presentment. 

The  Negotiable  Instruments  Law  has  the  following  provisions 
covering  this  subject: 

"Except  as  herein  otherzvise  provided,  the  holder  of  a  hill 
which  is  required  by  the  next  preceding  section  to  be  presented 
for  acceptance  must  either  present  it  for  acceptance  or  negotiate 
it  within  a  reasonable  time.  If  he  fail  to  do  so,  the  drawer  and 
all  indorsers  are  discharged. "^^ 

This  section  also  states  the  rule  at  common  law. 

"A  hill  may  be  presented  for  acceptance  on  any  day  on  which 
negotiable  instruments  may  he  presented  for  payment  under  the 
provisions  of  sections  seventy-two  and  eighty-five  of  this  act. 
When  Saturday  is  not  othcrzmse  a  holiday,  presentment  for 
acceptance  may  he  made  before  twelve  o'clock,  noon,  on  that 
day."^^ 

In  some  jurisdictions  the  last  sentence  is  omitted  and  in  still 
others  there  are  some  changes. 

Another  section  of  the  Negotiable  Instruments  Law  provides 
as  follows: 

"Where  the  holder  of  a  bill  drawn  payable  elsewhere  than  at 
the  place  of  business  or  the  residence  of  the  drawee  has  not  time 
with  the  exercise  of  reasonable  diligence  to  present  the  hill  for 
acceptance  before  presenting  it  for  payment  on  the  day  that  it 
falls  due,  the  delay  caused  by  presenting  the  bill  for  acceptance 
before  presenting  it  for  payment  is  excused  and  does  not  dis- 
charge the  drawers  and  indorsers."^'* 

§  154.     When  instrument  dishonored  by  non-acceptance.  As 

to  when  an  instrument  is  dishonored  by  non-acceptance  the  Nego- 
tiable Instruments  Law  provides : 

"A  bill  is  dishonored  by  non-acceptance:  (1)  When  it  is  duly 
presented  for  acceptance,  and  such  an  acceptance  as  is  prescribed 
by  this  act  is  refused  or  cannot  be  obtained;  (2)  When  present- 
ment for  acceptance  is  excused  and  the  bill  is  not  accepted."^^ 

Bolton   V.   Harrod,   9   Mart.    (La.)  ^^'Neg.    Inst.    Law,    §146,    where 
326,    13    Am.    Dec.    306;    Aymar   v.  all  cases  directly  or  indirectly  bear- 
Beers,  7  Cow.  (N.  Y.)  705,  17  Am.  ing    upon    or    citing   the    Law    are 
Dec.    538 ;    Jordan    v.    Wheeler,    20  grouped. 
Tex.  698.  14  ^gg.    Inst.   Law,    §  147,    where 

**  Nelson    v.    Fotterall,    7    Leigh  all  cases  directly  or  indirectly  bear- 

(Va.)    179;    Parker    v.    Gordon,    7  ing    upon    or    citing    the    Law    are 

East.  385,  6  Esp.  41  grouped. 

12  Neg.  Inst.  Law.  §  144,  where  *s  Neg.  Inst.  Law,  §  149,  where  all 
all  cases  directly  or  indirectly  bear-  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are  ing  upon  or  citing  the  Law  are 
grouped.  grouped. 


§  155  PRESENTMENT — NOTICE  OF  DISHONOR.  187 

"Where  a  bill  is  duly  presented  for  acceptance  and  is  not  ac- 
cepted within  the  prescribed  time,  the  person  presenting  it  must 
treat  the  bill  as  dishonored  by  non-acceptance,  or  he  loses  the 
right  of  recourse  against  the  drawer  and  indorsers."'^^ 

"When  a  bill  is  dishonored  by  non-acceptance  an  immediate 
right  of  recourse  against  the  drazvcrs  and  indorsers  accrues  to 
the  holder,  and  no  presentment  for  payment  is  ticcessary."^'^ 

§  155.  Presentment  for  payment — In  general.  The  engage- 
ment  entered  into  by  the  acceptor  of  a  bill  and  the  maker  of  a 
note  is,  that  it  shall  be  paid  at  its  maturity — that  is,  on  the  day 
that  it  falls  due,  and  at  the  place  specified  for  payment,  if  any 
place  be  designated — upon  its  presentment.-*^^  This  engagement 
is  absolute,  but  that  of  the  drawer  of  a  bill  and  the  indorser  of  a 
bill  or  note  is  conditional  and  contingent  upon  the  true  present- 
ment at  maturity,  and  notice  in  case  it  is  not  paid.-^'* 

It  is  not  necessary  that  a  presentment  for  payment  should  be 
personal.  It  is  sufficient  if  made  at  the  place  specified  in  the 
instrument,^**  or  personally  if  the  maker  or  acceptor  waives  his 
right  of  having  it  made  at  the  place  stipulated  in  the  contract,*^ 
or,  if  no  place  is  specified  in  the  instrument,  then  if  made  at  the 
place  of  business  or  residence  of  the  maker  or  acceptor.^^ 

It  is  provided  in  the  Negotiable  Instruments  Law  as  follows : 

"The  drazver  of  a  bill  and  any  indorser  may  insert  thereon  the 
name  of  a  person  to  zvhom  the  holder  may  resort  in  case  of  need, 
that  is  to  say,  in  case  the  bill  is  dishonored  by  non-acceptance  or 
non-payment.    Such  person  is  called  the  referee  in  case  of  need. 

18  Neg.    Inst.   Law,    §  150,    where  grace,  see  note  6  U.  S.  L.  Ed.  512. 

all  cases  directly  or  indirectly  bear-  20-Wolfe  v.   Jewett,   10  La.  383; 

ing    upon    or    citing    the    Law    are  Goodloe    v.    Godley,    13    Sm.   &   M. 

grouped.  (Miss.)    233;    Brownell    v.    Freese, 

17  Neg.    Inst.   Law,    §  151,    wliere  35  N.  J.  L.  285,  51   Am.  Dec.  150, 

all  cases  directly  or  indirectly  bear-  10    Am.    Rep.    239;    McKenney    v. 

ing;   upon    or    citing    the    Law    are  Whipple,   21    Me.    98;    Freeman    v. 

rrrouped.  Curran,  1  Minn.  161. 

'  18  Cox  V.   Nat.   Bank,   100  U.   S.  21  King  v.   Crowell,  61    Me.  244, 

712;   Jeune  v.   Ward,    1    B   &   Aid.  14    Am.    Rep.    560;    Townsend    v. 

653 ;  Snope  v.  Ross,  40  Pa.  St.  186,  Chas.  H.   Heer  Dry  Goods  Co.,  85 

80  Am.  Dec.  567.  Mo.  503;   King  v.   Holmes,   11   Pa. 

1^ Johnson  v.  Zeckendorf  (Ariz.  St.  456. 
1886),  12  Pac.  65;  Jones  v.  Robin-  22  sharnburgh  v.  Cemmagere,  10 
son,  11  Ark.  504,  54  Am.  Dec.  212;  Mart.  (La.)  18;  Simmons  v.  Bet., 
Grange  v.  Reigh.  93  Wis.  552.  As  35  Mo.  461 ;  Sussex  Bank  v.  Bald- 
to  demand  as  against  maker  of  win,  17  N.  J.  L.  487;  Oxnard  v. 
note  or  acceptor  of  bill,  see  note  Varnum,  111  Pa.  St.  193,  2  Atl.  224, 
6  U.  S.  L.  Ed.  443.  As  to  usage  56  Am.  Rep.  255.  As  to  banking* 
or  custom  as  controlling  and  vary-  customs  as  to  demand  and  notice, 
ing    demand,    notice    and    days    of  sec  note  21  L.  R.     A.  441. 


188  NEGOTIABLE    INSTRUMENTS.  §  156 

It  is  in  the  option  of  the  holder  to  resort  to  the  referee  in  case  of 
need  or  not,  as  he  may  see  fit."^^" 

The  usual  form  is  "In  case  of  need,  apply  to  Messrs.  C.  and 
D.  at  E."  If  the  referee  pays  the  bill  the  drawer  will  be  liable 
to  him  for  the  amount.    The  provision  is  seldom  inserted  in  bills. 

§  156.     Presentment  for  payment — When  essential.     As  to 

when  presentment  for  payment  is  essential  the  law  generally  is 
as  set  out  in  the  Negotiable  Instruments  Law  which  provides  as 
follows : 

"Presentment  for  payment  is  not  necessary  in  order  to  charge 
the  person  primarily  liable  on  the  instrument ;  but  if  the  instru- 
ment is,  by  its  terms,  payable  at  a  special  place,  and  he  is  able 
and  willing  to  pay  it  there  at  maturity,  such  ability  and  willing- 
ness are  equivalent  to  a  tender  of  payment  upon  his  part.  But 
except  as  herein  otherivise  provided,  presentment  for  payment  is 
necessary  in  order  to  charge  the  drawer  and  indorsers."^^ 

Some  jurisdictions  have  made  some  changes  in  the  above  sec. 
tion  of  the  law,  for  example,  in  Illinois  the  words  "except  in  ca.se 
of  bank  notes"  are  interpolated  after  the  words  "primarily  liable" 
on  the  instrument ;  in  Wisconsin  all  after  the  words  "primarily 
liable"  in  the  first  sentence  to  the  end  of  that  sentence  are  omit- 
ted ;  in  Kansas,  New  York  and  Ohio  the  words  "and  has  funds 
there  available  for  that  purpose"  have  been  interpolated  after 
the  word  "maturity"  in  the  first  sentence.  The  words  added  by 
these  three  states  seem  superfluous,  however. 

It  has  been  urged  against  the  above  section  of  the  law  that  it 
changes  the  law  in  a  number  of  the  states  as  to  certificates  of 
deposit  and  bank  notes  and  that  it  should  be  amended  to  except 
them  from  under  the  sections,  since  as  it  stands,  the  statute  of 
limitations  would  begin  to  run  from  date,  which  is  contrary  to 
business  custom  and  the  language  of  such  instruments. 

"Presentment  for  payment  is  not  required  in  order  to  charge 
the  drawer  where  he  has  no  right  to  expect  or  require  that  the 
drawee  or  acceptor  zvill  pay  the  instrument. "^^ 

That  the  drawer  of  a  bill  has  no  funds  in  the  hands  of  the 
drawer  will  not  excuse  failure  to  make  presentment  and  notice 
of  non-payment,  particularly  when  provision  has  been  made  for 

^*  Neg.   Inst.   Law,   §  131,   where  paper   held   as   collateral   or   condi- 

all  cases  directly  or  indirectly  bear-  tional   payment,   see   note  68  L.   R. 

ing    upon    or    citing    the    Law   are  A.    487. 

grouped.  24  Neg.    Inst.    Law,    §  79.    where 

23  Neg.  Inst.  Law,  §70,  where  all  all  cases  directly  or  indirectly  bear- 
cases    directly    or    indirectly    bear-  ing    tpon    or    citing    the    Law    are 
ing    upon    or    citing    the    Law    arc  grouped, 
grouped.    As  to  presentment  when 


§§  157-158  PRESENTMENT — NOTICE  OF  DISHONOR.  189 

payment  of  any  bill  drawn  by  the  drawer  on  the  drawee.^'  But 
presentment  is  not  required  to  charge  the  drawer  of  a  check  upon 
which  payment  has  been  stopped  ;^^*  and  presentment  of  a  check 
is  excused  where  the  making  of  a  check  was  a  fraud  upon  the 
part  of  the  drawer,  he  having  no  funds  in  the  bank,  and  no  ground 
for  a  reasonable  expectation  that  it  would  be  paid.*^'' 

And  "presentment  for  payment  is  not  required  in  order  to 
charge  an  indorser  where  the  instrument  was  made  or  accepted 
for  his  accommodation,  and  he  has  no  reason  to  expect  that  the 
instrument  will  be  paid  if  presented."^^ 

The  Illinois  act  omits  everything  after  the  words  "for  his  ac- 
commodation." 

It  is  not  necessary  under  this  section  that  a  loan  for  which 
notes  were  given  should  have  been  made  for  the  sole  accommoda- 
tion of  an  indorser  but  it  is  enough  if  it  was  only  partly  for  his 
benefit,.*®*  And  where  the  instrument  is  made  for  the  accom- 
modation of  the  indorser,  and  he  promises  the  maker  to  "take  care 
of  it,"  presentment  and  notice  of  dishonor  are  not  necessary.**" 

§  157.     Presentment  for  payment — When   dispensed   with. 

Presentment  for  payment  may  be  dispensed  with  as  set  out  by 
the  terms  of  the  Negotiable  Instruments  Law  which  provides : 

"Presentment  for  payment  is  dispensed  with:  (1)  Where  after 
the  exercise  of  reasonable  diligence  presentment  as  required  by 
this  act  cannot  be  made;  (2)  where  the  drawee  is  a  fictitious 
person;  (3)  by  waiver  of  presentment  express  or  implied."^"^ 

§  158.  Presentment  for  payment — What  sufficient.  As  to 
what  constitutes  a  sufficient  presentment  the  Negotiable  Instru- 
ments Law  provides : 

"Presentment  for  payment,  to  be  sufficient,  must  be  made'- 
(1)  By  the  holder,  or  by  some  person  authorised  to  receive  pay- 
ment on  his  behalf ;  (2)  at  a  reasonable  hour  on  a  business  day; 
(3)  at  a  proper  place  as  herein  defined;  and  (4)  to  the  person 
primarily  liable  on  the  instrument,  or  if  he  is  absent  or  inacces- 
sible, to  any  person  found  at  the  place  where  the  presentment  is 
mad'e."^^ 

25Simonoff  v.  Granite  City  Nat.  ^e^  Berger  v.  Trimble  (Md.),  101 

Bank,  279  111.  246,   116  N.  E.  6Z6.  A.  137. 

25«Sibree    v.    Thomas,    166    111.  26b  Dillon  v.  Brion,  96  Kan.   189, 

App.  422.  150  P.  553. 

25b  Beaureguard      v.      Knowlton,  27  jsjeg.    Inst.    Law,    §  82,    where 

156  Mass.  395.  all  cases  directly  or  indirectly  bear- 

2eNeg.    Inst.    Law,    §    80,    where  ing    upon    or    citing    the    Law    are 

all  cases  directly  or  indirectly  bear-  grouped. 

ing   upon    or    citing    the    Law    are  28  ^gg.    Inst.    Law,    §  72,    where 

grouped.  all  cases  directly  or  indirectly  bear- 


190  NEGOTIABLE    INSTRUMENTS.  §^59 

"The  instrument  must  he  exhibited  to  the  person  from  whom 
payment  is  demanded,  and  when  it  is  paid  must  be  delivered  to 
the  party  paying  it."^'^ 

This  section  does  not  change  the  law  but  states  an  old  estab- 
lished rule  of  law.  The  reason  of  the  rule  is  plain  and  is  neces- 
sary in  order  that  the  drawer  or  acceptor  may  be  able  to  judge 
of  the  genuineness  of  the  instrument ;  of  the  right  of  the  holder 
to  receive  payment ;  and  that  he  may  immediately  reclaim  posses- 
sion upon  paying  the  amount.^*** 

A  mere  informal  talk  asking  payment  of  a  note,  not  accom- 
panied with  a  presentment  of  it  or  intended  as  a  formal  present- 
ment and  demand,  is  not  sufficient  to  put  the  note  in  dishonor  ;**'* 
and  a  demand  over  the  telephone  is  not  a  sufficient  presentment 
to  charge  the  indorser  unless  the  maker  waives  the  right  to  ask 
for  an  exhibition  of  the  note.^"° 

Since  formal  demand  is  required  only  in  order  to  charge  the 
parties  secondarily  liable,  it  follows  that  any  reasonable  request 
to  pay  a  demand  note  with  a  clause  for  attorney's  fees,  is  suf- 
ficient to  put  the  maker  in  default  if  he  fails  to  discharge  the 
obligation ;  the  maker  waives  exhibition  of  the  note  by  not  asking 
for  it  and  refusing  payment  on  the  ground  that  he  did  not  have 
the  money  and  needed  the  sum  to  support  his  family.^"" 

§  159.  Presentment  for  payment— Date.  In  ascertaining 
the  proper  date  for  presentment  the  day  of  the  date  is  excluded 
so  where  the  paper  is  payable  one  year  from  date  it  will  mature 
on  the  first  anniversary  of  that  date.  The  Negotiable  Instruments 
Law  provides : 

"Where  the  instrument  is  payable  at  a  fixed  period  after  date, 
after  sight,  or  after  the  happening  of  a  specified  event,  the  time 
of  payment  is  determined  by  excluding  the  day  from  zvhich  the 
time  is  to  begin  to  run,  and  by  including  the  date  of  payment."^** 

Thus  in  an  instrument  payable  so  many  days  after  sight,  or 
after  date,  the  day  of  sight  or  date  is  excluded  and  the  day  of 
payment  included  in  the  computation.^* 

ing   upon    or    citing    the    Law    are  v.    Kennedy,    145    App.    Div.    669, 

grouped.     As   to   necessity   of   act-  130  N.  Y.  Supp.  412. 

ual  presentment  to  effect  dishonor,  29o  Gilpin   v.    Savage,    201    N.   Y. 

see  note  13  L.  R.  A.   (N.  S.)   303.  167,  94  N.  E.  656. 

2»  Neg.  Inst.  Law,  §  74,  where  all  ^Od  Hodge   v.    Blaylock,    82    Ore. 

cases    directly    or    indirectly    bear-  179,  161  Pac.  396. 

ing   upon    or    citing    the    Law    are  30  N^g     jnst.    Law,    §  86,    where 

grouped.  all  cases  directly  or  indirectly  bear- 

29a  Waring   v.    Betts,   90   Va.   46,  ing    upon    or    citing    the    Law    are 

51.  grouped. 

s*"*  State  of  New  York  Nat.  Bank  »!  Mitchell  v.  Degrand,  1  Mason 


§  160  PRESENTMENT — NOTICE  OF  DISHONOR.  191 

A  note  dated  November  8,  1922,  and  payable  twelve  months 
after  date  should  be  presented  November  8,  1923,  and  not  No- 
vember 9,  1923. 

Another  provision  relating  to  the  date  of  presentment  is  the 
following : 

"Where  the  instrument  is  not  payable  on  demand,  presentment 
must  be  made  on  the  day  it  falls  due.  Where  it  is  payable  on 
demand,  presentment  must  be  made  within  a  reasonable  time 
after  its  issue,  except  that  in  the  case  of  a  bill  of  exchange,  pre- 
sentment for  payment  will  be  sufficient  if  made  within  a  reason- 
able time  after  the  last  negotiation  thereof. "^^ 

Presentment  for  payment  cannot  be  made  on  a  Sunday  or 
legal  holiday,  and  if  the  note  matures  on  a  holiday  or  Sunday, 
since  the  maker'*  cannot  be  compelled  to  pay  sooner  than  he 
had  promised,  the  note  or  bill  will  have  to  be  presented  on  the 
next  business  day. 

Th  Negotiable  Instruments  Law  provides : 

"Every  negotiable  instrument  is  payable  at  the  time  fixed  there- 
in without  grace.  When  the  day  of  maturity  falls  upon  Sunday, 
or  a  holiday,  the  instrument  is  payable  on  the  next  succeeding 
business  day.  Instruments  falling  due  on  Saturday  are  to  be 
presented  for  payment  on  the  next  succeeding  business  day,  ex- 
cept that  instruments  payable  on  demand  may,  at  the  option  of 
the  holder,  be  presented  for  payment  before  twelve  o'clock  noon 
on  Saturday  when  that  entire  day  is  not  a  holiday. "^"^ 

Several  changes  have  been  made  in  this  section  in  many  juris- 
dictions and  these  should  be  read  as  they  are  set  out  in  the 
annotations  in  another  part  of  this  treatise. 

By  usage  the  banks  in  some  states  give  notice  to  the  promisor 
a  few  days  before  maturity  of  the  fact  that  the  paper  will  be 
due  on  a  named  day,  and  it  has  been  held  that  this  preliminary 
notice  will  take  the  place  of  a  formal  presentment  on  the  day 
of  maturity. 

§  160.  Presentment  for  payment — When  delay  excused.  As 
to  when  delay  in  making  presentment  for  payment  is  excused  the 

(U.  S.)  176,  17  Fed.  Cas.  No.  9,661 ;  33  Neg.  Inst.  Law,  §  194  and  §  85 

Coleman   v.   Sayer,   1   Barn.   K.   B.  where    all    cases     directly    or    in- 

303.  directly  bearing  upon  or  citing  the 

31*  Lewry  v.  Wilkinson,   135  La.  Law  are  grouped. 

105.  64   So.   1003.  34  Neg.  Inst.  Law,  §  85,  where  all 

S2Neg.  Inst,  Law,  §71,  where  all  cases  directly  or  indirectly  bearing 

cases    directly    or    indirectly    bear-  upon  or  citing  the  Law  are  grouped, 
ing   upon    or    citing    the    Law   are 
grouped. 


192  NEGOTIABLE    INSTRUMENTS.  §161 

following  provision  in  the  Negotiable  Instruments  Law  sets  out 
the  law  in  general: 

"Delay  in  making  presentment  for  payment  is  excused  when 
the  delay  is  caused  by  circumstances  beyond  the  control  of  the 
holder  and  not  imputable  to  his  default,  misconduct  or  negli- 
gence. When  the  cause  of  delay  ceases  to  operate,  presentment 
must  be  made  "with  reasonable  diligence."^ 

The  above  section  follows  the  old  established  law. 

A  loss  resulting  from  the  failure  of  the  bank  at  which  the 
instrument  is  payable,  and  in  which  the  maker  or  acceptor  has 
deposited  funds  at  its  maturity  to  pay  it,  does  not  fall  upon  the 
holder  who  has  failed  to  present  the  instrument  for  payment.*^* 

It  must  be  shown  that  the  proper  steps  were  taken  as  soon  as 
the  disability  was  removed.^*" 

In  the  excuses  set  out  in  the  above  section  of  the  law  where  the 
facts  are  not  disputed  the  question  of  due  diligence  is  one  of  law 
for  the  court;  but  if  there  is  a  dispute  as  to  the  facts,  the  ques- 
tion is  for  the  jury.^^' 

§  161.  Presentment  for  payment — Place.  The  following 
provisions  are  found  in  the  Negotiable  Instruments  Law,  and 
represent  the  law  generally,  as  to  the  place  of  presentment  for 
payment : 

"Presentment  for  payment  is  made  at  the  proper  place:  (1) 
Where  a  place  of  payment  is  specified  in  the  instrument  and  it 
is  there  presented.  (2)  Where  no  place  of  payment  is  specified, 
but  the  address  of  the  person  to  make  payment  is  given  in  the 
instrument  and  it  is  there  presented.  (3)  Where  no  place  of 
payment  is  specified  and  no  address  is  given  and  the  instrument 
is  presented  at  the  usual  place  of  business  or  residence  of  the 
person  to  make  payment.  (4)  In  any  other  case  if  presented 
to  the  person  to  make  payment  wherever  he  can  be  found,  or  if 
presented  at  his  last  known  place  of  business  or  residence."^ 

"Where  the  instrument  is  payable  at  a  bank,  presentment  for 
payment  must  be  made  during  banking  hours,  unless  the  person 
to  make  payment  has  no  funds  there  to  meet  it  at  any  time  during 
the  day,  in  which  case  presentment  at  any  hour  before  the  bank 
is  closed  on  that  day  is  sufficient. "^"^ 

85  Neg.  Inst.  Law,  §  81,  where  all  ^°  Belden    v.    Lamb,    17    Conn. 

cases    directly    or    indirectly    bear-  451. 

ing    upon   or    citing    the    Law    are  ^^  Neg.    Inst.    Law,    §  73,    where 

grouped.  all  cases  directly  or  indirectly  bear- 

35a  Note  2  A.  L.  R.  1381.  ing    upon    or    citing   the    Law    are 

35"  Wilson    V.    Senier,     14    Wis.  grouped.     See  also  note  12  L.  R.  A. 

380.  727. 

^'^  Neg.  Inst.  Law,  §  75,  where  all 


§§  162-163  PRESENTMENT — NOTICE  OF  DISHONOR.  193 

§  162.  Presentment  for  payment  to  whom.  When  a  bill  is 
payable  generally  or  at  a  particular  place  no  presentment  is 
necessary  to  charge  the  acceptor,  as  it  is  his  duty  to  be  on  hand 
to  pay  or  seek  out  his  creditor  to  pay  him.** 

The  following  provisions  are  in  the  Negotiable  Instruments 
Law: 

"Where  the  person  primarily  liable  on  the  instrument  is  dead, 
and  no  place  of  payment  is  specified,  presentment  for  payment 
must  be  made  to  his  personal  representative  if  such  there  be, 
and  if  with  the  exercise  of  reasonable  diligence,  he  can  be 
found."'^ 

"Where  there  are  several  persons  not  partners,  primarily  liable 
on  the  instrument,  and  no  place  of  payment  is  specified,  present- 
ment must  be  made  to  them  all."'*^ 

"Where  the  persons  primarily  liable  on  the  instrument  arc 
liable  as  partners,  and  no  place  of  payment  is  specified,  present- 
ment for  payment  may  be  made  to  any  one  of  them,  even  though 
there  has  been  a  dissolution  of  the  firm."'^^ 

There  is  no  doubt  that  a  clerk  found  at  the  counting-room  of 
the  acceptor  or  promisor  is  a  competent  party  for  presentment 
for  payment  to  be  made  to,  without  showing  any  special  author- 
ity given  him.^  But  where  the  protest  stated  the  mere  fact 
of  presentment  "at  the  office  of  the  maker,"  it  will  be  con- 
sidered insufficient,  as  not  showing  that  the  paper  was  presented 
to  the  party  authorized  to  pay  or  refuse  payment.  A  demand 
upon  the  servant  of  the  owner  who  used  to  pay  money  for  him 
was  held  sufficient  in  England.'*^ 

§  163.  Presentment  for  payment — Effect  of  failure  to  pre- 
sent. The  maker  and  acceptor  are  bound,  although  the  bill 
or  note  be  not  presented  on  the  day  it  falls  due,"*^  and  the  only 

cases    directly    or    indirectly    bear-  ing    upon    or    citing   the    Law    are 

ing    upon    or    citing   the    Law    are  grouped. 

grouped.  As  to  parol  agreement  ■*!  Neg.  Inst.  Law,  §  77,  where  all 
as  to  place  of  demand,  when  valid,  cases  directly  or  indirectly  bear- 
see  note  7  U.  S.  L.  Ed.  65.  ing    upon    or    citing    the    Law    arc 

^  Cooperstown   Bank  v.   Woods.  grouped. 

28  N.   Y.   545;   Goodloe  v.   Godley.  42  Stewart  v.  Eden,  2  Caines  CN. 

13  Sm.  &  M.   (Miss.)   233.  51   Am.  Y.)   121;  Draper  v.  Clemens.  4  Mo. 

Dec.    150;   De  Wolf  v.   Murray,   2  52;  Stainback  v.  Clemens,  11  Gratt 

Sandf.    (N.    Y.)    166.  260. 

3®  Neg.  Inst.  Law,  §  76,  where  all  43  Bank  of  England  v.  Newman, 

cases    directly    or    indirectly    bear-  12  Mod.  241. 

ing    upon    or    citing    the    Law    are  44  C(.g|j,(,p    ^     Jeflfries,     118    Ala. 

grouped.  573,  24  So.   37 ;    Greeley  v.   White- 

40  Neg.    Inst.    Law,    §78,    where  head.   35   Fla.    523,    17   So.   643.   48 

all  cases  directly  or  indirectly  bear-  Am.  St.  Rep.  258 ;  Wcstcott  v.  Pat- 


194  NEGOTIABLE    INSTRUMENTS.  §§  164-166 

consequence  of  a  failure  to  make  such  presentment  is  that  the 
maker  or  acceptor,  if  he  was  ready  at  the  time  and  place  to  make 
the  payment,  may  plead  the  matter  in  bar  of  damages  and 
costs  ;'*^*  but  the  drawer  and  indorsers  are  discharged  if  such  pre- 
sentment be  not  made,  unless  some  sufficient  cause  excuses  the 
holder  for  failure  to  perform  that  duty.^ 

The  fact  that  the  indorser  holds  security  to  indemnify  him 
against  loss  upon  his  indorsement  does  not  make  presentment  for 
payment  and  notice  of  dishonor  unnecessary.'*'^* 

§  164.  When  instrument  dishonored  by  non-payment.  "The 
instrument  is  dishonored  by  non-payment  when:  (1)  It  is  duly 
presented  for  payment  and  payment  is  refused  or  ca/nnot  be  ob- 
tained; or  (2)  presentment  is  excused,  and  the  bill  is  overdue 
and  tinpaid.'"^^ 

§  165.  Notice  of  dishonor — In  general.  Notice  of  dishonor 
is  bringing  either  verbally  or  by  writing,  to  the  knowledge  of 
the  drawer  or  the  indorser  of  an  instrument,  the  fact  that  a 
specified  negotiable  instrument,  upon  proper  proceedings  taken, 
has  not  been  accepted,  or  has  not  been  paid,  and  that  the  party 
notified  is  expected  to  pay  it.^'' 

"The  notice  may  be  in  writing  or  merely  oral,  and  may  be 
given  in  any  terms  zuhich  sufficiently  identify  the  instrument, 
and  indicate  that  it  has  been  dishonored,  by  non-acceptance  or 
non-payment.  It  may  in  all  cases  be  given  by  delivering  it  per- 
sonally or  through  the  mails.'"^^ 

§  166.  Contents  of  notice.  In  order  that  the  notice  may  be 
complete,  it  should  contain,  (1)  a  sufficient  description  of  the 
bill  or  note;"*"   (2)   a  statement  that  it  had  been  presented  for 

ton,    10    Colo.    App.    544,    51    Pac.  47  Martin  v.  Brown,  75  Ala.  442 ; 

1021.  Ticonic  Bank  v.  Stackpole,  41   Me. 

44a  Moore  V.  Alton,  196  Ala.  158,  321,  66  Am.  Dec.  246.    As  to  notice 

70    So.    681.  of  demand,  lion-payment,  and  pro- 

45  Jones  V.  Robinson,  11  Ark.  504,  test  in  general,  see  note  5  U.  S.  L. 

54  Am.  Dec.  212;  Wylie  v.  Cotter,  Ed.  215. 

170  Mass.  356,  49  N.  E.  746,  64  Am.  48  Neg.  Inst.  Law,  §96,  where 
St.  Rep;  305 ;  Piscataqua  Exch.  all  cases  directly  or  indirectly  bear- 
Bank  V.  Carter,  20  N.  H.  246,  57  ing  upon  or  citing  the  Law  arc 
Am.    Dec.   217;    Los   Angeles    Nat.  grouped. 

Bank  v.  Wallace,   101   Cal.  478,  36  49  Brown  v.  Jones,  125  Ind.  375, 

Pac.  197.  25   N.    E.   452,   21   Am.   Rep.  227; 

45a  Whitney  v.  Collins,  15  R.  L  44.  Dodson  v.  Taylor,  56  N.  J.  L.  11, 

4«Neg.    Inst.    Law,    §83,    where  28    Atl.    316;    Alexandria    Bank    v. 

all  cases  directly  or  indirectly  bear-  Swann,  9  Pet.  (U.  S.)  ZZ,  9  L.  Ed, 

ing    upon    or    citing   the    Law   arc  40. 
grouped. 


§  167  PRESENTMENT — NOTICE  OF  DISHONOR.  195 

acceptance  or  payment,  and  had  been  dishonored;'^®  (3)  a  state- 
ment that  the  paper  had  been  protested,®^  and  (4)  an  announce- 
ment of  the  intention  of  the  holder  to  look  to  the  party  addressed 
for  payment.^^ 

A  statement  of  non-payment  is  not  sufficient  without  a  state- 
ment that  presentment  and  demand  had  been  made,  but  if  the 
word  "dishonored"  is  used  it  is  held  to  be  sufficient  without 
further  statement  of  presentment  and  demand. 

Notice  is  sufficient  if  the  necessary  facts  can  reasonably  be  in- 
ferred from  the  terms  of  the  notice. 

"A  un-itten  notice  need  not  he  signed,  and  an  insufficient 
written  notice  may  he  supplemented  and  validated  hy  verbal 
communication.  A  misdescription  of  the  instrument  does  not 
vitiate  the  notice  unless  the  party  to  whom  the  notice  is  given  is 
in  fact  misled  therehy."^^ 

No  misdescription  of  the  amount,®*  or  of  the  date,  or  of  the 
names  of  the  parties,^  or  of  the  time  the  paper  falls  due,''^  or 
other  defect  vitiates  the  notice  of  dishonor,  unless  it  misleads  the 
party  to  whom  sent. 

§  167.  By  whom  given  and  when  to  be  given.  The  proper 
party  to  give  the  notice  is  the  holder""  or  his  authorized  agent,^^ 
or  an  indorser  who  is  at  the  time  of  giving  it  liable  on  the  bill 
and  who  has  a  right  of  recourse  against  the  party  to  whom  notice 
is  given.**®    That  is,  the  notice  must  be  given  by  a  party  to  the 

'^OTowsend    v.    Lorain    Bank,    2  Renner  v.  Downer,  23  Wend.   (N. 

Ohio  St.  345;  Sinclair  v.  Lynch,  1  Y.)   620. 

Speers    (S.   C.)    244;   Newberry  v.  55  Brown  v.  Jones,  125  Ind.  375, 

Trowbridge,  4  Mich.  39L  25  N.  E.  452,  21  Am.  St.  Rep.  227; 

51  Kellogg  V.  Pacific  Box  Factory,  Mainer  v.  Spurlock,  9  Rob.  (La.) 
57  Cal.  327;  Selden  v.  Washington,  161;  King  v.  Hurley,  85  Me.  525, 
17  Md.  379,  79  Am.  Dec.  659;  Et-  27  Atl.  463;  Carter  v.  Bradley,  19 
ting  V.   Schuylkill  Bank,  2   Pa.   St.  Me.  62,  Z6  Am.  Dec.  735. 

355,    44    Am.    Dec.    205;    Tevis    v.  ^e  Sahmarsh   v.    Tuthill,    13    Ala. 

Wood,  5  Cal.  393.  390;    Smith   v.    Whiting,    12    Mass. 

52  U.    S.    Bank    v.    Norwood,    1  6,7  Am.  Dec.  25;  Gates  v.  Beecher, 
Harr.  &  J.   (Md.)   423;  Burgess  v.  60  N.  Y.  518,  19  Am.  Rep.  207. 
Vreeland,  24  N.  J.  L.  71,  59  Am.  57  Tindal  v.  Brown,  1  T.  R.  167, 
Dec.  408.  1  Rev.  Rep.  171 ;  e.r  parte  Barclay, 

53  Neg.    Inst.    Law,    §  95,    where  7  Ves.  Jr.  597. 

all  cases  directly  or  indirectly  bear-  5S  Lindesborg   Bank  v.   Ober,   31 

ing    upon    or   citing    the    Law   are  Kan.  599,  3  Pac.  324;  Tevis  v.  Ran- 

grouped.  dall,  6  Cal.  632,  65  Am.  Dec.  547  J 

54  King  v.  Hurley,  85  Me.  525;  Waldron  v.  Turpin,  15  La.  552,  35 
Alexandria  Bank  v.  Swann,  9  Pet.  Am.  Dec.  210. 

(U.  S.)  2Z,  9  L.  Ed.  40;  McKnight  59Glasgow  v.  Pratte,  8  Mo.  336, 

V.  Lewis,  5  Barb.  (N.  Y.)  681.  See      40  Am.  Dec.  142;  Stanton  v.  Bios- 


196  NEGOTIARI.E    INSTRUMENTS.  §  168 

paper  or  his  a^ent,  and  a  total  stranger  cannot  give  proper 
notice  of  dishonor.®*  The  notary  may  give  the  notice  as  agent 
for  the  holder,  and  so  may  any  bank  holding  the  paper  for  col- 
lection.** 

"The  notice  may  he  given  by  or  on  behalf  of  the  holder,  or  by 
or  on  behalf  of  any  party  to  the  instrument  who  might  be  com- 
pelled to  pay  it  to  the  holder,  and  who  upon  taking  it  up,  would 
have  a  right  to  reimbursement  from  the  party  to  whom  notice 
is  given."^^ 

"Notice  of  dishonor  may  be  given  by  an  agent  either  in  his 
own  name  or  in  the  name  of  any  party  entitled  to  give  notice, 
whether  that  party  be  his  principal  or  not."^^ 

"Where  the  instrument  has  been  dishonored  in  the  hands  of 
an  agent  he  may  either  himself  give  notice  to  the  parties  liable 
thereon,  or  he  may  give  notice  to  his  principal.  If  he  gives  notice 
to  his  principal,  he  miust  do  so  within  the  same  time  as  if  he  zvere 
the  holder,  and  the  principal,  upon  the  receipt  of  such  notice, 
has  himself  the  same  time  for  giving  notice  as  if  the  agent  had 
been  an  independent  holder."^^ 

If  the  holder  die  before  the  time  for  presentment  for  pay- 
ment, it  must  be  made  by  his  personal  representative.*''''  If 
there  be  no  personal  representative  at  the  time,  presentment  and 
demand  within  a  reasonable  time  after  his  appointment  w^ill  be 
sufficient  to  charge  subsequent  parties,  although  presentment  and 
demand  were  not  made  at  maturity. 

§  168.  Notice  of  dishonor — To  whom  given.  As  to  vv^hbm 
notice  of  dishonor  should  be  given  the  Negotiable  Instruments 
Law  provides : 

"When  a  negotiable  instrument  has  been  dishonored  by  non- 
acceptance  or  non-payment  notice  of  dishonor  must  be  given  to 

som,  14  Mass.  116,  7  Am.  Dec.  198;  ing    upon    or    citing   the    Law    are 

Linn  v.  Horton,  17  Wis  15L  grouped. 

s^'Beal  V.  Alexander,  6  Tex.  531;  ^3  N^g   i^gt   l^w,  §91,  where  all 

Brailsford  v.  Wiliams,  15  Md.  150,  cases    directly    or    indirectly    bear- 

74  Am.  Dec.  559;  Brower  v.  Woot-  ing    upon    or    citing   the    Law    are 

en,  4  N.  C.  507,  7  Am.  Dec  692.  grouped. 

61  Lindsborg  Bank  v.  Ober,  31  *■*  Neg.  Inst.  Law,  §  94,  where 
Kan.  599,  3  Pac.  324;  Couch  v.  all  cases  directly  or  indirectly  bear- 
Sherrill,  17  Kan.  622;  Warren  v.  ing  upon  or  citing  the  Law  are 
Oilman,   17  Me.   360;    Blackeslee  v.  grouped. 

Hewett,    76    Wis.    341,    44    N.    W.  65  white    v.    Stoddard.    11    Gray 

1105.  (Mass.)    258,    71    Am.    Dec.    711; 

62  Neg.  Inst.  Law,  §90,  where  all  Rand  v.  Hubbard,  4  Mete.  (Mass.) 
cases    directly   or    indirectly   bear-  252, 


§168 


PRESENTMENT — NOTICE  OF  DISHONOR. 


197 


the  drazwr  and  to  each  indorser,  and  any  drawer  or  indorser  to 
ivhoni  such  notice  is  not  given  is  discharged,"^^  and 

"Notice  of  dishonor  may  he  given  either  to  the  party  himself 
or  to  his  agent  in  that  behalf ."^"^ 

The  proper  party  or  parties  to  be  given  notice  are  the  drawer,®"^ 
indorser  or  indorsers,®^  or  their  authorized  agent  or  other  person 
entitled  to  receive  notice  for  them.''®  That  is,  the  notice  must 
be  given  to  all  persons  secondarily  liable  whom  the  holder  wishes 
to  charge.  And  notice  should  be  given  to  indorsers  who  have 
indorsed  for  the  purpose  of  collection,''*^  and  indorsers  of  over- 
due paper.''^  Where  there  are  two  or  more  joint  drawers  or 
indorsers  who  are  not  partners,  notice  of  dishonor  must  be  given 
to  them  all  in  order  to  bind  either.''^ 

Some  jurisdictions  hold  that  absence  of  protest  and  notice  of 
dishonor  is  not  a  defense  to  an  action  by  one  joint  indorser  of 
negotiable  paper  to  compel  contribution  by  his  coindorsers  to 
the  amount  paid  by  him  upon  the  paper.''^*  While  other  juris- 
dictions decide  that  if  he  would  hold  his  coindorsers,  he  must 
give  notice  to  them.'^'' 

When  the  note  is  executed  by  several  joint  promisors  who  are 
not  partners,  but  liable  only  as  joint  and  several  promisors,  it 


**  Neg  Inst.  Law,  §  89,  where  all 
cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped.  As  to  sufficiency  of  no- 
tice to  indorser,  see  note  12  L.  R. 
A.  7Z\. 

^^  Neg.  Inst.  Law,  §  97,  where 
all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped. 

«8  Patillo  V.  Alexander,  96  Ga.  60, 
22  S.  E.  646,  29  L.  R.  A.  616 ;  Bax- 
ter V.  Graves,  2  A.  K.  Marsh.  (Ky.) 
152,  12  Am.  Dec.  374. 

^9  McLanaham  v.  Brandon,  1 
Mart.  (N.  S.)  La.  321,  14  Am.  Dec. 
188 ;  Fotheringham  v.  Price,  1  Bay. 
(S.  C.)  291,  1  Am.  Dec.  618;  Pea- 
body  Ins.  Co.  V.  Wilson,  29  W.  Va. 
528,  2  S.  E.  888. 

70  Crowley  v.  Berry,  4  Gill.  (Md.) 
194;  Coffman  v.  Commonwealth 
Bank,  41  Miss.  212,  90  Am.  Dec.  37L 
As  to  whom  given  after  appoint- 
ment of  receiver  or  assignee,  see 
note  61  L.  R.  A.  900. 


''*  Elizabeth  State  Bank  v.  A3'ers, 
7  N.  J.  L.  130,  11  Am.  Dec.  535; 
U.  S.  Bank  v.  Davis,  2  Hill  (N. 
Y.)  451. 

72  Beer  v.  Clifton,  98  Cal.  323, 
33  Pac.  204,  55  Am.  St.  Rep.  172, 
20  L.  R.  A.  580;  Grand  v.  Strutzel, 
53  la.  712,  6  N.  W.  119,  36  Am. 
Rep   250. 

73  People's  Bank  v.  Keech,  26 
Md.  521,  90  Am.  Dec.  118;  Willis 
v.  Green,  5  Hill  (N.  Y.)  232,  40 
Am.  Dec.  351. 

See   note   36  L.   R.   A.   703. 

Contra :  Williams  v.  Paintsville 
National  Bank,  143  Kv  781,  137 
S.  W.  535;  Eaves  v.  Kecton,  196 
Mo.  App.  424,  193  S.  W.  629. 

73a  Williams  v.  Paintsville  Na- 
tional Bank,  143  Ky.  781.  137  S. 
W.  535. 

^Sb  Owens  V.  Greenlee,  —  Colo. 
— ,  188  P.  721.  9  A.  L.  R.  1184. 

See  note  9  A.  L.  R.  1188. 


198  NEGOTIABLE   INSTRUMENTS,  §  169 

has  been  held,  that  presentment  should  be  made  to  each,  in  order 
to  fix  the  liability  of  an  indorser. 

And  as  provided  by  the  Negotiable  Instruments  Law : 

"Notice  to  joint  parties  who  are  not  partners  must  be  given 
to  each  of  them,  unless  one  of  them  has  authority  to  receive  such 
notice  for  the  others."'^'^ 

"Where  the  parties  to  he  notified  are  partners  notice  to  any 
one  partner  is  notice  to  the  Urm,  even  though  there  has  been 
a  dissolution.""^^ 

"Where  a  party  has  been  adjudged  a  bankrupt  or  an  insolvent, 
or  has  made  an  assignment  for  the  benefit  of  creditors,  notice  may 
be  given  either  to  the  party  himself  or  to  his  trustee  or  as- 
signee.""^^ 

Notice  left  with  a  clerk  or  person  in  charge,  at  the  party's 
place  of  business,  in  his  absence,  or  at  his  place  of  business,'^ 
without  proof  as  to  the  person  with  whom  it  was  left,  is  sufficient, 
and  proof  that  such  person  was  not  the  party's  agent  has  been 
held  irrelevant,  notice  being  left  at  the  right  place.  Hence, 
leaving  it  with  his  private  secretary  at  his  public  office  is  suffi- 
cient. If  service  be  sought  on  the  party  at  his  dwelling,  it  is 
sufficient  to  leave  notice  with  his  wife,  or  with  any  other  person 
on  his  premises.'^^ 

"When  any  party  is  dead,  and  his  death  is  known  to  the  party 
giving  notice,  the  notice  must  be  given  to  a  personal  represen- 
tative, if  there  be  one,  and  if  with  reasonable  diligence  he  can 
be  found.  If  there  be  no  personal  representative,  notice  may  be 
sent  to  the  last  residence  or  last  place  of  business  of  the  de- 
ceased/'"^^ 

§  169.     Notice  of  dishonor — Time.    As  to  the  time  In  which 

notice  must  be  given  the  Negotiable  Instruments  Law  provides : 

"Notice  may  be  given  as  soon  as  the  instrument  is  dishonored ; 
and  unless  delay  is  excused  as  hereinafter  provided,  must  be  given 
within  the  times  fixed  by  this  act."^^ 

'^'*  Neg.   Inst.    Law,    §  100,   where  194 ;     Coffman    v.     Commonwealth 

all  cases  directly  or  indirectly  bear-  Bank,   41    Miss,  212,   90  Am.   Dec. 

ing   upon    or    citing   the    Law    are  371. 

grouped.  78  Mercantile  Bank  v.  McCarthy, 

75  Neg.  Inst.  Law,  §99,  where  all  7  Mo.  App.  318;  Colms  v.  Bank  of 
cases  directly  or  indirectly  bearing  Tenn.,  4  Baxt.  422 ;  Bank  of  Ky. 
upon  or  citing  the  Law  are  v.  Duncan,  4  Bush.  (Ky.)  294;  U. 
grouped.  S.  v.  Hatch,  1  McLean  (U.  S.)  92. 

76  Neg.  Inst.  Law,  §  101,  where  79  Neg.  Inst.  Law,  §  98,  where  all 
fill  cases  directly  or  indirectly  bear-  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are  ing  upon  or  citing  the  Law  are 
grouped.  grouped. 

77  Crowley  V.  Barry,  4  Gill  (Md.)  so  Neg.  Inst.  Law,  §102.,  where 


§  170  PRESENTMENT — NOTICE  OF  DISHONOR.  199 

The  law  as  to  parties  residing  in  the  same  place  is  as  follows : 
"Where  the  person  giving  and  the  person  to  receive  notice 
reside  in  the  same  place,  notice  must  he  given  zvithin-  the  folloiv- 
ing  times:  (1)  If  given  at  the  place  of  business  of  the  person 
to  receive  notice,  it  must  be  given  before  the  close  of  business 
hours  on  the  day  following;  (2)  if  given  at  his  residence,  it  must 
be  given  before  the  usual  hours  of  rest  on  the  day  folloiving;  (3) 
if  sent  by  mail,  it  must  be  deposited  in  the  postoffice  in  time  to 
reach  him  in  usual  course  on  the  day  follozmng."^^ 

And  where  the  parties  reside  in  different  places  the  law  is: 
"Where   the  person  giving  and  the  person  to   receive   notice 
reside  in  different  places,  the  notice  must  be  given  zvithin  the 
follozving  times:    (1)  If  sent  by  mail,  it  must  be  deposited  in  the 
postoffice  in  time  to  go  by  mail  the  day  follozmng  the  day  of  dis- 
honor, or  if  there  be  no  mail  at  a  convenient  hour  on  that  day, 
by  the  next  mail  thereafter;  (2)  if  given  otherzvise  than  through 
the  postoffice,  then  within  the  time  that  notice  would  have  been 
received  in  due  course  of  mail,  if  it  had  been  deposited  in  the 
postoffice  zvithin  the  time  specified  in  the  last  subdivision."^^ 
As  to  time  of  giving  notice  to  a  subsequent  party  the  law  is : 
"Where  a  party  receives  notice  of  dishonor,  he  has,  after  the 
receipt  of  such  notice,  the  same  time  for  giving  notice  to  ante- 
cedent parties  that  the  holder  has  after  the  dishonor/'^^ 

§  170.  Notice  of  dishonor — Place  of  sending.  The  Nego- 
tiable Instruments  Law  sets  out  the  law  as  to  the  place  of  send- 
ing the  notice  of  dishonor.    It  states : 

"Where  a  party  has  added  an  address  to  his  signature,  notice 
of  dishonor  must  be  sent  to  that  address;  but  if  he  has  not  given 
such  address,  then  the  notice  must  be  sent  as  follozvs:  (1) 
Either  to  the  postoffice  nearest  to  his  place  of  residence,  or  to 
the  postoffice  where  he  is  accustomed  to  receive  his  letters;  or 
(2)  if  he  live  in  one  place,  and  have  his  place  of  business  in  an- 
other, notice  may  be  sent  to  either  place;  or  (3)  if  he  is  sojourn- 
ing in  another  place,  notice  may  be  sent  to  the  place  where  he  is 
sojourning.  But  zvhere  the  notice  is  actually  received  by^  the 
party  within  the  time  specified  in  this  act,  it  will  be  sufficient, 

all  cases  direcctly  or  indirectly  bear-  ^^  Neg.  Inst.  Law,  §  104,  where 
ing  upon  or  citing  the  Law  are  all  cases  directly  or  indirectly  bear- 
grouped.  As  to  time  within  which  ing  upon  or  citing  the  Law  are 
notice  of  dishonor  must  be  given,  grouped. 

see  note  12  L.  R.  A.  729.  ^'-^Neg.   Inst.   Law,   §   107,   where 
**  Neg.   Inst.   Law,   §  103,   where  all  cases  directly  or  indirectly  bear- 
all  cases  directly  or  indirectly  bear-  ing    upon    or    citing    the    Law   are 
ing   upon   or   citing  the   Law   are  grouped, 
grouped. 


200  NEGOTIABLE   INSTRUMENTS.  §§  171-172 

though  not  sent  in  accordance  with  the  requirements  of  this  sec- 
tion."^'*   This  is  also  the  law  generally. 

§  171.  Notice  of  dishonor — Through  postoffice.  As  to  send- 
ing notice  through  the  postoffice  the  Negotiable  Instruments  Law 
states : 

"Where  notice  of  dishonor  is  duly  addressed  and  deposited  in 
the  postoffice,  the  sender  is  deemed  to  have  given  notice,  notwith- 
standing any  miscarriage  in  the  mail."^^ 

"Notice  is  deemed  to  have  been  deposited  in  the  postoffice  when 
deposited  in  any  branch  postoffice  or  any  letter  box  under  the 
control  of  the  postoffice  department. "^^ 

That  is,  if  a  notice  he  given  by  the  holder  to  an  indorser  by 
mail,  addressed  to  the  indorser  at  the  postoffice  nearest  his  resi- 
dence and  deposited  in  the  postoffice  at  the  proper  time,  the 
indorser  will  be  charged  whether  he  received  the  notice  or  not. 
The  letter  containing  the  notice  must  be  posted  early  enough 
to  be  sent  by  mail  on  the  day  succeeding  the  dishonor  of  the 
instrument. 

§  172.  Notice  of  dishonor — When  unnecessary.  Notice  of 
dishonor  is  dispensed  with:  (1)  When  the  drawer  or  indorser 
sought  to  be  charged  is,  as  between  the  parties  to  the  bill,  the 
principal  debtor,  and  has  no  reason  to  expect  that  it  will  be 
honored  on  presentment.^'  (2)  As  regards  the  drawer,  when 
drawer  and  drawee  are  the  same  person,  or  identical  in  interest.^ 
(3)  When  the  drawer  or  indorser  sought  to  be  charged  is  the 
person  to  whom  the  bill  is  presented  for  payment.  (4)  When 
the  drawee  is  fictitious  and  the  drawer  or  indorser  sought  to  be 
charged  was  aware  of  the  fact  at  the  time  he  drew  or  indorsed 
the  bill.^^  (5)  When  the  drawer  or  indorser  sought  to  be 
charged  has  received  an  assignment  of  all  the  property  of  the 

84Neg.    Inst.   Law.    §103,    where  328,   85   Am.    Dec.   309;    Culver   v. 

all  cases  directly  or  indirectly  bear-  Marks,  122  Ind.  554,  23  N.  E.  1086, 

ing   upon    or    citing    the    Law    are  17  Am.  St.  Rep.  2i77,  7  L.  R.  A.  489; 

grouped.  Merchants  Bank  v.  Easley,  44  Mo. 

85  Neg.  Inst.  Law,  §  105,  where  all  286,  100  Am.  Dec.  287.    As  to  when 

cases  directly  or  indirectly  bearing  drawer   or  indorser  is  not  entitled 

upon  or  citing  the  Law  are  grouped.  to  notice,  see  note  2  U.  S.  L.  Ed. 

As  to  service  of  notice  by  mail,  see  102. 

note  12  L.  R.  A.  731.  ^8  Planters    Bank    v.    Evans,    36 

*^  Neg.  Inst.  Law,   §   106,   where  Tex.    592 ;    New   York  etc.    Co.   v. 

all  cases  directly  or  indirectly  bear-  Selma    Sav.    Bank,    51    Ala.    305; 

ing    upon    or    citing    the    Law    are  Gowan   v.    Jackson,   20  Johns.    176. 

grouped.  *"  Groth  v.  Gyger,  31  Pa.  St.  271 ; 

*''  Kupfer  V.  Galena  Bank,  34  111.  Magruder  v.  Union  Bank,  3  Pet.  87. 


§  173  PRESENTMENT — NOTICE  OF  DISHONOR.  201 

acceptor  as  security  against  his  liability.^®  (6)  When,  after  the 
exercise  of  reasonable  diHgence,  no  notice  of  dishonor  can  be 
given  to  or  does  not  reach  the  party  sought  to  be  discharged.^* 

The  Negotiable  Instruments  Law  has  the  following  provisions 
as  to  when  notice  of  dishonor  is  unnecessary  and  they  represent 
the  law  generally: 

"Notice  of  dishonor  is  not  required  to  be  given  to  an  indorser 
in  either  of  the  follotmng  cases: 

1.  Where  the  drawee  is  a  fictitious  person  or  a  person  not 
hazing  capacity  to  contract,  and  the  indorser  was  aware  of  the 
fact  at  the  time  he  indorsed  the  instrument; 

2.  Where  the  indorser  is  the  person  to  whom  the  instrument 
is  presented  for  payment ; 

3.  Where  the  instrument  was  made  or  accepted  for  his  ac- 
commodation."^^ 

''Notice  of  dishonor  is  not  required  to  be  given  to  the  drawer 
in  either  of  the  following  cases:  (1)  Where  the  drawer  and 
drawee  are  the  same  person;  (2)  where  the  drawee  is  a  fictitious 
person  or  a  person  not  having  capacity  to  contract;  (3)  zvhere 
the  drawer  is  the  person  to  whom  the  instrument  is  presented 
for  payment;  (4)  zvhere  the  drawer  has  no  right  to  expect  or 
require  that  the  drazvee  or  acceptor  zvill  honor  the  instrument; 
(5)  where  the  drawer  has  countermanded  payment. "^^ 

"Notice  of  dishonor  may  be  waived,  either  before  the  time  of 
giving  notice  has  arrived  or  after  the  omission  to  give  due  notice, 
and  the  waiver  may  be  express  or  implied."^* 

"Notice  of  dishonor  is  dispensed  zvith  when,  after  the  exercise 
of  reasonable  diligence,  it  cannot  be  given  to  or  does  not  reach 
the  parties  sought  to  be  chargcd."^^ 

§  173.  Notice  of  dishonor — Excuse  for  failure  to  give  notice. 
Certain  excuses  for  failure  to  give  notice  of  dishonor  are  per- 
mitted, thus : 

80  Prentiss  v.  Danielson,  5  Conn.  ing    upon    or    citing    the    Law    are 

175,    13    Am.    Dec.    52;    Mead    v.  grouped. 

Small,  2  Me.  207,  11  Am.  Dec.  62;  »3  Neg.  Inst.  Law,  §  114.  where  all 

Perry  v.  Green,  19  N.  J.  L.  61,  38  cases  directly  or  indirectly  bearing 

Am.  Dec.  536.  upon  or  citing  the  Law  are  grouped. 

»i  Walker  v.  Stetson,  14  Ohio  St.  94  Neg.  Inst.  Law,  §  109,  where 
89,  84  Am.  Dec.  362 ;  Galpin  v.  all  cases  directly  or  indirectly  bear- 
Hard,  3  McCord  (S.  C.)  394,  15  ing  upon  or  citing  the  Law)  are 
Am.  Dec.  640;  Miranda  v.  New  Or-  grouped. 

leans  City  Bank,  6  La.  740,  26  Am.  »5  Neg.   Inst.   Law,   §   112,   where 

Dec.  493;  Tunstall  v.  Walker,  2  Sm.  all  cases  directly  or  indirectly  bear- 

&  M.  (Miss.)  638.  ing    upon    or    citing    the    Law   are 

92  Neg.   Inst.  Law,   §   115,   where  grouped, 
all  cases  directly  or  indirectly  bear- 


202  NEGOTIABLE    INSTRUMENTS.  §  173 

"Delay  in  giving  notice  of  dishonor  is  exeuscd  when  the  delay 
h  caused  by  circumstances  beyond  the  control  of  the  holder  and 
not  inipntable  to  his  default,  misconduct  or  negligence.  When 
the  cause  of  delay  ceases  to  operate,  notice  must  be  given  with 
reasonable  diligence."^ 

When  political  disturbances  interrupt  and  obstruct  the  ordi- 
nary negotiations  of  trade,  they  constitute  a  sufficient  excuse  for 
want  of  presentment  or  notice,  upon  the  same  principle  that  con- 
trols in  cases  of  military  operations  or  interdictions  of  com- 
merce.®'^ 

So  the  prevalence  of  a  malignant,  contagious,  or  infectious 
disease,  such  as  the  cholera,  yellow  fever,  the  plague,  or  small- 
pox, which  has  become  so  extensive  as  to  suspend  all  commercial 
business  and  intercourse  or  to  render  it  very  hazardous  to  enter 
into  the  infected  district,  is  recognized  by  the  text  writers  as  a 
sufficient  excuse  for  not  doing  any  act  which  would  require  an 
entry  into  such  districts."® 

Where  presentment  or  notice  of  dishonor  has  been  waived  by 
express  agreement  or  is  implied  in  the  acts  of  the  parties,  it  is 
unnecessary  -^^  when  sudden  illness  or  death  of,  or  accident  to, 
the  holder  or  his  agent  prevents  the  presentment  of  the  bill  or 
note  in  due  season,  or  the  communication  of  notice,  the  delay 
is  excused,  provided  presentment  is  made  and  notice  given  as 
promptly  afterward  as  the  circumstances  reasonably  permit.* 
This  doctrine  rests  upon  the  same  principle  as  that  which  ex- 
cuses want  of  punctuality  when  overwhelming  calamities  or  acci- 
dents of  a  general  nature  prevent.  The  sudden  illness  or  death 
of  his  agent  is  on  the  same  footing  as  when  these  happen  to  the 
holder  himself.     If  the  excuse  be  illness,  it  must  be  of  such  a 

96Neg.    Inst.  Law,   §    113,  where  cliffe,  4  Strobh.  (S.  C.)  296,  53  Am. 

all  cases  directly  or  indirectly  bear-  Dec.  678;  Hale  v.  Damford,  46  Wis., 

ing    upon    or    citing    the    Law    are  554,  1  N.  W.  284.     As  to  indorser's 

grouped.  promise  to  pay  or  acknowledgment 

9''  Peters   v.   Hobbs,   25   Ark.   67,  of      liability      after      maturity      as 

91  Am.  Dec.  526;  House  v.  Adams,  waiver  of  lack  of  notice,   see  note 

48   Pa.    St.  261.   86  Am.   Dec.   426;  6   U.    S.    L.    Ed.    596.      Immaterial 

Ray  V.  Smith,  17  Wall.  (U.  S.)  411,  whether  indorser  receives  notice  if 

21  L.  Ed.  666.  due    diligence    used    in    sending    it, 

sSTunno  v.  Lague,  2  Johns.  Cas.  see  note  11  U.  S.  L.  Ed.  1000. 

(N.  Y.)    1,  1  Am.  Dec.   141;  Han-  i  White    v.     Stoddard,     11     Gray 

over  V.  Anderson,  16  Lea  (Tenn.)  (Mass.)    258,    71    Am.    Dec.    711; 

340.  Newbold    v.    Borsef,    155    Pa.    St. 

99  Markland  v.  McDaniel,  51  Kan.  227,  26  Atl.  305 ;  Duegan  v.  King, 

350,  32  Pac.  1114,  20  L.  R.  A.  96 ;  Rice  (S.  C.)  239,  Z?,  Am.  Dec.  107; 

Hibbard  v.  Russell,   16  N.  H.  410,  Wilson  v.  Sevier,  14  Wis.  380. 
41  Am.  Dec.  72Z;  Schmidt  v.  Rad- 


§  174  PRESENTMENT — NOTICE  OF  DISHONOR.  203 

character  as  to  prevent  due  presentment  and  notice  by  the  exer- 
cise of  due  dilgience.^ 

Where  the  person  against  whom  the  bill  is  sought  to  be  en- 
forced has  been  fully  secured  against  loss  by  the  person  princi- 
pally liable  on  the  instrument,  and  has  promised  to  see  to  the 
acceptance  or  payment  of  the  paper,  its  presentment  is  unnec- 
essary.^ 

§  174.  Notice  of  dishonor — Effect  of  notice  as  to  prior  and 
subsequent  parties.  "Where  notice  is  given  by  or  on  behalf  of 
the  holder,  it  enures  for  the  benefit  of  all  subsequent  holders  and 
all  prior  parties  tvho  have  a  right  of  recourse  against  the  party 
to  whom  it  is  given.'"* 

"Where  notice  is  given  by  or  on  behalf  of  a  party  entitled  to 
give  notice,  it  enures  for  the  benefit  of  the  holder  and  all  parties 
subsequent  to  the  party  to  whom  notice  is  given."'^ 

That  is,  notice  of  dishonor  given  by  or  on  behalf  of  the  holder 
enures  to  the  benefit  of  all  subsequent  holders,  and  all  prior 
indorsers  liable  on  the  bill  who  have  a  right  of  recourse  agamst 
the  party  to  whom  notice  is  given.  And  notice  of  dishonor 
given  by  or  on  behalf  of  an  indorser  entitled  to  give  notice, 
enures  to  the  benefit  of  the  holder  and  all  indorsers  liable  on  the 
bill  who  have  a  right  of  recourse  against  the  party  given  notice. 

A  party  who  receives  due  notice  of  the  dishonor  of  a  bill,  as 
an  indorser,  after  the  receipt  of  such  notice,  has  the  same  time 
in  which  to  give  notice  to  antecedent  parties  whom  he  desires 
to  hold  liable,  as  the  original  holder  has  after  the  dishonor  of  the 
bill. 

"Where  due  notice  of  dishonor  by  non-acceptance  has  been 
given,  notice  of  a  subsequent  dishonor  by  non-payment  is  not  nec- 
essary unless  in  the  meantime  the  instrument  has  been  accepted"^ 

"An  omission  to  give  notice  of  dishonor  by  non-acceptance  does 
not  prejudice  the  rights  of  a  holder  in  due  course  subsequent  to 
the  omission.'"^ 

2  Wilson  V.  Sevier,  14  Wis.  380;  cases  directly  or  indirectly  bearing 
Purcell  V.  Allerr.ong,  22  Gratt.  upon  or  citing  the  Law  are  grouped. 
(Va.)  739.  6Neg.  Inst.  Law,  §  116,  where  all 

3  Prentice  v.  Danielson,  5  Conn.  cases  directly  or  indirectly  bearing 
175,  13  Am.  Dec.  52 ;  Perry  v.  upon  or  citing  the  Law  are  grouped. 
Green,  19  N.  J.  L.  61,  38  Am.  Dec.  '^  Neg.  Inst.  Law,  §  117,  where  all 
536;  Brandt  v.  Mickle,  28  Md.  436.  cases  directly  or  indirectly  bearing 

Contra,    Watkins    v.    Crouch,    5  upon  or  citing  the  Law  are  grouped. 

Leigh  (Va.)  522.  As  to  effect  of  omission  to  give  no- 

^  Neg.  Inst.  Law,  §  92,  where  all  tice  on  paper  held  as  collateral  or 

cases  directly  or  indirectly  bearing  conditional  payment,  see  note  G&  L. 

upon  or  citing  the  Law  are  grouped.  R.  A.  482. 

5  Neg.  Inst.  Law,  §  93,  where  all 


204  NEGOTIABLE    INSTRUMENTS.  §  175 

§  175.  Protest — Method  of.  Protest  in  its  popular  signifi- 
cation includes  all  the  steps  taken  to  fix  the  liability  of  a  drawer 
or  indorsers,**  but  its  accurate  technical  meaning  is  that  it  is  the 
testimony  of  some  proper  person,  usually  a  notary,  that  the 
regular  legal  steps  to  fix  that  liabihty  have  been  taken  by  the 
holder.*^  Its  method  is  for  the  notary  himself  to  properly  pre- 
sent the  instrument,  and  demand  its  acceptance  or  payment.  If 
these  are  refused,  to  make  a  minute  thereof  on  the  instrument, 
or  in  his  official  record ;  the  minute  consisting  of  his  initials,  the 
year,  month,  and  day  of  dishonor,  and  his  charges.  This  is 
done  on  the  day  of  the  dishonor.  And  on  the  same  day,  or  after- 
wards, the  notary  extends  the  protest  thus  noted  by  embodying 
in  a  certificate  the  facts  of  the  protest,  and  his  acts  in  making 
presentment,  demand,  and  in  giving  notice  of  dishonor.  To  this 
he  generally  appends  his  official  seal.-^® 

Where  a  notary  cannot  be  obtained  protest  may  be  made  by 
any  respectable  person.-^-"^ 

As  to  protest  the  Negotiable  Instruments  Law  provides  as 
follows : 

"The  protest  must  he  annexed  to  the  hill  or  must  contain  a 
copy  thereof  and  must  he  under  the  hand  and  seal  of  the  notary 
making  it,  and  must  specify:  (1)  The  time  and  place  of  present- 
ment; (2)  the  fact  that  presentment  zvas  made  and  the  manner 
thereof ;  (3)  the  cause  or  reason  for  protesting  the  bill;  (4)  the 
demand  made  and  the  answer  given,  if  any,  or  the  fact  that  the 
drazvee  or  acceptor  could  not  he  found."^^ 

The  signature  of  the  notary  may  be  printed  ;^^*  and  neither  the 
seal  nor  the  signature  of  the  notary  need  be  proved.-^^" 

A  certificate  of  the  protest  of  a  foreign  bill  of  exchange  is  no 
proof  of  the  drawer's  refusal  to  accept  or  pay  the  bill,  unless 
properly  authenticated  by  the  seal  of  the  officer  before  whom  the 
protest  was  made.-^^** 

8  White  V.  Keith,  97  Ala.  668,  12  Donegan  v.  Wood,  49  Ala.  242,  20 

So.  611 ;  Ayrault  v.  Pacific  Bank,  47  Am.  Rep.  275.    As  to  v/rongful  pro- 

N.  Y.  570,  7  Am.  Rep.  489 ;  Sprague  test,  see  note  30  Am.  St.  Rep.  158. 

V.   Fletcher,    8    Oreg.    367,    34   Am.  ^2  Ngg   i^gt.  Law,  §153.  where  all 

Rep.  587.  cases  directly  or  indirectly  bearing 

^  Swayze  v.  Britton,  17  Kan.  625.  upon  or  citing  the  Law  are  grouped. 

As   to  liability  of   notaries  making  ^^^  Fulton  v.  MacCracken,  18  Md. 

protest,  see  note  82  Am.   St.   Rep.  528. 

380.  12b  Barrv  v.  Crowly.  4  Gill  (Md.) 

lOLeftley  v.  Mills,  4  T.  R.   170;  194. 

Gale  V.  Walsh,  5  T.  R.  170;  Rod-  i2o  London   &   River   Plate   Bank 

gers  V.  Stephens,  2  T.  R.  713.  v.  Carr,  54  Alisc.  Rep.  94,  105  N.  Y. 

11  Read   v.   Commonwealth,   1    T.  Supp.  679. 
B.  Men.  (Ky.)  91,  15  Am.  Dec.  86; 


§  175  PRESENTMENT — NOTICE   OF   DISHONOR.  205 

"Protest  may  he  made  by:  (1)  A  notary  public;  or  (2)  by  any 
respectable  resident  of  the  place  where  the  bill  is  dishonored,  in 
the  f>resence  of  two  or  more  credible  witnesses."^^ 

In  some  states  the  word  responsible  is  substituted  for  respect- 
able in  the  law. 

In  the  absence  of  any  custom  or  usage,  the  presentment  and 
demand  must  be  made  by  the  notary  in  person.^^* 

"When  a  bill  is  protested,  such  protest  must  he  made  on  the 
day  of  its  dishonor  unless  delay  is  excused  as  herein  provided. 
When  a  bill  has  been  duly  noted,  the  protest  may  be  subsequently 
extended  as  of  the  date  of  the  noting."''-'* 

The  protest  should  be  commenced  on  the  day  on  which  ac- 
ceptance or  payment  is  refused ;  but  it  may  be  drawn  up  and 
completed  later. 

The  drawer  of  a  check  who  has  countermanded  payment  is 
not  entitled  to  notice  of  its  protest.*^* 

"A  bill  must  be  protested  at  the  place  where  it  is  dishonored 
except  that  when  a  hill  drawn  payable  at  the  place  of  business 
or  residence  of  some  person  other  than  the  draivee,  has  been  dis- 
honored, by  non-acceptance,  it  must  he  protested  for  non-pay- 
ment at  the  place  where  it  is  expressed  to  be  payable,  and  no 
further  presentment  for  payment  to,  or  demand  on,  the  drawee 
is  necessary."''^ 

"A  bill  which  has  been  protested  for  non-acceptance  may  be 
subsequently  protested  for  non-payment."^^ 

Below  is  given  a  form  of  protest: 

FORM  OF  PROTEST. 

United  States  of  America, 

State  of 

County  of 

City  of 


ss. 


By  this  Public  Instrument  of  Protest,  be  it  known;  That  on 

this day  of ,  in  the 

*3  Neg.   Inst.  Law,   §   154,  where  ^^^  First  National  Bank  v.  Korn, 

all  cases  directly  or  indirectly  bear-  —  Mo.  App.  — ,  179  S.  W.  721. 

ing    upon    or    citing    the    Law    are  i^  Neg.   Inst.   Law,   §    156,   where 

grouped.  all  cases  directly  or  indirectly  bear- 

13a  Ocean  National  Bank  v.  Will-  ing    upon    or    citing    the    Law    are 

iams.  102  Mass.  141.  grouped. 

14  Neg.  Inst.  Law,  §  155,  where  ^^  Neg.  Inst.  Law,  §  157,  where 
all  cases  directly  or  indirectly  bear-  all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are  ing  upon  or  citing  the  Law  are 
grouped.  grouped. 


206  NEGOTIABLE    INSTRUMENTS.  §  175 

year  of  our  Lord  19 ,  I,  a  Notary  Public  in  and  for  the  County 

and  State  aforesaid  by  lawful  authority  duly  commissioned  and 

sworn,  residing  in ,   in  the  County  and 

State  aforesaid,  at  the  request  of , 

holder  of  the  original ,  did  present  the 

original - ,  which  is  hereunto  annexed, 

to ,  and  did  demand 

The  said did 

refuse  to the  same  (here  insert  reason, 

if  any,  why  payment  or  acceptance  was  refused). 

Whereupon  I  did  protest,  and  by  these  presents  do  publicly 
and  solemnly  protest  as  well  against  the  drawer  and  indorsers 

of  the  said as  against  all 

others  whom  it  doth  or  may  concern  for  exchange,  re-exchange 
and  all  costs,  charges,  damages  and  interest  heretofore  incurred 

or  to  be  hereafter  incurred  for  want  of  the of  the  same; 

and  I  do  hereby  certify  that  on  the day 

of ,  one  thousand  nine  hundred , 

I  did  give  due  and  written  notice,  signed  by  me,  of  the  present- 
ment and  protest  of  the  foregoing — 

to  the  respective  indorsers  of  the  said  instrument,  and  informing 

that held  liable  for 

the  payment  of  said ;  and  on  the 

same  day,  in  the  evening,  I  deposited  the  same  in  the  postoffke 

at ,  contained  in  a  securely 

sealed  postpaid  wrapper,  duly  directed  and  subscribed  to  said 
as  follows,  to-wat:  to 


The  above-named  places  and  addresses  being  the  reputed  place 
of  residence  and  address  of  the  persons  to  whom  such  notice  was 
so  addressed  and  the  postoffice  nearest  thereto. 

Thus  done  and  protested  in  the  City  of , 

in    the     County     and     State    aforesaid,    in    the    presence   of 

and , 

witnesses. 


§176 


PRESENTMENT — NOTICE  OF  DISHONOR. 


207 


In   testimony    whereof,    I    have   hereunto    set    my    hand    and 

affixed  my  official  seal  this day  of , 

19 

(seal) 

Notary  Public. 
My    Commission    Expires    on 

the day 

of ,  19 


fees 


Protest  . 
Record 
Notices 
Postage 
Total 


-$- 


Registered  Vol Page. 


§  176.  Protest — Purpose.  The  dishonor  must  be  brought 
to  the  attention  of  the  person  secondarily  liable  on  the  instru- 
ment.    That  is,  to  the  indorsers  or  drawer. 

For  "subject  to  the  provisions  of  this  act,  zvhen  the  instrument 
is  dishonored  by  non-payment  an  immediate  right  of  recourse 
to  all  parties  secondarily  liable  thereon  accrues  to  the  holder/'^"^ 

By  the  above  section  of  the  law  an  indorser  whose  liability  has 
become  fixed  by  demand  and  notice  is,  as  to  the  holder,  a  prin- 
cipal debtor.*'^' 

The  notice  may  be  made  by  a  notary  public.^^  The  instru- 
ment is  presented  for  payment  and  payment  is  refused,  then 
the  instrument  may  be  taken  by  a  notary  public  to  the  party 
and  the  party  may  state  that  he  refuses  to  pay  it ;  the  notary 
makes  a  statement  to  that  effect  and  attaches  his  seal,  that  it  has 
been  dishonored,  and  that  he  has  protested  it  for  non-payment. 
The  notary  keeps  this  or  he  may  send  his  sworn  statement,  one 
copy  to  one  person  and  one  to  the  other.^^  This  is  the  protest, 
it  is  not  the  notice  of  protest.  The  protest  is  a  solemn  declara- 
tion made  by  the  notary  public  that  the  paper  has  been  dis- 
honored.*®   Now,  when  suit  is  brought  on  the  paper,  it  is  abso- 

*''  Neg.  Inst.  Law,  §  84,  where  all 
cases  directly  or  indirectly  bearing 
upon  or  citing  the  Law  are  grouped. 

*''*  Pittsburg- Westmoreland  Coal 
Co.  V.  Kerr,  220  N.  Y.  137,  115  N. 
E.  465. 

18  Donegan  v.  Woods,  49  Ala.  242, 
20  Am.  Rep.  275 ;  Scrider  v.  Brown, 
3  McLean  (U.  S.)  481,  21  Fed.  Cas. 
No.  12,205.. 


i9LeftIey  v.  Mills,  4"  T.  R.  170; 
Gale  V.  Walsh,  5  T.  R.  170;  Rod- 
gers  V.  Stephens,  2  T.  R.  713.  As 
to  what  facts  certificate  of  notary 
is  evidence,  see  note  2  U.  S.  L.  Ed. 
102. 

20  Swayze  v.  Britton.  17  Kan.  625. 
As  to  protest  as  sufficient  evidence, 
see  note  36  Am.  St.  Rep.  685, 


208  NEGOTIABLE    INSTRUMENTS.  §  177 

lutely  necessary  that  proof  be  shown.  So  when  you  come  to 
prove  your  case  as  the  holder  of  an  instrument  you  must  prove 
that  there  has  been  a  protest  of  the  instrument,  that  it  has  been 
presented  for  payment  or  acceptance  to  the  person  liable  and  that 
it  has  been  refused.  That  is  part  of  your  case.  And  when 
you  come  to  the  trial,  this  statement  of  the  protest  by  the  notary 
is  a  part  of  your  case.  It  is  the  same  as  a  deposition.  It  can 
go  into  evidence  anywhere  and  will  prove  the  case  just  the  same 
as  a  deposition. 

For  this  certificate  is  generally  accepted  as  evidence  of  the 
facts  set  forth  in  its  terms,  and  its  production  obviates  the  neces- 
sity of  proof  of  these  facts  by  witnesses  in  open  court.  The  main 
purpose  of  the  protest,  therefore,  is  to  furnish  to  the  holder  legal 
testimony  of  presentment,  demand,  and  notice  of  dishonor,  to  be 
used  in  actions  against  the  drawer  and  indorsers. 

And  the  notary's  certificate  of  protest  is  only  evidence  of  those 
facts  which  are  stated  therein  and  which  it  is  the  duty  of  the 
notary  to  note  in  making  presenment  and  demand  for  payment. 
Collateral  facts  noted  by  the  certificate  must  be  proved  by  other 
evidence. 

A  protest  certificate  is  only  prima  facie  evidence  and  all  facts 
stated  therein  may  be  disproved  by  competent  evidence  show- 
ing the  statements  to  be  untrue. 

§  177.  Protest — Notice  of.  After  the  notary  protests  the  in 
strument  he  sends  notice  to  all  the  parties  on  the  instrument.** 
He  can  do  this  in  several  ways.  He  might  send  it  to  the  per- 
son who  sent  the  paper  in  for  collection.  Then  the  notary  public 
would  send  his  notice  of  protest  for  the  other  parties  on  the  in- 
strument, to  the  last  person  on  the  instrument,  and  he  would  say, 
"Notices  enclosed  herewith  to  be  sent  to  the  other  parties."  If 
the  holder  has  sent  notice  to  all  the  parties,  he  is  entitled  to  come 
in  and  recover  because  he  has  performed  his  contract.  He  has 
sent  notice  to  all  the  parties  on  the  instrument  that  he  intends  to 
recover  against  them.  Now,  if  the  indorsee  is  D  and  he  has  sent 
notice  to  all  the  other  indorsers,  he  can  proceed  against  all  or 
any  one  of  them.  C  gets  the  notice  and  he  sends  out  notices 
to  those  who  preceded  him  and  that  holds  them,  but  they  will 
be  held  already  by  the  notices  sent  them  by  the  other  man.  It 
is  just  performing  the  contract  which  was  entered  into  in  the 
way  a  merchant  would  do  it.     It  is  performing  the  contract 

aiTevis  v.   Randall,   6   Cal.   632,      65  Am.  Dec.  547;  Ban  v.  Marsh,  9 

Yerg.  (Tenn.)  253. 


§  177  PRESENTMENT — NOTICE  OF  DISHONOR.  209 

which  was  entered  into  originally  so  that  you  may  come  within 
the  terms  of  the  contract.^^ 

It  is  the  duty  of  a  bank  undertaking  the  collection  of  a  bill 
or  note  to  protest  the  same  upon  dishonor  and  give  the  proper 
notice.  Some  jurisdictions  hold  that  the  notice  must  be  given  to 
all  prior  indorsers  while  others  hold  that  notice  need  be  given  only 
to  the  collecting  bank's  immediate  indorser  or  principal.  Under 
the  latter  view  when  the  principal  has  received  notice  the  col- 
lecting bank  is  relieved  from  liability.  Thus  it  is  no  part  of  the 
duty  of  the  collecting  bank  to  forward  to  an  indorsee  notice  of 
dishonor  received  by  it  from  its  correspondent,  provided  its  prin- 
cipal received  notice  of  the  dishonor,  that  is,  a  bank  which  col- 
lects through  a  correspondent  bank  must  see  to  it  that,  at  least, 
its  principal  is  notified.^** 

Below  is  given  a  form  of  notice: 

FORM  OF  NOTICE  OF  PROTEST. 
State  dp 


ss 
County  of. 

,  19... 

To 


You  will  please  take  notice  that  a for 

dollars,  dated 

payable after drawn  by 

in  favor  of on 

(accepted  by) endorsed  by 

you  and  due has  been  protested  by  me  on  this 

day  for  non- after  having  made  legal  demand 

for  the  same. 

I  hereby,  at  the  request  of ,  the  holder 

thereof,  notify  you  that  the  said  holder  looks  to  you  for  pay- 
ment, damages,  interest  and  costs  as  indorser  thereof. 

Very  respectfully, 


Notary  Public. 
My  Commission  Expires  on 

the 

day  of ,  19__ 

22  Lysaght  v.  Bryant,  9  C.  B.  46 ;  People's    National    Bank,    263    Pa. 

Smith  V.  Poillon,  87  N.  Y.  590,  41  266.  106  A.  311,  4  A.  L.  R.  531,  3 

Am.  Rep.  402 ;  Wilson  v.  Swaberg,  R.  C.  L.  250  and  622.   Note  4  A.  L. 

1  Stark.  34.  R.  534. 

*2a  Farmers'    National    Bank    v. 


210  iSTEGOTIABLE   INSTRUMENTS.  §  178 

§  178.  Protest — What  should  be  protested  and  what  not 
necessary.  As  to  what  should  be  protested  and  what  is  un- 
necessary to  protest  the  Negotiable  Instruments  Law  has  the  fol- 
lowing provisions : 

"Where  any  negotiable  instrument  has  been  dishonored  it  may 
be  protested  for  non-acceptance  or  non-payment,  as  the  case  may 
be;  but  protest  is  not  required  except  in  the  case  of  foreign  bills 
of  exchange."^'^ 

In  many  states  statutes  make  the  certificate  of  the  notary 
prima  facie  evidence  of  the  facts  of  presentment,  demand,  non- 
payment and  notice  of  dishonor.  Therefore,  while  protest  is  not 
required  in  cases  of  promissory  notes  and  inland  bills,  it  is  usual 
to  protest  these  instruments  also,  when  dishonored,  since  the 
notary's  certificate  of  protest  is  the  most  convenient  and  certain 
mode  of  proving  the  facts.*^*  And  under  some  statutes  it  has 
been  held  prima  facie  evidence  that  notice  was  given  in  com- 
pliance with  the  Negotiable  Instruments  Law.^^" 

"Where  a  foreign  bill  appearing  on  its  face  to  be  such  is  dis- 
honored by  non-acceptance,  it  must  be  didy  protested  for  non^ 
acceptance,  and  where  such  a  bill  zvhich  has  not  previously  been 
dishonored  by  non-acceptance  is  dishonored  by  non-payment,  it 
must  be  didy  protested  for  non-payment.  If  it  is  not  so  protested, 
the  drazver  and  indorsers  are  discharged.  Where  a  bill  does  not 
appear  on  its  face  to  be  a  foreign  bill,  protest  thereof  in  case 
of  dishonor  is  unnecessary."^* 

A  foreign  bill  must  be  presented  by  a  notary  public,  because, 
from  the  needs  of  the  case,  some  act  of  a  universally  recognized 
authority  is  called  for.*'  By  force  of  custom,  the  official  act  of 
the  notary  public  is  of  recognized  authority  throughout  the  world. 

Protest  by  notaries  public  of  a  foreign  note  is  unnecessary, 
unless  it  is  indorsed;  but,  if  indorsed,  its  protest  by  a  notary 
public,  according  to  the  weight  of  authority,  is  required  be- 
cause the  indorsement  of  a  note  is  essentially  a  bill  drawn  on 
the  maker .20 

23  Neg.  Inst.  Law,  §  118,  where  all  As  to  protest  for  non-acceptance, 
cases  directly  or  indirectly  bearing  see  notes  1  U.  S.  L.  Ed.  640  and  2 
upon  or  citing  the  Law  are  grouped.  U.  S.  L  Ed.  79. 
As  to  protest  of  promissory  note  or  ^5  Commercial  Bank  v.  Barks- 
inland  bill  under  general  law  mer-  dale,  36  Mo.  563;  Sussex  Bank  v. 
chant,  see  note  5  U.  S.  L.  Ed.  228.  Baldwin,    17    N.    J.    L    476;    Cape 

23a  Eaves  v.  Keeton,  —  Mo.  App.  Fear  Bank  v.  Stinemetz,  1  Hill  (S. 

— .  193  S.  W.  629.  C.)    44.     As   to  liability  of  notary 

23"  Scott  V.   Brown,   240   Pa.   St.  for  neglect  to  protest,  and  of  bank 

.".28,  87  A.  431.  employing  him,   see  note  16  U.   S. 

2-*  Neg.  Inst.  Law,  §  152,  where  all  L.  Ed.  466. 
cases  directly  or  indirectly  bearing  26  Austin  v.  Rodman,  8  N.  C  194, 

upon  or  citing  the  Law  are  grouped.  9  Am.  Dec.  630;  Carter  v.  Union 


§§  179-180  PRESENTMENT — NOTICE  OF  DISHONOR.  211 

The  convenience  of  proving  the  essential  facts  of  dishonor  by 
notarial  certificate  has  caused  the  enactment  in  some  of  the 
States  of  statutes  requiring  or  permitting  the  protesting  of  inland 
bills  and  notes. 

§  179.  Protest — Waiver.  Protest  is  vi^aived  by  express  or 
impHed  waiver  of  a  presentment  for  payment,  and  protest  is 
dispensed  with  by  the  same  circumstances  which  would  dispense 
with  notice  of  dishonor  in  the  case  of  an  inland  bill,  and  cir- 
cumstances excusing  delay  in  giving  notice  of  dishonor  will 
excuse  delay  in  protesting. 

The  Negotiable  Instruments  Law  provides : 

"Protest  is  dispensed  ivith  by  any  circumstances  which  would 
dispense  with  notice  of  dishonor.  Delay  in  noting  or  protesting 
is  excused  when  delay  is  caused  by  circumstances  beyond  the 
control  of  the  holder  and  not  imputable  to  his  defaidt,  miscon- 
duct, or  negligence.  When  the  cause  of  delay  ceases  to  operate, 
the  bill  must  be  noted  or  protested  zvith  reasonable  diligence. "^"^ 

"Where  the  waiver  is  embodied  in  the  instrument  itself,  it  is 
binding  upon  all  parties;  but  where  it  is  written  above  the  signa- 
ture of  an  indorser,  it  binds  him  only."^^ 

"A  zmiver  of  protest  whether  in  the  case  of  a  foreign  bill  of 
exchange  or  other  negotiable  instrument,  is  deemed  to  be  a  waiver 
not  only  of  a  formal  protest,  but  also  of  presentment  and  notice 
of  dishonor."^^ 

§  180.  Protest — Miscellaneous  matters.  A  foreign  bill  dis- 
honored for  non-acceptance  must  be  protested,  but  when  this  is 
done  it  need  not  be  subsequently  protested  for  non-payment. 

Any  holder  may  present  the  bill  or  note  for  payment  and  re- 
ceive payment,  but  in  case  payment  is  refused  and  protest  be- 
comes necessary,  the  notary  public  who  makes  the  protest  is 
obliged,  by  law  to  make  a  second  demand,  so  that  he  can  of  his 
own  personal  knowledge  certify  to  the  fact  of  dishonor.^" 

Bank,  7   Humph.    (Tenn.)    548,   46  As  to  effect  of  waiver,  see  note  29 

Am.  Dec.  671 ;  Carmichael  v.  Penn-  L.  R.  A.  313. 

sylvania  Bank,  4  How.  (Miss.)  567,  29  Neg.  Inst.  Law,  §  111,  where  all 

35  Am.  Dec.  408.  cases  directly  or  indirectly  bearing 

27  Neg.  Inst.  Law.  §  159.  where  all  upon  or  citing  the  Law  are  grouped, 
cases  directly  or  indirectly  bearing  ^^  Ellis  v.  Commercial  Bank,  7 
upon  or  citing  the  Law  are  grouped.  How.  (Miss.)  294,  40  Am.  Dec.  63; 

28  Neg.  Inst.  Law,  §  110.  where  all  Chenowith  v.  Chamberlin,  6  B. 
cases  directly  or  indirectly  bearing  Mon.  (Ky.)  60,  43  Am.  Dec.  145: 
upon  or  citing  the  Law  are  grouped.  Donegan  v.  Wood,  49  Ala.  242,  20 

Am,  Rep.  275. 


212  NEGOTIABLE    INSTRUMENTS.  §  180 

A  bill  must  be  protested  at  the  place  where  it  is  dishonored,  but 
if  the  domicile  and  place  of  payment  are  different  it  may  be 
protested  at  either  place.^^ 

When  the  laws  are  in  conflict,  the  validity  of  the  protest  will 
be  determined  by  the  law  of  the  place  where  it  is  made.^^ 

The  notary's  minutes  made  on  the  bill  or  note,  such  as  his 
initials,  the  date  and  the  like,  are  made  for  his  convenience, 
since  he  by  the  law  merchant  is  required  to  make  the  protest  the 
same  day  that  the  presentment  and  demand  were  made,  and  this 
short  form  is  equivalent  to  the  protest  itself,  and  the  more  formal 
protest  may  be  made  out  later  from  the  minutes. 

When  the  acceptor  of  a  bill  becomes  bankrupt  or  makes  an 
assignment  before  its  maturity,  it  may  be  protested  for  better 
security.^^ 

"Where  the  acceptor  has  been  adjudged  a  bankrupt  or  an 
insolvent,  or  has  made  an  assignment  for  the  benefit  of  creditors, 
before  the  bill  matures,  the  holder  may  cause  the  bill  to  be  pro- 
tested for  better  security  against  the  drawer  and  indorsers."^* 

"Where  a  bill  is  lost  or  destroyed  or  is  wrongly  detained  from 
the  person  entitled  to  hold  it  protest  may  be  made  on  a  copy  or 
written  particulars  thereof f'^ 

The  notary  public  must  present  the  paper,  if  you  desire  to 
protest  it,  either  for  non-payment  or  non-acceptance.^* 

The  custom  in  some  cities  is  to  make  two  presentments,  twice 
in  the  same  day.  If  it  is  not  accepted  when  it  is  presented  in 
the  forenoon  it  is  taken  back  again  in  the  afternoon  and  is  pro- 
tested. 

As  the  Negotiable  Instruments  Law  makes  no  provision  as  to 
the  damages  which  may  be  recovered  on  foreign  bills  of  ex- 
change, this  matter  is  to  be  determined  by  the  law  merchant 
under  section  196  of  the  Law  or  by  statute  in  the  dififerent  juris- 
dictions.   The  damages  recoverable  by  the  payee  of  a  negotiable 

31  Grigsby  v.  Ford,  3  How.  cases  directly  or  indirectly  bearing 
(Miss.)  184;  Neeley  v.  Morris,  2  upon  or  citing  the  Law  are  grouped. 
Head.  (Tenn.)  595,  75  Am.  Dec.  35  Ngg.  Inst.  Law,  §  160,  where  all 
753.  cases  directly  or  indirectly  bearing 

32  Wooley  V.  Lyon,  117  111.  244,  6  upon  or  citing  the  Law  are  grouped. 
N.  E.  885,  57  Am.  Rep.  867;  Tick-  Hinsdale  v.  Miles,  5  Conn.  331; 
ner  v.  Roberts,  11  La.  14,  30  Am.  Kavanaugh  v.  Bank,  59  Mo.  App. 
Dec.   706;   Carter   v.   Union    Bank,  540. 

7    Humph.    (Tenn.)    548,    46   Am.  38  Ellis   v.    Commercial   Bank,   7 

Dec.  89.  How.  (Miss.)  294,  40  Am.  Dec.  6Z; 

33  Neg.  Inst.  Law,  §  158,  where  all  Chenowith  v.  Chamberlain,  6  B. 
cases  directly  or  indirectly  bearing  Mon.  (Ky.)  60,  43  Am.  Dec.  145; 
upon  or  citing  the  Law  are  grouped.  Donegan  v.  Wood,  49  AU.  242,  20 

34  Neg.  Inst.  Law,  §  159,  where  all  Am.  Rep.  275, 


8    180  PRESENTMENT — NOTICE   OF   DISHONOR.  213 

foreign  bill  of  exchange  protested  for  non-payment  against  the 
drawee  may  be  deemed  to  be  made  up  as  follows :  (a)  The  face 
of  the  bill;  (b)  interest  thereon;  (c)  protest  fees;  (d)  re- 
exchange,  i.  e.,  the  additional  expense  of  procuring  a  new  bill 
for  the  same  amount  payable  in  the  same  place  on  the  day  of 
dishonor;  or  a  percentage  in  lieu  of  such  re-exchange  in  juris- 
dictions where  it  is  prescribed  by  statute .*'' 
S7  Pavenstedt  v.  N.  Y.  Life  Insur  ance  Co.,  203  N.  Y.  91. 


io  H. 


7^ 


a.-^^ 


CHAPTER  XVII. 
DISCHARGE  OF  NEGOTIABLE  INSTRUMENTS. 


§  181.  In  general.  §  188.  By  alteration. 

182.  By  payment.  jgg    gy   ^h^   principal    debtor   be- 

18J.  By  payment  for  honor.  ^ .•  „    ^.u      i    i  i        •      u- 

io,  r.               11     •             1  commg    the    holder    m    hia 

184.  By    cancellation    and    surren-  ^^^  ^.j^j^^ 

185.  By  covenant  not  to  sue.  ^^^  ^^  operation  of  law. 

186.  By  accord  and  satisfaction.  191.  By  renunciation  of  holder. 

187.  By    substitution    of    another  192.  When    a   person    secondarily 

obligation.  liable,  discharged. 

§  181.  In  general.  Some  writers  treat  this  subject  under 
the  head  of  defense  while  others  treat  it  as  the  performance  of 
an  obHgation  contracted.  It  will  be  treated  here  largely  in  the 
nature  of  a  discharge  of  a  contract. 

The  Negotiable  Instruments  Law  provides,  as  follows : 

"A  negotiable  instrument  is  discharged, 

1.  By  payment  in  due  course  by  or  on  behalf  of  the  principal 
debtor. 

2.  By  payment  in  du.e  course  by  the  party  accommodated, 
where  the  instrument  is  made  or  accepted  for  accommodation. 

3.  By  the  intentional  cancellation  thereof  by  the  holder. 

4.  By  any  other  act  which  will  discharge  a  simple  contract  for 
the  payment  of  money. 

(Thus  the  release  of  one  joint  maker  will  operate  to  discharge 
the  others.)'* 

5.  When  the  principal  debtor  becomes  the  holder  of  the  in- 
strument at  or  after  maturity  in  his  ozvn  right."^ 

The  words  "in  his  own  right"  exclude  the  cases  where  the 
maker  or  acceptor  acquire  the  instrument  in  a  purely  repre- 
sentative capacity  as  agent,  as  executor  or  in  some  such  capacity.** 

The  above  five  provisions  of  the  Law  merely  designate  the  acts 
which  discharge  the  instrument  and  do  not  purport  to  describe 

a  Case  v.  Bridger,  133  La.  754,  63  discharging  other  parties   only  pro 

So.  319.  tanto,  see  note  2  U.  S.  L.  Ed.  79. 

1  Neg.  Inst.  Law,  §  119,  where  all  l»  Schwartzman  v.   Post,  94  App. 

cases  directly  or  indirectly  bearing  Div.    (N.  Y.)    474,  87  N.  Y.   Supp. 

upon  or  citing  the  Law  are  grouped.  872 ;  Peoples  State  Bank  v.  Dryden, 

As  to  part  payment  by  one  party  91  Kans.  216,  137  P.  928. 

214 


§  182  DISCHARGE    OF    INSTRUMENTS.  215 

the  character  of  proof  by  which  they  must  be  estabhshed.  A 
renunciation  must  therefore  be  in  writing  under  section  122  of 
the  Law,  unless  the  instrument  is  deHvered  up  to  the  party 
primarily  liable  thereon.^" 

§  182.  By  payment.  Negotiable  instruments  may  be  dis- 
charged by  payment.^  This  is  the  most  usual  way  of  perfecting 
a  discharge  of  the  bill  or  note.  The  very  nature  of  the  word 
payment  indicates  that  it  is  a  discharge  of  a  contract  to  pay 
money  by  giving  to  the  party  entitled  to  receive  it  the  amount 
agreed  to  be  paid  by  one  of  the  parties  to  the  contract.  Pay- 
ment is  not  a  contract  but  is  rather  a  manner  of  discharging  a 
contract  in  which  one  party  has  a  right  to  demand  a  sum  of 
money  and  in  which  the  other  party  has  a  right  to  receive  the 
money.  Then  by  payment  is  meant  the  discharge  of  a  contract 
tO'  pay  money  by  giving  to  the  party  entitled  to  receive  it,  the 
amount  agreed  to  be  paid  by  one  of  the  parties  who  entered 
into  the  agreement.^  Payment  as  stated  above  is  not  a  contract. 
It  is  the  discharging  of  a  contract  in  which  the  party  of  the 
first  part  has  a  right  to  demand  payment,  and  the  party  of  the 
second  part  has  a  right  to  make  payment.  A  sale  is  altogether 
different.  It  is  a  contract  which  does  not  extinguish  a  bill  or 
note,  but  continues  it  in  circulation  as  a  valid  security  against 
all  parties.  And  it  is  necessary  to  constitute  a  transaction  a 
sale  that  both  parties  should  expressly  or  impliedly  agree,  the 
one  to  sell  and  the  other  to  purchase  the  paper.  Whether  the 
transaction  is  a  purchase  or  payment  is  a  question  for  the  jury 
where  the  facts  are  in  dispute,  to  be  resolved  according  to  the 
intention  of  the  parties,  by  looking  to  the  substance  of  the 
matter  rather  than  its  form.  Payment  is  usually  made  by  the 
principal  debtor  and  is  a  complete  discharge  of  the  instrument, 
that  is,  "a  negotiable  instrument  is  discharged  by  payment  in  due 
course  by  or  on  behalf  of  the  principal  debtor'"^  because  it  is 
the  performance  of  a  contract  according  to  its  terms  by  the 
person  primarily  liable.  Payment  may  be  made  by  any  other 
person  than  the  principal  debtor.     But  in  order  that  he  may  in 

l**  Whitcomb     v.     National     Ex-  to  necessity  of  surrender,  see  note 

change  Bank,   123  Md.   612,   91   A.  1  Am.  St.  Rep.  184;  and  as  to  pre- 

689.  sumption  of  payment  from  lapse  of 

2Ballard   v.   Gremburch,   24   Me.  time,  see  18  Am.  St.  Rep.  882. 

336;  Dooley  v.  Va.  Fire  &  Marine  3  Kendall  v.  Brownson,  47  N.  H. 

Ins.    Co.,    Fed.    Cas.    No.    3,999,    3  186;  Green  v.  Hughitt  School  Tp., 

Hughes  (U.  S.)  221 ;  Christman  v.  5  S.  D.  452.  59  N.  W.  224. 

Harmon,  29  Gratt.  494.     As  to  ef-  ^  Neg.  Inst.  Law,  §  119,  where  all 

feet    of    payment   by   indorser,    see  cases  directly  or  indirectly  bearing 

note  14  Am,  St.  Rep.  794 ;  and  as  upon  or  citing  the  Law  are  grouped. 


216  NEGOTIABLE    INSTRUMENTS.  §  182 

turn  recover  from  the  maker  it  is  necessary  for  him  to  ascertain 
whether  there  has  been  presentment,  protest  and  notice,  because 
in  default  of  these  steps  in  this  particular  case  the  maker  would 
not  be  liable  to  him.  It  is  also  advisable  for  him  to  inform  him- 
self as  to  the  identity  of  the  holder  and  determine  as  to  whether 
or  not  he  has  the  legal  title  to  the  instrument,  "and  payment 
to  him  in  due  course  discharges  the  instrument."^  Payment 
always  discharges  the  instrument  when  made  to  the  proper  party 
but  it  does  not  discharge  all  the  parties.  The  principal  debtor 
must  pay  the  amount  of  the  instrument  before  he  is  discharged.* 
But  it  must  be  understood  that  not  any  one  who  desires  may 
pay  the  instrument  and  then  recover  of  the  maker.  He  must 
be  a  person  who  has  in  some  way  made  himself  liable  for  the 
payment  of  the  instrument.  There  is  however  one  exception  to 
this,  and  that  is  where  an  instrument  has  been  protested  and 
some  one  comes  in  and  makes  "payment  supra  protest"  or  "for 
honor." 

The  mere  fact  that  the  payee  stamps  the  word  "paid"  upon 
the  instrument  does  not  constitute  payment.^* 

"A  negotiable  instrument  is  discharged: 

By  payment  in  due  course  by  the  party  accommodated  where 
the  instrument  is  made  or  accepted  for  accommodation.'"^ 

Thus  where  a  note  is  made  for  the  accommodation  of  one  of 
the  makers  and  he  pays  it  then  it  is  discharged  as  to  other 
makers. '^^ 

Any  party  to  a  bill  or  note  may  pay  it,  and  an  indorser  who 
has  been  discharged  by  failure  of  notice  may  still  sue  a  prior 
indorser  or  other  parties  who  were  not  discharged,  because,  al- 
though not  compelled  to  pay  it,  he  acquires  the  right  of  the  holder 
from  whom  he  took  the  instrument,  or  is  remitted  to  his  own 
rights  as  indorsee.® 

A  mere  stranger  to  the  paper  cannot  make  payment  without 
the  consent  of  the  holder  unless  he  represents  a  party  liable 
thereon,  or  makes  payment  supra  protest.**    And  when  one  who  is 

5  Neg.  Inst.  Law,  §  51.  where  all  '^^  Comstock  v.  Buckley,  141  Wis. 

cases  directly  or  indirectly  bearing  228,  124  N.  W.  414. 

upon  or  citing  the  Law  are  grouped.  ^Ellsworth   v.    Brewer,    11    Pick. 

*•  King  V.  Hannah,  6  111.  App.  495;  316;  Comomnwealth  Bank  v.  Floyd, 

Leeke  v.  Hancock,  76  Cal.   127,   17  4  Mete.  (Ky.)   159;  Meyer  v.  Spen- 

Pac.  937 ;  Mead  v.  Small,  2  Me.  207,  cer,  9  Mo.  App.  590 ;  Ticonic  Nat. 

11  Am.  Dec.  62.  Bank  v.  Bagley,  68  Me.  249. 

6a  Hanna  v.  McCrory,  19  N.  Mex.  But  see  Turner  v.  Leech,  4  B.  & 

183,  141  P.  996.  Aid  457,  6  E.  C.  L.  556;  Roscow  v. 

''Neg.  Inst.  Law,  §   119,  subd.  2,  Hardy,  2  Campb.  458,  12  East.  434. 

where    all    cases    directly    or    indi-  ®  Burton  v.   Slaughter,  26  Gratt. 

rectly   bearing   upon    or    citing   the  919. 
Law  are  grouped. 


§  182  DISCPIARGE  OF  INSTRUMENTS.  217 

not  a  party  to  negotiable  paper  pays  his  money  for  it  and  takes 
up  the  paper,  the  presumption  is  that  he  has  bought  it  and  not 
paid  it  off.^* 

Where  some  payment  is  made  to  the  holder  of  a  negotiable 
note  by  an  indorser  in  discharge  of  his  obligation  as  an  indorser, 
it  does  not  enure  to  the  benefit  of  the  maker  of  the  instrument 
and  in  an  action  upon  it  the  maker  is  liable  for  the  whole  amount 
thereof,  notwithstanding  the  payment.  The  indorser  to  the  extent 
of  the  money  paid  becomes  equitably  entitled  to  be  substituted 
to  the  rights  and  remedies  of  the  holder,  and  becomes,  pro  tanto, 
the  beneficial  owner  of  the  debt;  so  that  the  maker's  obligation 
to  pay  the  note  in  full,  at  first  due  the  holder  solely  in  his  own 
right,  becomes,  after  the  part  payment  by  the  indorser,  still 
wholly  due  to  the  holder,  but  partly  in  his  own  right  and  partly 
as  trustee  for  the  indorser.  A  court  of  law  cannot  split  the 
note  into  parts,  and  must  act  upon  the  legal  interest  and  own- 
lership.^" 

Where  payment  is  made  by  a  party  who  is  not  the  primary 
obligor  or  an  accommodation  party,  his  payment  only  cancels  his 
own  liability,  and  those  who  are  obligated  after  him.  All  prior 
parties,  primarily  or  secondarily  liable  on  the  bill,  are  liable  to 
such  a  payer,  and  the  payer  may  cancel  indorsements  subsequent 
to  his  own  and  reissue  the  paper,  and  it  will  be  valid  as  against 
the  prior  parties. 

The  Negotiable  Instruments  Law  covers  this  by  the  following 
provision : 

"Where  the  instrument  is  paid  by  a  party  secondarily  liable 
thereon,  it  is  not  discharged ;  but  the  party  so  paying  it  is  re- 
mitted to  his  former  rights  as  regards  all  prior  parties,  and  he 
may  strike  out  his  own  and  all  subsequent  indorsements,  and\ 
again  negotiate  the  instrument,  except:  * 

1.  Where  it  is  payable  to  the  order  of  a  third  person,  and  has 
been  paid  by  the  drawer;  and 

2.  Where  it  luas  made  or  accepted  for  accommodation,  and 
has  been  paid  by  the  party  accommodated."'^^ 

Payment  of  a  bill  or  note  should  be  made  to  the  legal  owner 
or  holder  thereof,  or  some  one  authorized  by  him  to  receive  it.** 
If  it  be  payable  to  bearer  or  indorsed  in  blank,  any  person  having 

»aCantrelI  v.  Davidson,  180  Mo.  "  Stuart  v.  Asher,  15  Colo.  App. 

App.  410,  168  S.  W.  271.  403,  62  Pac.  1051 ;  Walter  v.  Logan. 

O""  Madison       Square      Bank      v.  63  Kan.  193,  65  Pac.  225 ;  Chicago 

Pierce,  137  N.  Y.  444.  etc.  Ry.  Co.  v.  Burns,  61  Neb.  793, 

lONeg.  Inst.  Law,  §  121,  where  all  86  N.  W.  724;  Patten  v.  Fullerton. 

cases  directly  or  indirectly  bearing*  27  Me.  58. 
upon  or  citing  the  Law  are  grouped. 


218  NEGOTIABLE   INSTRUMENTS.  §  182 

it  in  possession  may  be  presumed  to  be  entitled  to  receive  pay- 
ment, unless  the  payer  have  notice  to  the  contrary;  and  a  pay- 
ment to  such  person  will  be  valid,  although  he  may  be  a  thief, 
finder  or  fraudulent  holder. 

"Payment  is  made  in  due  course  zvhen  it  is  made  at  or  after 
the  maturity  of  the  instrument  to  the  holder  thereof  in  good  faith 
and  zmthout  notice  that  his  title  is  defcctive."^^ 

The  maker  of  a  note  or  the  acceptor  of  a  bill  must  satisfy 
himself,  when  it  is  presented  for  payment,  that  the  holder  traces 
his  title  through  genuine  indorsements ;  for  if  there  is  a  forged 
indorsement  it  is  a  nullity  and  no  right  passes  by  it.*^ 

The  party  making  payment  should  insist  on  the  presentment 
of  the  paper  by  the  party  demanding  payment,  in  order  to  make 
sure  that  it  is  at  the  time  in  his  possession,  and  not  outstanding 
in  another.     And  if  at  the  time  he  makes  payment  it  is  out- 
standing, and  Held  by  a  bona  Me  holder  for  value,  he  will  be 
I    liable  to  pay  it  again,  and  a  receipt  taken  will  be  no  protection. 
\    The  party  making  payment  of  the  bill  or  note  should  also  not  fail 
I   to  insist  upon  its  being  surrendered  up,  as  a  voucher  that  the 
I  party  receiving  the  money  was  entitled  to  do  so  and  also  that  he 
\has  paid  it  to  him. 
\  The  party  bound  to  make  payment  has  no  right  to  do  so  in  any 
other  medium  than  that  expressed  on  the  face  of  the  instru- 
ment— that  is,  he  must  make  payment  in  money.*'* 

When  payment  of  a  bill  or  note  is  made  by  giving  another 
note  or  bill, — other  than  notes  treated  as  legal  tender, — as  a 
general  rule,  such  payment  will  not  be  considered  absolute  until 
the  paper  given  in  payment  has  been  itself  paid,  except  where 
the  parties  expressly  or  impliedly  agree  that  the  claim  shall  be 
discharged  by  such  payment.*^ 

A  distinction  is  made  by  some  authorities  when  the  payer 
gives  his  own  note  in  payment  and  when  he  gives  the  note  or  bill 
of  another.  In  the  first  instance  it  is  usually  treated  as  a 
conditional  payment.*®    When  a  stranger's  note  is  given  in  pay- 

12  Neg.  Inst.  Law,  §  88,  where  all  v.    Patterson,    13   La.   256,  81    Am. 

cases  directly  or  indirectly  bearing  Dec.   432 ;    Klauber   v.    Biggerstaff, 

upon  or  citing  the  Law  are  grouped.  47  Wis.  551,  3  N.  W.  357,  32  Am. 

i^Harter     v.     Mechanics      Nat.  Rep.   772>;   Williamson   v.   Smith,   1 

Bank,  63  N.  J.  L.  578,  44  Atl.  715,  Coldw.  (Tenn.)  1,  78  Am.  Dec.  478. 

76   Am.    St.    Rep.   224;   Tolman   v.  15  Stanley   v.    McElrath,   86   Cal. 

Am.   Nat.   Bank,   22   R.    L   462,   48  449,  25  Pac.   16,   10  L.   R.  A.  545; 

Atl.  480,  84  Am.   St.   Rep.  850,   52  Granite    Nat.    Bank    v.    Firch,    145 

L.  R.  A.  877;  Lane  v.  Nufifer,  5  N-.  Mass.  567,  14  N.  E.  650,  1  Am.  St. 

Y.  S.  421,  25  N.  Y.  St.  823.  Rep.  484 ;  Cadiz  Bank  v.  Slemmons. 

14  Galena  Ins.  Co.  v.  Kupfer,  28  34  Ohio  St.  142,  32  Am.  Rep.  364. 

111.  Zd2,  81  Am.  Dec.  284;  Graydon  le^insted  Bank  v.  Webb,  39  N. 


§  183  DISCHARGE  OF  INSTRUMENTS.  219 

ment  for  a  precedent  debt  it  is  also  generally  treated  as  a  con- 
ditional payment.^''  but  if  given  in  satisfaction  of  a  contem- 
poraneous debt  it  is  held  to  be  an  absolute  payment  if  so  trans- 
ferred as  to  end  the  transferrer's  liability  thereon,  that  is,  with- 
out indorsement.-^^ 

A  new  bill  or  note  given  in  renewal  of  an  old  one  retained  by 
the  payee  is  also  held  to  constitute  but  a  suspension  of  the  old 
one  until  the  new  one  is  paid. 

The  conditional  payment  operates  to  suspend  the  right  of  action 
on  the  original  paper  until  the  paper  taken  in  payment  falls  due, 
then  the  holder  can  sue,  at  his  election,  on  either  of  the  obli- 
gations.-^^ 

A  part  payment  of  a  bill  or  note  which  has  fallen  due  only 
extinguishes  it  pro  tanto,  and  an  agreement  that  it  shall  be  in 
full  discharge  of  the  debt  does  not  make  such  part  payment  any 
more  effectual  as  to  the  residue,  there  being  no  sufificient  con- 
sideration for  the  discharge  of  the  whole.^®  But  any  agreement 
by  way  of  compromise  or  composition,  into  which  any  new  ele- 
ment entered,  would  be  sustained,  and  if  the  claim  were  disputed, 
agreement  to  receive  part  payment  in  full  would  discharge  it.^* 

§  183.  By  payment  for  honor.  "Where  a  hill  has  been  pro- 
tested for  non-payment,  any  person  may  intervene  and  pay  it 
supra  protest  for  the  honor  of  any  person  liable  thereon  or  for 
the  honor  of  the  person  for  whose  account  it  zvas  drauni."'^'^ 

"The  payment  for  honor  supra  protest,  in  order  to  operate  as 
such  and  not  as  a  mere  voluntary  payment,  must  be  attested  by 
a  notarial  act  of  honor  zvhich  may  be  appended  to  the  protest  or 
form  an  extension  to  it."^^ 

Y.  325,  100  Am.  Dec.  435 ;  Nightin-  Mordecai  v.    Stewart,   36  Ga.    126 ; 

gale  V.  Chafee,  11  R.  I.  609,  23  Am.  In  re  Weeks,  8  Ben.   (U.   S.)   269, 

Rep.  531 ;   Scott  v.  Gilkey,  153   111.  29  Fed.  Cas.  No.  17,349. 

168,  39  N.  E.  265.  21  Coburn  v.  Ware,  25  Me.  330 ; 

17  Gibson  v.  Tobey,  46  N.  Y.  6Z1,  Robbins    v.    Cheek,    32    Ind.    328,   2 

7  Am.  Rep.  397;  Tilford  v.  Miller,  Am.  Rep.  348;  Price  v.  Cannon,  3 

84  Ind.  185.  Mo.  453. 

IS  Tobey  v.  Barber,  5  Johns.  68,  22  j^Teg.   Inst.   Law,   §   171,  where 

'  4   Am.    Dec.   326 ;    Day   v.    Kinney,  all  cases  directly  or  indirectly  bear- 

131    Mass.    Zl ;    Susquehanna    Fert.  ing    uponj   or    citing    the    Law    are 

Co.   V.  White,   66  Md.  444,  7   Atl.  grouped.    As  to  payment  for  honor 

802.  in  general,  see  note  7  U.  S.  L.  Ed. 

19  Henry  v.  Conley,  48  Ark.  271,  132. 

Zl  S.  V/.  181 ;  Geib  v.  Reynolds.  35  23  Neg.  Inst.  Law,  §  172.  where 
Minn.  331,  28  N.  W.  923;  East  all  cases  directly  or  indirectly  bear- 
River  Bank  v  Butterworth,  45  Barb.  ing  upon  or  citing  the  Law  are 
(N.  Y.)  476.  grouped. 

20  Hart  V.  Freeman,  42  Ala.  567; 


220  NEGOTIABLE  INSTRUMENTS.  §  184 

"The  notarial  act  of  honor  must  be  founded  on  a  declaration 
made  by  the  payer  for  honor  or  by  his  agent  in  that  behalf  de- 
claring his  intention  to  pay  the  bill  for  honor  and  for  whose 
honor  he  pays."^* 

"Where  two  or  more  persons  offer  to  pay  a  bill  for  the  honor 
of  different  parties,  the  person  zvhose  payment  zvill  discharge 
most  parties  to  the  bill  is  to  be  given  the  preference/'^^ 

"Where  a  bill  has  been  paid  for  honor,  all  parties  subsequent 
to  the  party  for  whose  honor  it  is  paid  are  discharged,  but  the 
payer  for  honor  is  subrogated  for,  and  succeeds  to,  both  the 
rights  and  duties  of  the  holder  as  regards  the  party  for  whose 
honor  he  pays  and  all  parties  liable  to  the  latter."^ 

"Where  the  holder  of  a  bill  refuses  to  receive  payment  supra 
protest,  he  loses  his  right  of  recourse  against  any  party  who 
woidd  haz'e  been  discharged  by  such  pay^nent."^'^ 

"The  payer  for  honor,  on  payment  to  the  holder  of  the  amount 
of  the  bill  and  the  notarial  expenses,  incidental  to  its  dishonor,  is 
entitled  to  receive  both  the  bill  itself  and  the  protest."^^ 

§  184.  By  cancellation  and  surrender.  The  second  method 
by  which  an  instrument  may  be  discharged  is  by  cancellation  and 
surrender.  Where  the  person  who  is  entitled  to  receive  pay- 
ment delivers  up  the  instrument  which  he  holds  against  another 
with  the  intent  and  for  the  purpose  of  discharging  the  debt,  this 
surrender  operates  as  a  release  and  discharge  of  the  liability 
thereon  in  the  absence  of  fraud  or  mistake.  It  is  set  out  in  the 
Negotiable  Instruments  Law  that: 

"A  negotiable  instrument  is  discharged  by  the  intentional 
cancellation  thereof  by  the  holder."^'^ 

Thus  where  the  payee  of  a  note  tears  it  up,  with  the  intention  of 
destroying  and  cancelling  it,  this  is  a  discharge  of  the  note.*®* 

No  consideration  is  necessary  to  support  such  a  transaction 
after  it  has  been  executed.^**    Where  the  return  or  surrender  of 

24  Neg.   Inst.  Law,   §   173,   where  28  ^gg.  Inst.  Law,  §  177,  where  all 

all  cases  directly  or  indirectly  bear-  cases  directly  or  indirectly  bearing 

iiig   upon    or    citing   the    Law    are  upon  or  citing  the  Law  are  grouped, 

grouped.  2»  j^eg.  Inst.  Law,  §  119,  where  all 

35  ivjeg    lx\st.   Law,   §    174,   where  cases  directly  or  indirectly  bearing 

all  cases  directly  or  indirectly  bear-  upon  or  citing  the  Law  are  grouped, 

ing    upon    or    citing    the    Law    are  39a  ]v[ontgomery  v.   Schwal3,    177 

grouped.  Mo.  App.  75,  166  S.  W.  831. 

2«  Neg.  Inst.  Law,  §  175,  where  aTi  30  Hale  v.   Rice,   124  Mass.  292; 

cases  directly  or  indirectly  bearing  Booth  v.  Smith,  3  Woods   (U.  S.) 

upon  or  citing  the  Law  are  grouped.  19,  2  Fed.  Cas.  No.  1,649;  Ellsworth 

'"^  Neg.  Inst.  Law,  §  176^  where  all  v.  Fogg,  35  Vt.  355. 

cases  directly  or  indirectly  bearing  See  in  re  Campbell,  7  Pa.  St.  100, 

upon  or  citing  the  Law  ar?  grouped,  47  Am.  Dec.  503. 


§§  185-186  DISCHARGE   OF   INSTRUMENTS.  221 

a  note  is  induced  by  fraud,^*  the  maker  is  not  released  from 
liability  thereon ;  and  where  a  note  has  been  surrendered  by 
mistake'^  upon  the  supposition  that  it  was  fully  paid,  the  maker 
will  remain  liable  for  the  balance  still  unpaid.  The  holder  may 
waive  his  right  to  payment  by  cancellation.  Cancellation  of  an 
instrument  may  be  made  by  destroying  it  or  by  any  other  means 
by  which  the  intention  to  cancel  the  instrument  may  be  evi- 
denced.^^ 

"A  cancellation  mode  unintentionally,  or  under  a  mistake,  or 
w-ithout  the  authority  of  the  holder,  is  inoperative;  but  where 
ait  instrument  or  any  signature  thereon  appears  to  have  been 
cancelled,  the  burden  of  proof  lies  on  the  party  who  alleges  that 
the  cancellation  was  made  unintentionally,  or  under  a  mistake 
or  without  authority. "^^ 

Cancellation  may  be  made  before  maturity,  but  in  order  to  be 
effective  in  such  case  against  a  bona  fide  holder  it  must  carry 
notice  to  him  of  such  cancellation  upon  its  face.** 

§  185.  By  covenant  not  to  sue.  The  maker  or  acceptor  may 
be  discharged  from  the  payment  of  the  instrument  by  a  general 
covenant  not  to  sue,  and,  of  course,  if  the  maker  is  discharged, 
the  indorsers  will  also  be  discharged.^® 

Such  a  covenant  is  a  discharge  of  the  instrument  as  to  these 
parties,  but  such  a  covenant  will  not  discharge  another  who  is 
jointly  liable  with  the  covenantee.  If  the  covenant  is  given  by 
one  of  two  creditors  it  will  not  operate  as  a  release  or  a  discharge 
of  the  instrument.*'^  A  covenant  not  to  sue  for  a  limited  time 
will  not  discharge  the  instrument  as  between  the  parties,  but 
it  does  release  the  sureties.*^ 

§  186.  By  accord  and  satisfaction.  In  considering  the  ques- 
tion of  accord  and  satisfaction  a  distinction  should  be  made  be- 

SiPindley  v.  Cowles,  93  la.  389,  ssDod  y.  Edwards,  2  Car.  &  P. 

61   N.   W.  998;  Liesemer  v.  Burg,  602;  Morley  v.  Culverwell,  7  Mees. 

106  Mich.  124.  63  N.  W.  999;  Rey-  &  W.  174. 

nolds  V.  French,  8  Vt.  85,  30  Am.  36  Gordon   v.    Third    Nat.    Bank, 

Dec.  456.  144  U.  S.  97,  36  L.  Ed.  360 ;  Hall  v. 

32  Mfg.  Nat.  Bank  v.  Thompson,  Capitol  Bank  of  Macon,  71  Ga.  715; 
129  Mass.  438,  37  Am.  Rep.  376;  Scott  v.  Saffold,  Z7  Ga.  384;  Mc- 
Blodgett  V.  Bickford,  30  Vt.  731,  7Z  Lemore  v.  Powell,  12  Wheat.  (U. 
Am.  Dec.  334.  S.)  554. 

33  Booth  V.  Smith,  3  Woods  (U.  37  Williams  v.  Scott,  83  Ind.  405. 
S.)  19,  2  Fed.  Cas.  No.  1,649;  Blade  38  Hine  v.  Bailey,  16  la.  213,  35 
V.  Noland,  12  Wend.  (N.  Y.)  173.  Am.  Dec.  214;  Hamilton  v.  Prowty, 

34Neg.   Inst.  Law,   §   123,   where  50  Wis.  592,     7N.  W.  659,  36  Am. 

all  cases  directly  or  indirectly  bear-  Rep.  866 ;  Okie  v.  Spencer,  2  Whart. 

ing   upon   or   citing   the   Law   are  253,  30  Am.  Dec.  251. 
grouped. 


222  NEGOTIABLE    INSTRUMENTS.  §  187 

tween  an  extinguishment  and  a  satisfaction  of  a  bill  or  note. 
This  has  been  very  clearly  stated  by  Justice  Story  in  the  follow- 
ing words :  "Taking  a  security  of  a  higher  description,  such  as 
a  bond  or  judgment,  will  extinguish  the  claim  of  the  holder  upon 
the  note  against  the  party  given  the  security ;  but  it  will  not 
amount  to  a  satisfaction  thereof,  so  as  to  discharge  the  other 
parties  upon  the  note."^'**  Any  person  to  whom  the  maker  is 
liable  on  an  instrument  who  makes  an  agreement  with  the  maker 
not  to  sue  has  caused  the  instrument  to  be  extinguished  as  to 
himself,  but  there  is  no  satisfaction  as  to  the  other  parties  to  the 
note."***  Whatever  the  payee  of  the  instrument  receives  from  the 
maker  in  full  satisfaction  of  his  claim  is  a  satisfaction  as  to  all 
other  parties  who  might  have  been  held  liable."*^  Where  the  debt 
or  demand  is  liquidated,  that  is,  where  it  is  a  sum  certain,  the 
payment  of  a  less  sum  by  the  debtor  and  a  receipt  therefor  by 
the  creditor  is  not  an  accord  and  satisfaction  of  the  debt,  although 
the  creditor  agrees  to  accept  it  as  such.'*^  Such  would  not  be  the 
case,  however,  if  the  sum  was  in  dispute  or  was  an  unliquidated 
sum. 

§  187.  By  substitution  of  another  obligation.  A  bill  of  ex- 
change or  promissory  note  may  be  discharged  by  the  substitution 
of  a  new  obligation  for  the  pre-existing  one.'*^  Some  writers  treat 
this  subject  under  the  head  of  novation.  In  these  cases  the  ex- 
tinguishment of  the  old  debt  is  sufficient  consideration  for  the 
new  obligation.  It  is  essential  that  the  new  obligation  be  such 
as  may  legally  take  place  in  order  that  it  may  extinguish  or 
discharge  the  prior  obligation.  There  may  be  a  sufficient  con- 
sideration and  competent  parties  to  the  substitution  obligation, 
but  if  the  new  obligation  is  one  whch  cannot  legally  take  place 
the  prior  instrument  is  not  discharged.^  It  is  permissible  at 
any  time  before  the  contract  of  substitution  is  complete,  for  the 
parties  to  withdraw  from  the  arrangement,  but  after  such  com- 
pletion, none  of  them,  without  the  consent  of  all  the  others, 
may  withdraw  from  or  rescind  or  in  any  way  modify  the  new 
contract  existing  between  them.     The  entire  doctrine  of  substi- 

39  Story  on  Promissory  Notes,  Hun  459,  10  N.  Y.  S.  S8;  Hart  v. 
§  409;  Tradesmen's  Nat.  Bank  v.  Freeman,  42  Ala.  567;  Mordecai  v. 
Looney,  99  Tenn.  278,  42  S.  W.  149,       Stewart,  36  Ga.  126. 

38  L.  R.  A.  837.  43  McDonnell  v.   Ala.   Gold   Life 

40  Dean  v.  Newhall,  8  T.  R.  Ins.  Co.,  85  Ala.  401,  5  So.  120. 
(Eng.)  168;  Fowell  v.  Forrest,  2  Note  10  L.  R.  A.  369;  Note  5  L. 
Saund.   (Eng.)  47n.  R.  A.  414. 

41  S.tory  on  Promissory  Notes,  44  Henry  v.  Nubert  (Tenn.),  35 
§402.  S.  W.  44;  Pope  v.  Vajen,  121  Ind. 

43  People  V.  Hamilton  County,  56      317,  22  N.  E.  308,  6  L.  R.  A.  688. 


§§  188-189  DISCHARGE  OF  INSTRUMENTS.  223 

tution  and  the  legal  effect  thereof  depend  upon  the  agreement 
between  the  parties  and  is  governed  by  the  general  laws  of  con- 
tracts. 

§  188.  By  alteration.  The  general  rule  as  to  whether  or  not 
the  alteration  of  a  bill  or  note  will  operate  as  a  discharge  of  the  in- 
strument depends  upon  the  effect  produced  upon  the  instrument 
by  such  alteration.  If  the  alteration  is  immaterial  it  is  held 
not  to  be  a  discharge,  while,  if  it  is  a  material  alteration  it  is  held 
to  be  a  discharge  of  the  instrument  as  to  all  the  parties  liable 
except  as  to  the  party  who  has  himself  made,  authorized  or  as- 
sented to  the  alteration. 

"Where  a  negotiable  instrument  is  materially  altered  imthout 
the  assent  of  all  parties  liable  thereon,  it  is  avoided,  except  as 
against  a  party  who  has  himself  made,  authorised  or  assented  to 
the  alteration  and  subsequent  indorsers.  But  when  an  instru- 
ment has  been  materially  altered  and  is  in  the  hands  of  a  holder 
in  due  course,  not  a  party  to  the  alteration,  he  may  enforce  pay- 
ment thereof  according  to  its  original  tenor.""*^ 

"Any  alteration  zvJiich  changes:  (1)  The  date;  (2)  the  sum 
payable  either  for  principal  or  interest;  (3)  the  time  or  place 
of  payment;  (4)  the  number  or  the  relations  of  the  parties;  (5) 
the  medium  or  currency  in  which  payment  is  to  be  made;  or  which 
adds  a  place  of  payment  zuhere  no  place  of  payment  is  specified, 
or  any  other  change  or  addition  which  alters  the  effect  of  the  in- 
strument in  any  respect,  is  a  material  alteration."'^ 

If  the  alteration  is  made  before  the  delivery  of  the  instrument 
it  will  not  operate  as  a  discharge  of  it.  If  a  person  after  full 
knowledge  of  an  alteration  unconditionally  promises  to  pay  the 
instrument,  it  is  considered  a  sufficient  ratification  and  will  not 
be  construed  as  a  discharge  of  the  instrument  to  this  particular 
party.'*''  Where  the  alteration  is  made  by  a  stranger  to  the  in- 
strument the  rights  of  the  parties  are  not  affected  and  there  is 
not  sufficient  ground  for  a  discharge."** 

§  189.  By  the  principal  debtor  becoming  the  holder  in  due 
course.  The  instrument  is  discharged  if,  when  it  matures,  the 
acceptor  or  maker  is  or  becomes  the  holder,  since  the  right  to 

45Neg.  Inst.  Law,   §   124,  where  ^7  Canon  v.  Grigsby,  116  HI.  151, 

all  cases  directly  or  indirectly  bear-  5  N.  E.  362;  Bell  v.  Makin,  69  la. 

ing    upon    or    citing    the    Law   are  408,  29  N.  W.  331 ;  Camden  Bank  v. 

grouped.                                •  Hall,  14  N.  J.  L.  583. 

4«  Neg.  Inst.  Law,  §  125,  where  ^^  Paterson  v.  Higgins,  5  111.  App. 
all  cases  directly  or  indirectly  bear-  268;  Piersol  v.  Grimes,  30  Ind.  129; 
ing  upon  or  citing  the  Law  are  White  Sewing  Machine  Co.  v.  Da- 
grouped,  kin,  86  Mich.  581,  49  N.  W.  583. 


224  NEGOTIABLE    INSTRUMENTS.  §  190 

recovery  upon  the  instrument  and  the  liabiHty  to  pay  the  instru- 
ment are  coincident  in  one  and  the  same  person.  In  order  that 
payment  or  coincidence  of  right  and  liabiHty  should  operate  as 
a  discharge,  it  is  essential  that  the  instrument  should  have  ma- 
tured. "A  negotiable  instrument  is  discharged  zvhen  the  prin- 
cipal debtor  becomes  holder  of  the  instrument  at  or  after  ma- 
turity in  his  own  right/''*''*  An  acceptor  or  maker  may  acquire 
it  before  maturity,  as  purchaser,  and  may  then  further  nego- 
tiate it.  The  possession  of  a  bill  of  exchange  by  the  acceptor 
after  it  has  been  in  circulation  is  prima  facie  evidence  that  it  has 
been  paid  by  him.*'-**  And  the  possession  of  a  promissory  note 
by  the  maker  is  prima  facie  evidence  that  it  has  been  paid  by 
him.'*'*''  But  where  he  admits  the  execution  of  the  note,  the  bur- 
den of  showing  payment  is  on  him."*^" 

§  190.  By  operation  of  law.  An  instrument  may  be  dis- 
charged by  operation  of  law.  If  a  judgment  is  obtained  on  a 
bill  or  note,  the  bill  or  note  is  thereby  extinguished  and  merged 
in  the  judgment.^**  The  judgment  alone,  without  actual  satis- 
faction, is  no  extinguishment  as  between  the  plaintiff  and  other 
parties  not  jointly  liable  with  the  original  defendant,  whether 
those  parties  be  prior  or  subsequent  to  the  defendant.^^  The 
issuing  of  execution  against  the  person  or  property  of  one  party 
to  a  negotiable  instrument  does  not  extinguish  the  plaintiff's 
remedy  against  the  other  parties.^*  The  intermarriage  of  the 
maker  of  a  note  with  the  payee  or  holder  formerly  discharged  the 
maker  from  all  liability  thereon,^^  but  this  rule  has  now  been 
changed  by  statute  in  most  jurisdictions.  A  discharge  in  bank- 
ruptcy, unless,  otherwise  provided  by  statute,  releases  a  bankrupt 
from  all  his  provable  debts,  and  therefore  will  discharge  the  bank- 
rupt, on  all  bills  accepted,  or  notes  made  by  him,  but  will  not 
discharge  the  other  parties.®* 

^^Neg.   Inst.  Law,   §    119,  where  51  Qaxton    v.     Swift,    2     Show, 

all  cases  directly  or  indirectly  bear-  (Eng.)  441  . 

ing   upon    or    citing    the    Law    are  ^^  Porter  v.  Ingraham,  10  Mass. 

grouped.  88;   Hayling  v.   Mulhall,  2  W.   Bl. 

49a  Raring  v.  Clark,  19  Pick.  220.  (Eng.)   1235. 

49i>  Perez  v.  Bank  of  Key  West,  ^3  Curtis  v.  Brooks,  37  Barb.  (N. 

36  Fla.  467.  Y.)  476 

49"  Swan  V.   Carawan,  168  N.  C.  ^4  Dean   v.   Justice's    Munic.    Ct., 

472,  84  S.  E.  699.  173  Mass.  453,  53  N.  E.  893,  2  Am. 

50  Claxton    V.    Swift,    2    Show.  B.  R.  163. 
(Eng.)    441;    Nor r is   v.    Aylett,   2 
Campb.  (Eng.)  329. 


§§    119-192  DISCHARGE   OF    INSTRUMENTS.  225 

§  191.  By  renunciation  by  holder.  The  Negotiable  Instru- 
ments Law  provides  that : 

"The  holder  may  expressly  renounce  his  rights  against  any 
party  to  the  instrument,  before,  at  or  after  its  maturity.  An 
absolute  and  unconditional  renunciation  of  his  rights  against  the 
principal  debtor,  made  at  or  after  the  maturity  of  the  instrument, 
discharges  the  instrument.  But  a  renunciation  does  not  affect  the 
rights  of  a  holder  in  due  course  without  notice.  A  renunciation 
must  be  in  writing,  unless  the  instrument  is  delivered  up  to  the 
person  primarily  liable  thereon."^^ 

§  192.     When  a  person  secondarily  liable  discharged.     "A 

person  secondarily  liable  on  the  instrument  is  discharged: 

"By  any  act  which  discharges  the  instrument  ; 

"By  the  intentional  cancellation  of  his  signature  by  the  holder; 

"By  the  discharge  of  a  prior  party; 

"By  a  valid  tender  of  payment  made  by  a  prior  party; 

"By  a  release  of  the  principal  debtor,  unless  the  holder's  right 
of  recourse  against  the  party  secondarily  liable  is  expressly  re- 
served; 

"By  any  agreement  binding  upon  the  holder  to  extend  the  time 
of  payment,  or  to  postpone  the  holder's  right  to  enforce  the  in- 
strument, unless  made  with  the  assent  of  the  party  secondarily 
liable,  or  unless  the  right  of  recourse  against  such  party  is  ex- 
pressly re  served. ''^^ 

Certain  changes  have  been  made  in  the  above  section  of  the  law 
in  some  of  the  states.  In  IlHnois  subdivision  three  is  omitted ; 
at  the  end  of  subdivision  five  the  following  is  added:  "or  unless 
the  principal  debtor  be  an  accommodating  party;"  and  subdi- 
vision six  reads:  "By  an  agreement  in  favor  of  the  principal 
debtor  binding  upon  the  holder  to  extend  the  time  of  payment,  or 
to  postpone  the  holder's  right  to  enforce  the  instrument,  unless 
made  with  the  assent  prior  or  subsequent  of  the  party  secondarily 
liable  or  unless  the  right  of  recourse  against  such  party  is  ex- 
pressly reserved,  or  unless  the  principal  debtor  be  an  accommo- 
dating party."  In  Maryland  and  New  York  the  words  "unless 
made  with  the  assent  of  the  party  secondarily  liable,  or"  are 
omitted  in  subsection  6.  In  Missouri  the  words  "except  when 
such  discharge  is  had  in  bankruptcy  proceedings,"  are  added  at 
the  end  of  subdivision  three.  In  Wisconsin  the  words  "or  unless 
he  is  fully  indemnified,"  are  added  at  the  end  of  the  section ;  and 

55Neg.  Inst.  Law,  §  122.  where  56  Neg.  Inst.  Law.  §  120,  where 
all  cases  directly  or  indirectly  bear-  all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are  ing  upon  or  citing  the  Law  are 
grouped.  grouped. 


226  NEGOTIABLE    INSTRUMENTS.  §  192 

a  new  subdivision  numbered  4a,  is  interpolated,  as  follows  "By 
giving  up  or  applying  to  other  purposes  collateral  security  ap- 
plicable to  the  debt,  or,  there  being  in  the  holder's  hands  or  with- 
in his  control,  the  means  of  complete  or  partial  satisfaction,  the 
same  are  applied  to  other  purposes." 


CHAPTER  XVIII. 
CONFLICT  OF  LAWS,  OR  WHAT  LAW  GOVERNS. 

§  193.  In  general.  197.  As  to  liability  of  indorser. 

194.  As  to  validity,  interpretation       §  198.  As    to    presentment,    protest 

and  effect.  and  notice. 

194a.  As  to  capacity.  199.  Rule  in  federal  courts. 

195.  As     to     liability     of     maker,  199a.  Damages  upon   dishonor   of 

drawer  and  acceptor.  foreign  bills. 

196.  As  to  payment,    interest  and  199b.  Date   at   which   rate   of  ex- 

damages,  change  should  be  applied. 

§  193.  In  general.  Suppose  a  note  is  made  in  Pennsylvania, 
payable  in  Ohio,  indorsed  in  Kentucky,  and  suit  is  brought  upon 
it  in  Illinois ;  and  suppose  each  of  these  states  has  a  different 
law,  which  law  will  govern? 

As  a  general  rule  if  the  instrument  is  made  in  one  state  to  be 
performed  in  another  its  negotiability  will  be  governed  by  the 
laws  of  the  state  in  which  it  is  to  be  performed.''^  The  formalities 
essential  to  the  validity  of  a  contract  and  the  interpretation  there- 
of and  the  matter  as  to  the  capacity  of  the  parties  are  by  the 
weight  of  authority  to  be  governed  by  the  laws  of  the  country 
where  it  is  made.  Suppose  a  note  is  made  in  one  jurisdiction 
and  suit  brought  in  another  jurisdiction,  what  rule  governs  as  lO 
the  bringing  of  the  suit?  The  law  of  the  latter  state.  A  man 
cannot  come  from  another  state  and  sue  on  a  note  under  that 
state's  method  of  procedure,  but  must  proceed  according  to  the 
law  in  the  place  where  he  sues.  All  matters  respecting  the 
remedy  to  be  pursued  including  the  bringing  of  suits,  service  of 
process,  and  admissibility  of  evidence,  depend  upon  the  law  of 
the  place  where  the  action  is  brought.^ 

In  some  states  in  order  for  a  note  to  be  negotiable  by  the  law 
merchant  it  must  be  payable  at  a  bank.  Now  suppose  some  one 
gets  such  a  note  in  another  state  where  such  is  not  the  law  and 

1  National  Bank  of  America  v.  R.  A.  801,  and  as  to  situs  for  pur- 
Indiana  Banking  Co.,  114  111.  483,  poses  of  administration,  see  note  24 
2    N.    E.    401 ;    Shae   etc.    National  L.  R.  A.  689. 

Bank  v.  Wood,  142  Mass.  563,  8  N.  2  Garrigue    v.     Kellar,     164    Ind. 

E.  753.     See  note  61  L.  R.  A.  193.  676. 
As  to  where  taxable,  see  note  2  L. 

227 


228  NEGOTIABLE    INSTRUMENTS.  §  ISH 

he  endeavors  to  recover  upon  that  note.  In  order  to  show  the 
law  of  that  state  he  must  introduce  the  special  statute,  because 
the  court  would  presume  that  the  common  law  prevailed.  In  or- 
der to  show  that  the  formalities  were  different  in  that  state 
from  what  they  are  in  another  state,  that  special  statute  would 
have  to  be  produced  and  introduced  in  evidence  in  another  state 
to  prove  that,  and  if  it  is  not  introduced  in  evidence,  then  the 
common  law  would  prevail.^  In  order  to  have  the  statute  to 
govern,  the  statute  must  be  produced  in  another  state  to  make  it 
supersede  the  common  law  there,  for  if  a  note  is  executed  in  one 
state  and  suit  is  brought  on  it  in  another  state,  in  the  absence 
of  the  statute  of  the  first  state  being  pleaded,  the  common  law 
prevails. 

If  a  bill  on  its  face  is  an  inland  bill,  the  fact  that  it  was 
actually  drawn  and  delivered  in  a  foreign  state  will  not  divest 
it  of  its  inland  character.  The  principle  is  that  it  is  competent 
for  the  parties  to  provide,  by  agreement,  that  it  shall  be  governed 
by  the  laws  of  any  particular  state  or  country.^* 

§  194.  As  to  validity,  interpretation  and  effect.  The  valid- 
ity of  a  bill  or  note  as  regards  requisites  in  form  is  determined 
by  the  law  of  the  place  of  its  issue."*  As  a  negotiable  instru- 
ment is  not  binding  upon  the  parties  until  it  is  delivered,  the 
place  of  contract  is,  therefore,  the  place  where  the  instrument  is 
delivered  and  not  where  it  is  written,  dated  and  signed.'^  But  in 
the  absence  of  evidence  to  the  contrary  it  will  be  presumed  that 
the  instrument  was  executed  and  delivered  at  the  place  where  it 
bears  date.*  Where  the  instrument  specifies  a  place  of  payment 
in  a  different  state  from  that  in  which  it  was  executed  and  de- 
livered it  is  governed  by  the  laws  of  the  state  in  which  it  is  made 
payable  as  to  its  execution.''^ 

The  question  of  the  negotiability  of  a  bill  or  note  is  to  be  deter- 
mined by  the  law  of  the  state  where  it  is  made  payable.  A  note 
payable  generally  and  negotiable  in  the  state  where  executed 
will  be  governed  by  the  law  of  that  state  in  case  suit  is  brought 
there  on  the  note  after  it  has  been  indorsed  in  another  state 

aWhidden  V.  Seelye,  40  Me.  247;  ^Austed   v.    Sutter,   30   111.    164; 

Hunt  V.  Adams,  44  N.  Y.  27;  Fran-  Ford  v.  Buckeye  Ins.  Co.,  6  Bush, 

cis  V.  Ocean  Ins.  Co.,  6  Cow.    (N.  133.     See  also  note  3  U.  S.  L.  Ed. 

Y.)   404;  Mason  v.  Dousay,  35  111.  205. 

424,  85  Am.  Dec.  368.  5  Freese  v.  Brownell,  35  N.  J.  L. 

3a  As   to  state   statutes  declaring  286;  Bell  v.  Packard,  69  Me.  105. 

contracts  executed  by  foreign  corpo-  ^  Lernig    v.    Ralston,    23    Pa.    St. 

rations    void    under    certain    condi-  139. 

tions   see   cases   cited   under   §   60,  ''  Strieker  v,  Tinkham,  35  Ga.  176. 
Neg.  Inst.  Law. 


§  194a  CONFLICT  OF  LAWS.  229 

where  it  is  not  negotiable.  But  it  has  been  held  that  when  a  note 
is  executed  in  one  state  and  made  payable  in  another  that  it  will 
be  governed  for  the  purposes  of  negotiability  by  the  law  of  the 
state  where  payable. 

Some  jurisdictions  state  the  rule  to  be  that  every  contract  as 
to  its  validity,  nature,  interpretation  and  effect  — the  right,  in 
contradistinction  to  the  remedy — is  governed  by  the  law  of  the 
place  where  made,  unless  to  be  performed  iu  another  place  when 
it  is  governed  by  the  law  of  the  place  of  performance.''* 

§  194a.  As  to  capacity.  As  a  general  rule  the  capacity  of 
the  parties  is,  with  some  few  exceptions,  determined  by  the  law 
of  the  place  with  reference  to  which  the  contract  is  made. 

There  is  a  conflict  among  the  authorities,  however,  when  the 
instrument  is  made  in  one  state  and  is  to  be  performed  in  another 
state.  Some  jurisdictions  hold  that  when  parties  make  contracts 
which  upon  their  face  are  to  be  discharged  in  a  state  other  than 
that  in  which  they  are  executed,  they  are  presumed,  in  the  absence 
of  anything  to  the  contrary,  to  have  intended  the  law  of  the  state 
of  performance,  the  les  loci  solutionis,  to  control,  and  thus,  if 
intention  can  do  so,  to  have  voluntarily  constituted  the  law  of 
that  state  the  law  of  the  contract,  or,  the  governing  law ;'"''  and 
matters  connected  with  the  performance  of  the  contract  are  regu- 
lated by  the  law  prevailing  at  the  place  of  performance.'^'^ 

The  question  as  to  capacity,  where  there  is  a  conflict  of  laws, 
has  often  arisen  as  to  the  disability  of  coverture.  In  jurisdic- 
tions holding  that  the  law  prevailing  at  the  place  of  performance 
controls  it  is  stated  that  the  disability  of  coverture  arising  from 
the  law  of  the  married  woman's  domicile  does  not  follow  her  into 
other  states,  and  where  she  goes  into  another  state,  and  makes 
a  contract  valid  by  and  to  be  performed  in  accordance  with  the 
laws  of  such  state,  she  will  be  bound  thereby,  and  such  contract 
will  be  enforced  wherever  suit  is  brought,  even  in  the  state  of 
her  domicile,  subject  only  to  exception  on  ground  of  public  policy 
in  states  where  married  women  are  totally  incapacitated  to  con- 
tract.''" In  other  jurisdictions  it  is  held  that  questions  pertaining 
to  the  capacity  of  the  party  are  determined  by  the  lex  loci  con- 
tractus, that  is,  the  law  of  the  state  where  it  was  executed  and 
not  by  that  of  the  state  wherein  it  is  payable.''*' 

7a  Poole    V.    Perkins,   —   Va.   —  '""Poole  v.  Perkins,  supra. 

101  S.  E.  240.  7«  Garrigan    v.    Kellar,    164    Ind. 

''b  Poole  V.  Perkins,  supra.  676,  74  N.  E.  523,  67  L.  R.  A.  870, 

70  Scudder   v.    Union    Nat.   Bank,  108  Am.  St.  Rep.  324. 

91  U.  S.  1106,  23  L.  Ed.  245. 


230  NEGOTIABLE    INSTRUMENTS.  §  195 

In  jurisdictions  which  maintain  the  view  that  the  formal 
validity  of  the  contract  or  the  capacity  of  the  parties  is  deter- 
mined not  by  the  place  of  performance  but  by  the  place  of  con- 
tract it  is  stated  that  where  a  contract  is  made  in  one  state  and,  by 
its  terms  provides  for  its  performance  in  another,  and  the  laws  of 
the  two  states  differ,  no  fixed  rule  can  be  announced  by  which 
it  can  be  determined  in  every  case  which  law  shall  apply.  Where 
the  parties  have  manifested  an  intention  in  good  faith  to  make 
their  contract  subject  to  the  laws  of  one  or  the  other  of  such 
states  such  intention  will  be  given  effect  in  construing  the  con- 
tract and  determining  the  reciprocal  rights  and  duties  of  the 
parties  thereunder;  but  if  the  question  to  be  decided  relates  to 
the  capacity  of  the  parties  such  question  is  to  be  determined  in 
accordance  with  the  lex  loci  contractus  without  regard  to  the 
intention  of  the  parties.''* 

§  195.    As  to  liability  of  maker,  drawer  and  acceptor.    The 

obligation  of  the  maker  of  a  note  is  governed  by  the  law  of  the 
place  where  the  note  is  made  or  to  be  performed.*  If  a  nego- 
tiable note  is  made  in  one  state  and  payable  there,  and  it  is  after- 
wards indorsed  in  another  state,  and  by  the  law  of  the  former, 
equitable  defenses  are  let  in,  in  favor  of  the  maker,  and  by  the 
latter  excluded,  what  rule  is  to  govern  as  to  the  holder?  The 
answer  is,  the  law  of  the  place  where  the  note  was  made ;  for 
there  the  maker  undertook  to  pay;  and  the  subsequent  negotia- 
tion did  not  change  his  obligation  or  right.®  The  contract  of  the 
drawer  of  a  bill  of  exchange  is  governed  by  the  law  of  the  place 
where  the  bill  is  drawn,^**  in  regard  to  the  rights  of  the  payee 
and  any  subsequent  holder,  and  not  by  the  law  of  the  place  where 
accepted.  This  is  so  since  the  contract  of  the  drawer  is  to  pay 
the  bill  in  the  place  where  it  is  drawn,  in  case  of  the  failure  of 
the  drawee  to  accept  it,,  and  not  to  pay  it  at  the  place  where  the 
drawee  resides.  The  liability  of  an  acceptor  of  a  bill  of  ex- 
change is  governed  by  the  law  of  the  place  of  his  acceptance,** 
as  to  the  drawer,  payee,  and  each  subsequent  holder,  provided 
payment  is  to  be  made  in  the  state  where  the  acceptance  was 
made. 

§  196.  As  to  payment,  interest  and  damages.  The  obliga- 
tion of  the  maker  to  pay  and  that  of  the  acceptor  to  accept  is 

"^^2   Wharton,    Conflict   of    Laws  ^  Raymond  v.  Holmes,  11  Tex.  60. 

(3rd   Ed.),   sees.   427e-427n.     Scud-  i®  Bank  of  U.  S.  v.  U.  S..  2  How. 

der  V.  Union  Nat.  Bank,  supra.  711,    11    L.    Ed.    439;    Raymond    v. 

^Lawrence    v.    Bassett,    5    Allen  Holmes,  11  Tex.  55. 
140;  Wilson  v.  Lazier,  11  Gratt.  482.  "Bissell  v.  Lewis,  4  Mich.  459. 


§§  196-197  CONFLICT   OF   LAWS.  231 

governed  by  the  law  of  the  place  of  performance.  Therefore  the 
rate  of  interest  will  likewise  be  governed  by  the  same  law.  And 
if  the  different  parties  to  the  instrument  reside  in  different  juris- 
dictions the  law  of  the  place  where  each  is  required  to  perform 
his  obligation  will  govern.^^  In  respect  to  interest,  the  maker  of 
a  note  or  the  acceptor  of  a  bill  has  a  right  to  elect  whether  the 
legality  of  the  rate  shall  be  determined  by  the  law  of  the  place 
of  payment,  or  of  the  place  of  execution.  If  a  rate  of  interest  is 
expressly  provided  for,  which  is  usurious  according  to  the  law  of 
the  place  of  execution,  and  lawful  according  to  the  law  of  the 
place  of  payment,  or  vice  versa,  it  will  be  lawful  interest,  and 
may  be  recovered  anywhere,  even  in  the  place  where  the  rate  is 
declared  to  be  usurious. ^^  But  if  the  provision  of  the  law,  which 
applies  in  the  determination  of  the  legality  and  rate  of  interest 
and  damages,  is  not  established  by  proper  testimony,  the  law  of 
the  place  where  suit  is  brought  will  govern.*'' 

The  rate  of  interest  payable  as  damages  is  determined  by  the 
law  of  the  place  of  performance ;  thus,  in  case  of  the  acceptor  or 
maker  where  the  instrument  is  payable  ;  and  in  case  of  the  drawer 
and  indorser,  where  the  contract  of  indemnity  is  to  be  performed, 
that  is,  at  the  place  of  drawing  and  indorsing. 

§  197.  As  to  liability  of  indorser.  The  liability  of  the  in- 
dorser is  said  to  be  governed  by  the  law  of  the  place  where  the 
indorsement  is  made.*^  It  is  the  new  liability  created  by  the 
indorsement  in  favor  of  the  indorsee  and  subsequent  indorsers 
that  causes  this  law  to  govern.  This  law  governs  only  as  to  the 
new  liability  created  between  the  indorsee  or  subsequent  indorsers 
and  the  prior  indorsers.  The  rights  of  the  transferee  or  indorsee 
against  the  original  parties  to  the  instrument  are  determined  by 
the  law  of  the  place  where  the  contract  was  made  or  is  to  be 
performed.  Each  successive  holder  of  a  commercial  instrument 
has  the  same  rights  against  the  acceptor  or  maker,  it  matters  not 
where  the  transfer  was  made.*^  These  rights  are  determined  by 
the  lex  loci  contractus  vel  solutionis.  The  law  of  the  forum  de- 
termines always  in  whose  name  the  suit  may  be  brought,  and  to 
that  extent  governs  the  determination  of  the  title  of  the  in- 
dorsee.-*'^ 

laschofield  v.  Day,  20  Johns.  15  Lee  v.  Selleck.  ZZ  N.  Y.  615; 
102 ;  Summers  v.  Mills,  21  Tex.  77.       Canton  v.  Barnes,  SO  Ala.  403.    See 

13  Richards    v.    Globe    Bank,    12      note  61  L.  R.  A.  212,  222. 

Wis.    692 ;    Potter    v.    Tallman,    35  i®  Robertson  v.  Burdekin,  1  Ross. 

Bash.  182.  Lead.  Cas.  812. 

14  Wood  V.  Cerl,  4  Met.  203 ;  Ay-  i^  Walsh  v.  Dart,  12  Wis.  635. 
mar  v.  Sheldon,  12  Wend.  221. 


232  NEGOTIABLE    INSTRUMENTS.  §§  198-199 

§  198.  As  to  presentment,  protest  and  notice.  The  required 
formalities  in  respect  to  presentment  are  determined  by  the  law 
of  the  place  of  acceptance  or  payment  or,  as  sometimes  called, 
the  law  of  the  place  of  performance.^^  Thus  where  a  draft  is 
drawn  in  the  state  of  A,  by  one  residing  there,  upon  a  person 
residing  in  the  state  of  B,  any  legal  question  in  reference  to  pres- 
entation and  demand  for  payment  is  to  be  determined  by  the  laws 
of  the  state  of  B.^^^  This  needs  no  explanation,  as  no  other  law 
could  govern  as  to  presentment  except  the  law  of  the  place  of 
performance.  The  law  of  the  place  of  payment  governs  as  to 
the  requirements  in  respect  to  protest.^'*  If  a  bill  is  protested  for 
non-acceptance  the  law  of  the  state  where  the  bill  was  presented 
for  acceptance  will  govern,  while  if  it  is  presented  for  non-pay- 
ment the  law  of  the  place  of  payment  will  govern.  The  necessity 
of  making  a  demand  and  protest,  and  the  circumstances  under 
which  the  same  may  be  required  or  dispensed  with,  are  incidents 
of  the  original  contract  which  are  governed  by  the  law  of  the 
place  where  the  bill  is  drawn,  rather  than  the  place  where  it  is 
payable.-^***  The  authorities  are  divided  as  to  what  law  governs 
the  requirements  in  respect  to  notice,  but  the  weight  of  American 
decision  is  to  the  efifect  that  the  notice  must  conform  to  the  law 
of  the  place  where  the  contract  of  the  maker  or  indorser  is  to  be 
performed.^" 

§  199.  Rule  in  federal  courts.  In  the  courts  of  the  United 
States,  the  decisions  are  in  general  in  conformity  with  those  of 
the  state  courts  of  last  resort  in  respect  to  the  liability  of  parties 
to  bills  and  notes,  but  not  uniformly .^^  In  a  late  case  a  federal 
court  held  that  where  a  question  is  governed  by  a  Negotiable 
Instruments  Law  adopted  by  the  state  the  federal  court  is  bound 
to  give  force  and  efifect  to  the  statute  if  applicable.**^  Where 
any  controversy  arises  as  to  the  liability  of  a  party  to  a  bill  of 
exchange,  promissory  note,  or  other  negotiable  paper,  in  one  of 
the  federal  courts  of  the  United  States,  which  is  not  determined 
by  the  positive  words  of  a  state  statute,  or  by  its  meaning  as  con- 
strued by  the  state  courts,  the  federal  courts  will  apply  to  its  so- 

18  Todd  V.  Neal's  Admrs.,  49  Ala.  21  Moses    v.    Laurence    Co.    Nat 
266.                                                              Bank,  149  U.  S.  298, .  13  S.  Ct.  90a 

18a  Sylvester  v.  Crohan,  138  N.  Y.      37  L.   Ed.   743 ;   Burgess   v.    Selig- 
494.  man,  107  U.  S.  20-33,  2  S.  Ct.  10, 

19  Raymond  v.  Holmes,   11   Tex.      27  L.  Ed.  359. 

54.  21a  Smith    V.    Nelson    Land    and 

is^Amsick  v.  Rogers,  189  N.  Y.       Cattle  Company,  212  Fed.  Rep.  56, 
258.  122  C.  C.  A.  512. 

20  Lee  V.  Selleck,  33  N.   Y.   32 ; 
Williams  V.  Putnam,  14  N.  H.  543. 


§§  199a-199b  conflict  of  laws.  233 

lution  the  general  principles  of  the  law  merchant,  regardless  of 
any  local  decision.** 

§  199a.  Damages  upon  dishonor  of  foreign  bills.  In  some 
jurisdictions  the  statutes  provide  the  amount  of  damages  which 
may  be  recovered  upon  foreign  bills  upon  their  dishonor.  These 
statutes  often  provide  that  said  rules  do  not  apply  to  promissory 
notes  discounted  by  a  bank  and  protested  for  non-payment. 

These  statutes  ordinarily  provide  that  damages  payable  on  pro- 
test for  non-payment  or  non-acceptance  of  a  bill  of  exchange 
drawn  or  negotiated  within  the  state,  shall  be,  if  drawn  upon  any 
person  at  any  place  out  of  the  state  but  within  the  United  States, 
S%  on  the  principal  of  the  bill  and  that  beyond  such  damages  no 
interest  or  charges  accruing  prior  to  protest  shall  be  allowed  but 
interest  from  the  date  of  protest  may  be  recovered;  and  when 
such  bills  are  payable  within  the  United  States  the  rate  of  ex- 
change shall  not  be  taken  into  account.  These  statutes  usually 
further  provide  that  no  damages  beyond  cost  of  protest  shall  be 
chargeable  against  the  drawer  or  indorser  if  upon  notice  of  pro- 
test and  demand  of  the  principal  sum  the  same  is  paid,  and  that 
no  holder  of  a  bill  of  exchange  shall  recover  damages  thereon  if 
he  has  not  given  a  valuable  consideration  for  the  same  or  have 
some  interest  thereunder ;  and  that  on  any  bill  drawn  or  nego- 
tiated in  the  state  and  payable  at  any  place  without  the  state,  or 
in  regard  to  which  it  shall  appear  that  it  was  not  to  be  presented 
for  acceptance  or  payment  at  that  place,  if  means  were  provided 
for  its  discharge  within  the  state,  that  no  damages  or  charges  for 
protest  shall  be  allowed. 

§  199b.  Date  at  which  rate  of  exchange  should  be  applied. 
•Whenever  money  is  due  in  a  foreign  country  it  becomes  neces- 
sary to  determine  its  equivalent  in  domestic  currency.  The  ques- 
tion arises  as  to  whether  or  not  it  should  be  at  the  date  of  the 
breach  or  the  date  of  the  judgment.  The  date  of  the  breach  has 
been  adopted  in  England.*^  And  the  late  American  decisions 
point  in  the  same  direction.** 

23  Swift  V.  Tyson.  16  Pet.  1 ;  see  23  Scott  v.  Bevan,  2  B.  &  Ad.  78. 

Hughes    (W.    T.)    Prac.    1214,    for  34simonoff  v.   Granite  City  Na- 

full     statement    and    bibliography;  tional  Bank,  279  111.  248,  116  N.  E. 

Brooklyn  City,  etc.  Railroad  Co.  v.  636;  Pavenstedt  v.  New  York  Life 

Nat.  Bank,  102  U.  S.  14,  26  L.  Ed.  Ins.  Co.,  203  N.  Y.  91,  96  N.  E.  104. 
61. 


CHAPTER  XIX. 


SUBDIVISION  A— CHECKS. 


\  200.  Check  defined  and  distin- 
guished from  bill  of  ex- 
change. 

201.  The  formalities  of  a  check. 

202.  Presentment   of   a   check   for 

payment. 

203.  Certification  of  check. 

204.  Forgery     and     alteration     of 

check. 

205.  Memorandum  check. 

206.  Stale  check. 
206a.  Cashier's  check. 

206b.  Paid  or  cancelled  check. 


§  206c.  Crossed  check. 
206d.  Fraudulent  check. 
206e.  Stolen  checks  or  stolen  ne- 
gotiable securities. 
206f.  Check  as  payment. 

206g.  Stopping  payment. 

207.  Chcckholder's    right    to     sue 

the  bank. 

208.  The  depositor's  right  to  draw 

on  the  bank. 

209.  Failure    of    bank    to    honor 

check. 


§  200.  Check  defined  and  distinguished  from  bill  of  ex- 
change. The  Negotiable  Instruments  Law  defines  a  check  as 
follows:  "A  check  is  a  bill  of  exchange  drawn  on  a  bank,  pay- 
able on  demand."  To  this  definition  is  added  the  following  pro- 
vision :  "Except  as  herein  otherzvise  provided,  the  provisions  of 
this  act  applicable  to  a  bill  of  exchange  payable  on  demand  apply 
to  a  check  "^ 

In  other  words  a  check  is  a  commercial  instrument  which  is  in 
the  form  and  nature  of  an  inland  bill  of  exchange,  payable  on 
demand.^ 

A  check  unlike  a  bill  of  exchange,  is  always  drawn  upon  a 
bank  or  banker  and  is  always  payable  on  demand  without  days 
of  grace.^  It  is  not  necessary  that  a  check  be  presented  for  ac- 
ceptance as  in  case  of  a  bill  of  exchange.^  However,  if  the 
holder  requests  it  and  the  banker  desires  he  may  accept  it. 

13  L.  R.  A.  (N.  S.)  211.  As  to 
nature  of  checks,  see  note  7  L. 
R.  A.  595  and  as  to  what  are 
checks,  see  note  7  L.  R.  A.  489. 

^  McDonald  v.  Stokey,  1  Mont. 
388;  In  re  Brown,  2  Story  (U.  S.) 
502,  4  Fed.  Cas.  No.  1.985 ;  Hawley 
V.  Jette,  10  Oreg.  31,  45  Am.  Rep. 
129. 

^  In  re  Brown,  2  Story  (U.  S.) 
502,  4  Fed.  Cas.  No.  1,985;  Bowen 
V.  Newell,  5  Sandf.  (N.  Y.)  326. 


"^  Neg.  Inst.  Law,  §  185,  where 
all  cases  directly  or  indirectly  bear- 
ing upon  or  citing  the  Law  are 
grouped. 

2  Exchange  Bank  v.  Sutton  Bank, 
78  Md.  577,  28  Atl.  563,  23  L.  R. 
A.  176;  Minot  v.  Russ,  156  Mass. 
458,  31  N.  E.  489,  32  Am.  St.  Rep. 
472,  16  L  R.  A.  510.  As  to  remedy 
of  payee  of  a  check  against  one 
who  has  taken  it  on  indorsement 
of    unauthorized    agent,    see    note 


234 


§200  SUBDIVISION  A— CHECKS.  235 

The  whole  theory  and  use  of  a  check  points  to  its  immediate 
payability.  A  depositor  places  money  with  his  bank  or  banker, 
where  it  is  subject  at  any  time  to  his  order ;  and  by  his  check  or 
order  he  desires  to  appropriate  so  much  of  it  to  another  person, 
and  the  bank  or  banker,  in  consideration  of  its  temporary  use 
of  the  money,  agrees  to  pay  it  in  whole,  or  in  parcels,  to  the 
depositor's  order  when  demanded.  Biit  he  does  not  agree  to  con- 
tract to  pay  at  a  future  day  by  acceptance  and  the  depositor  can 
not  require  it.^' 

A  check  is  similar  to  a  bill  of  exchange  in  that  it  is  a  nego- 
tiable instrument,®  if  negotiable  in  form,  and  is  subject  to  the 
same  rules  regarding  its  transfer.  A  check  may  be  transferred 
by  indorsement  and  the  indorser  incurs  the  same  liability  as  the 
indorser  of  a  promissory  note  or  bill  of  exchange.  Like  a  bill, 
a  check  must  contain  an  order ;  the  order  must  be  for  the  payment 
unconditionally  and  at  all  events ;  and  it  must  be  for  a  certain 
sum  of  money.®  If  an  instrument  is  drawn  in  all  respects  as  a 
check  except  that  it  orders  payment  at  a  day  subsequent  to  its 
date,  it  is  then  a  bill  of  exchange  and  not  a  check,  being  subject 
to  all  the  rules  governing  bills  of  exchange.'^ 

Unless  a  specific  date  of  payment  is  mentioned,  a  check  is  pay- 
able upon  demand  under  Section  7  of  the  Law.''" 

The  drawer  of  a  bill  of  exchange  is  discharged  by  default  of 
the  payee  or  holder  in  making  due  presentment  to  the  drawee 
and  in  giving  notice  in  case  of  dishonor,  while  in  case  of  a  check 
the  drawer  is  not  discharged  by  the  failure  of  the  payee  or  holder 
to  take  the  above  steps  unless  the  delay  was  unreasonable.^  A 
check  is  due  when  demand  is  made  for  payment  and  the 
statute  of  limitations  begins  to  run  after  that  time.  A  check 
may  be  accepted  as  payment.^' 

^^Mt.  Sterling  National  Bank  v.  ''» Riddle   v.    Bank   of   Montreal, 

Green,  99  Ky.  262,  35   S.   W.  911.  145  App.  Div.  (N.  Y.)  207. 

5  Gate    City    Bldg.    etc.    Assn.   v.  « Bull    v.    Bank,    123    U.    S.    105, 

Nat.   Bank  of  Commerce,  126  Mo.  31  L.  Ed.  97;  Stewart  v.  Smith,  17 

82,  28  S.  W.  633,  47  Am.  St.  Rep.  Ohid   St.    82;    Serle   v.    Norton,    2 

633,  27  L.  R.  A.  401.  IMoody   &   R.   401.     As   to    release 

®  Grisson     v.     Commercial     Nat.  of   indorser   of   check  by   delay   in 

Bank,  87  Tenn.  350,  10  S.  W.  774,  presenting  it,  see  notes  22  L.  R.  A. 

10  Am.    St.   Rep.   669,  3   L.   R.   A.  785  and  17  Am.   St.  Rep.  810.     As 

273.  to  recovery  by  holder  from  drawer 

''  Whitehouse   v.    Whitehouse,   90  or  indorser,   see    17  Am.    St.    Rep. 

Me.  468,   38   Atl.   374,   60  Am.    St.  807. 

Rep.  278;  Harrison  v.  Nicollet  Nat.  Sa  ^g    ^q   pavment  bv   check,    see 

Bank,  41  Minn.  488,  43  N.  W.  336,  note  in  7  L.  R.  A.  442,  and  as  to 

16  Am.    St.   Rep.   718,    5   L.    R.    A.  effect    of    acceptance    of    check    as 

746.  payment,  see  note  9  L.  R.  A.  263. 


236  NEGOTIABLE    INSTRUMENTS.  §§201-202 

,  A  cashier's  check,  whether  certified  or  not,  is  classed  with  bills 
of  exchange  payable  on  demand.^'' 

§  201.  The  formalities  of  a  check.  A  check  as  to  its  form 
and  formalities  differs  but  little  from  that  of  a  bill  of  exchange. 
All  the  various  requisites  of  negotiable  paper  must  be  complied 
with  in  case  of  a  check ;  there  must  be  certainty  as  to  amount, 
time  and  the  person  to  whom  payment  shall  be  made  and  the 
payment  must  be  in  money.**  In  order  that  the  check  may  be 
negotiable  it  must  contain  words  of  negotiability,  but  the  absence 
of  such  words  does  not  affect  the  character  of  the  check  other 
than  that  it  is  non-negotiable.  The  signature  may  be  in  pencil 
as  well  as  in  ink,  it  may  be  stamped  or  even  printed  if  adopted  as 
one's  signature;  and  it  may  be  by  mark.  Usually  a  check  does 
not  contain  the  address  of  the  drawee,  while  in  a  bill  of  exchange 
it  is  almost  invariably  written  in  the  lower  left  hand  corner.  The 
address  of  the  bank  is  usually  written  or  printed  in  large  letters 
across  the  top,  just  below  the  date  and  place  of  execution.  A  blank 
space  may  be  left  for  the  payee's  name,  which  would  indicate 
authority  to  any  bona  fide  holder  to  insert  his  name  as  payee.®' 

A  check  may  bear  its  actual  date,  or  be  ante-dated  or  post- 
dated. The  Negotiable  Instruments  Law  provides :  "The  instru- 
ment is  not  invalid  for  the  reason  only  that  it  is  ante-dated  or 
post-dated,  provided  this  is  not  done  for  an  illegal  or  fraudulent 
purpose.  The  person  to  whom  an  instrument  so  dated  is  delivered 
acquires  the  title  thereto  as  of  the  date  of  delivery."^** 

Under  the  above  section  an  indorsee  of  a  post-dated  check  is 
not  put  upon  inquiry  merely  because  of  the  negotiability  of  the 
check  prior  to  the  day  of  its  date.'"' 

The  sum  should  be  distinctly  and  carefully  expressed  in  figures 
and  in  words  to  avoid  any  dispute.  While  either  words  or  figures 
are  sufficient,  if  they  differ,  the  words  control.  A  change  of  the 
figures,  so  as  to  conform  them  to  the  words  made  by  the  holder, 
without  the  knowledge  or  consent  of  the  drawer,  is  not  a  material 
alteration  or  forgery."" 

§  202.  Presentment  of  a  check  for  payment.  The  main  pur- 
pose of  presentment  for  payment  being  made  in  due  time  is  to  fix 

8»»  Singer  Mfg.   Co.  v.   Summers,  9»  Mcintosh    v.    Lytic.    23    Minn. 

143  N.  C.  103.  2^6. 

» Ridgely    Nat.    Bank   v.    Patton,  9"  Neg.   Inst.   Law,   §  12. 

109    III.    479;    Industrial    etc.    Bank  9o  Albert  v.  Hoffman,  64  Misc.  87, 

of  Chi.  v.  Bowers.   165   111.   70,   46  117  N.  Y.  Supp.  1043. 

N.    E.    10,   56    Am.    St.    Rep.   228 ;  Od  Smith  v.  Smith,  1  R.  I.  398. 
State  V.   Warner,   60  Kan.   90,   55 
Pac.  342. 


§  202  SUBDIVISION   A — CHECKS.  2Z7 

the  liability  of  the  drawer  in  case  the  bank  fails  before  payment  is 
made.    The  Negotiable  Instruments  Law  provides  that : 

"A  check  fnust  be  presented  for  payment  within  a  reasonable 
time  after  its  issue  or  the  drawer  zvill  be  discharged  from  liabil- 
ity thereon  to  the  extent  of  the  loss  caused  by  the  delay."^^ 

This  is  simply  the  enactment  of  a  general  principle  of  law 
which  existed  prior  to  the  passage  of  the  act.  Simply  the  want 
of  due  presentment  of  a  check  will  not  discharge  the  drawer, 
unless  he  has  suffered  some  loss  or  injury  thereby.^*  The  only 
injury  which  would  be  sustained  by  the  drawer  in  case  present- 
ment was  not  made  within  a  reasonable  time  would  be  caused  by 
the  failure  of  the  bank  subsequent  to  the  delivery  and  prior  to 
the  presentment  of  the  check.  Justice  Story  states  the  rule  in 
the  following  language :  'Tf  a  bank  or  banker  still  remains  in 
good  credit  and  is  able  to  pay  the  check,  the  drawer  will  still  re- 
main liable  to  pay  the  same,  notwithstanding  many  months  may 
have  elapsed  since  the  date  of  the  check,  and  before  the  pre- 
sentment for  payment  and  notice  of  the  dishonor.  So  if  the 
drawer  at  the  date  of  the  check  or  at  the  time  of  the  present- 
ment of  it  for  payment  had  no  funds  in  the  bank  or  banker's 
hands,  or  if,  after  drawing  the  check  and  before  its  presentment 
for  payment  and  dishonor,  he  had  withdrawn  his  funds,  the 
drawer  would  remain  liable  to  pay  the  check,  notwithstanding 
the  lapse  of  time."" 

As  to  what  is  a  reasonable  time  the  Negotiable  Instruments  Law 
provides:  "In  determining  what  is  a  'reasonable  time'  or  an  'un- 
reasonable time/  regard  is  to  be  had  to  the  nature  of  the  instru- 
ment, the  usage  of  trade  or  business  (if  any)  with  respect  to  such 
instruments,  and  the  facts  of  the  particular  case."^^" 

Thus  far  we  have  only  discussed  the  effect  of  delay  in  pre- 
sentment as  to  the  drawer.  Now  we  will  consider  its  effect  upon 
an  indorser.  We  have  already  seen  that  delay  in  presentment 
does  not  discharge  the  liability  of  the  drawer  unless  he  has  sus- 
tained a  loss  thereby,  but  we  find  that  a  different  rule  applies  as 
to  an  indorser.     As  between  the  holder  and  an  indorser  the  rule 

i»Neg.    Inst.   Law,    §186,   where  25  L.  R.  A.  200;  Bull  v.  Bank,  123 

all  cases  directly  or  indirectly  bear-  U.   S.    105 ;    Little  v.   Bank,  2   Hih 

ing   upon    or   citing   the    Law    are  (N.  Y.)  425;  Henshaw  v.  Root,  60 

grouped.     As    to   necessity    of    de-  Ind.    220;    Stewart    v.     Smith,    17 

mand,  see  note  7  L.  R.  A.  490  and  Ohio  St.  82 ;   Alexander  v.  Burch- 

as  to  the  time  of  presenting  a  check,  field,  7  Mon.  &  G.  1061.    As  to  pre- 

see   note   13   L.   R.   A.   43.     As   to  sentment   and    notice,    see   note   41 

when  check  must  be  presented  for  U.  S.  L.  Ed.  855. 

payment,  17  Am.  St.  Rep.  807.  12  gtory    on    Promissory    Notes, 

"Anderson  v.   Gill,  79  Md.  312.  §498. 

Z9  Atl.  527,  47  Am.  St.  Rep.  402,  ia»  Neg.  Inst.  Law,  §  193, 


238  NEGOTIABLE    INSTRUMENTS.  §  203 

is  that  the  check  must  be  presented  within  the  time  prescribed 
by  the  law  merchant,  which  is  usually  the  following  day,  and  if 
such  presentment  is  not  made  within  a  reasonable  time  the  in- 
dorser  will  be  discharged  from  any  liability.^^  The  question 
that  now  arises  is  what  constitutes  a  reasonable  time.  The  law 
merchant  has  established  the  rule  that  where  the  parties  all  re- 
side in  the  same  place  the  holder  must  present  it  not  later  than 
the  next  day.*^  This  is  not,  however,  an  absolute  and  iron-clad 
rule.  What  is  a  reasonable  rule  will  depend  upon  circumstances 
and  will  in  many  cases  depend  upon  the  time,  the  mode,  and  the 
place**^  of  receiving  the  check  and  upon  the  relation  of  the  par- 
ties between  whom  the  question  arises.^^' 

If  a  bank  pays  a  check  after  the  death  of  a  depositor,  but  before 
the  bank  has  received  knowledge  of  that  fact,  it  is  a  valid  pay- 
ment and  the  bank  is  not  Hable  for  the  amount  to  the  personal  rep- 
resentative of  the  depositor,  for  on  principles  of  necessity  incident 
to  the  banking  business,  if  the  bank  pays  in  good  faith  and  without 
notice  of  the  death  of  the  drawer,  it  is  protected.^^"  But  if  a  bank 
pays  a  check  with  knowledge  of  the  drawer's  death  it  is  liable  for 
the  amount  to  his  estate. 

Where  the  payee  of  a  check  collects  it  after  the  death  of  the 
drawer,  he  must  refund  the  amount  to  the  drawer's  estate.^'" 

§  203.  Certification  of  check.  Certification  of  a  check  is  an 
agreement  whereby  the  bank  agrees  to  pay  the  check  at  any 
future  time  when  presented  for  payment.  The  certification  of 
checks  is  an  expedient  and  outgrowth  of  modern  commerce  quite 
recent  in  its  origin,  but  now  of  daily  and  extensive  occurrence. 
It  enables  persons  not  well  acquainted  to  deal  promptly  with 
each  other,  and  it  avoids  the  delay  and  risks  of  receiving,  count- 
ing and  passing  from  hand  to  hand  large  sums  of  money.*'"  No 
particular  form  of  words  is  necessary,  but  the  usual  method  of 

13  Miller  v.  Moseley,  26  La.  Ann.  Buckhannon  Bank,  80  Md.  475,  31 
667;  Wymore  First  Nat.  Bank  v.  Atl.  302,  21  L.  R.  A.  332;  Parker 
Miller,  43  Neb.  791,  62  N.  W.  195;  v.  Reddick,  65  Miss.  242,  3  So.  575, 
Smith  V.  Jones,  20  Wend.  (N.  Y.)  7  Am.  St.  Rep.  646;  Wymore  First 
192,  32  Am.  Dec.  527.  As  to  duty  Nat.  Bank  v.  Miller,  43  Neb.  791, 
of  holder  to  present,   see  note  17  62  N.  W.  195. 

Am.  St.  Rep.  807.  isa  Merchants'     Bank     v.     State 

14  Morris  v.  Eufaula  Nat.  Bank,      Bank,  10  Wall.  648  (U.  S.). 

122  Ala.   580,   25   So.  499,  82   Am.  i5b  Qigrman    v.    Rochester    Trust 

St.   Rep.   95;   Hamilton  v.  Winona  etc.   Co.,  209  N.  Y.   12,   102   N.   E. 

Salt  etc.  Co.,  95  Mich.  436,   54  N.  537,  53  L.  R.  A.  (N.  S.)  302. 

W.  903;  Grange  v.  Reigh,  93  Wis.  i-"'" /n    re    Adamson,    154    N.    Y. 

552,  67  N.  W.  1130.  Supp.  667. 
1*  Grafton    First    Nat.    Bank    y, 


§  203  SUBDIVISION  A — CHECKS.  239 

certification  is  by  stamping  or  writing-  upon  the  check  the  word 
"certified"  and  adding  the  date  of  the  certification.  After  a  check 
is  once  certified  at  the  request  of  the  holder,  the  drawer  is  released 
from  all  liability  and  all  subsequent  indorsers  are  discharged  from 
their  obligations. 

The  Negotiable  Instruments  Law  provides  : 

"Where  the  holder  of  a  check  procures  it  to  he  accepted  or  cer- 
tified the  drawer  and  all  indorsers  are  discharged  from  liability 
thereon."^^ 

But  the  drawer  is  not  discharged  when  the  check  is  certified  at 
the  procurement  of  said  drawer,  even  if  he  has  the  check  certi- 
fied at  the  request  of  the  one  to  whom  it  is  payable.  So  if  the 
drawer  has  the  check  certified  and  then  delivers  it,  the  certifica- 
tion does  not  discharge  the  drawer. 

The  bank,  after  the  certification,  will  not  be  allowed  to  dispute 
the  genuineness  of  the  drawer's  signature  or  to  question  the  suf- 
ficiency of  the  funds  in  its  hands  to  pay,  as  against  a  bona  fide 
holder.*''  Neither  will  the  bank  be  allowed  to  deny  the  validity 
of  the  check  on  the  ground  that  no  payee  is  named  therein,  be- 
cause in  such  case  it  will  be  held  payable  to  bearer.  A  bank  can 
not  refuse  to  pay  a  check  which  it  has  certified  in  order  that  the 
drawer  may  enforce  a  right  of  set-off  against  the  payee.*''*  The 
above  section  of  the  law  applies  where  a  bank,  which  has  taken 
its  customer's  check  on  another  bank  and  given  him  credit  there- 
for, has  the  check  certified  by  the  drawer.*'" 

The  efifect  of  certification  is  that  the  bank  by  certifying  the 
check  becomes  the  principal  and  only  debtor,  and  the  holder  by 
taking  a  certificate  of  the  check  from  the  bank,  instead  of  re- 
quiring payment,  discharges  the  drawer,  that  is,  "Where  a  check 
is  certified  by  the  bank  on  which  it  is  drazvn  the  certification  is 
equivalent  to  an  acceptancef^^  The  check  then  circulates  as  the 
representative  of  so  much  cash  in  bank,  payable  on  demand  to  the 
holder. 

i«  Neg.    Inst.   Law.    §  188,   where  ation   of   check,    19   U.    S.    L.    Ed. 

all  cases  directly  or  indirectly  bear-  1008. 

ing    upon    or    citing   the    Law    are  But    see    Marine    Nat.    Bank    v. 

grouped.     As  to  effect  of  certifica-  Nat.  City  Bank,  59  N.  Y.  67. 

tion,  see  note  12  L.  R.  A.  492,  and  i^a  Ca^negie   Trust   Co.   v.    First 

as  to  effect  on  liability  of  drawer,  National  Bank,  213  N.  Y.  301,  107 

see  note  16  L.  R.  A.  510.  N.  E.  693,  L.  R.  A.  1916C,  186. 

*^  Farmers  &  Mechanics  Bank  v.  *''''  Lyons  v.  Union  Exchange  Na- 

Rutchers  &  Drovers  Bank,  16  N.  Y.  tional  Bank,  150  App.  Div.  (N.  Y.) 

125;   Espy  v.   Bank,   18  Wall.  621.  493,  135  N.  Y.  Supp.  121. 

21  L.  Ed.  947 ;  Louisiana  Nat.  Bank  18  Ngg  ipsj  l^^^  §  jg;^  ^^  j  ^ases 

V.  Citizens  Bank,  28  La.    Ann.  189.  cited.     As  to  parol  certification  see 

As  to  liability  of  bank  on  certific-  note  7  L.  R.  A.  428. 


240  NEGOTIABLE    INSTRUMENTS.  §203 

And  a  bank  which  certifies  a  raised  check  and  afterwards  pays 
it  is  entitled  to  recover  the  amount  from  the  bank  to  which  it 
was  paid  as  opportunity  of  discovering  the  alteration  was  equally 
open  to  the  collecting  bank.^*** 

We  shall  next  notice  who  may  certify  a  check.  The  board  of 
directors  as  the  governing  body  of  the  corporation  or  bank  may 
delegate  to  other  officers  who  have  not  implied  power,  the  power 
to  certify  checks.  The  officers  having  implied  power  are  the 
president,  cashier  and  teller.*"  The  assistant  cashier  has  not  this 
power  and  if  he  certifies  a  check,  signing  his  name  with  his  official 
title,  "Asst.  Cashier,"  without  authority,  it  is  generally  held  that  it 
is  not  binding  on  the  bank  even  in  the  hands  of  a  bona  -fide  holder. 

A  check  cannot  be  certified  before  it  is  payable.  Thus  if  a 
check  is  post-dated,  the  bank  would  not  be  bound  by  a  certifica- 
tion made  before  the  date  on  which  the  check  is  payable.*®  Such 
check  carries  notice  to  all  that  the  certification  was  beyond  the 
officer's  authority.  If  the  commercial  character  of  the  check  has 
been  destroyed  in  any  manner  the  officer  of  the  bank  is  not  au- 
thorized to  certify  it.  If  the  officer  certifies  a  check  of  a  person 
who  has  no  funds  there,  the  bank  is  not  bound  by  it  except  as  to 
a  bona  fide  holder  without  notice.** 

Of  course  a  certification  must  be  in  writing,  thus  a  bank  is  not 
liable  on  equitable  grounds  to  the  holder  for  the  amount  of  an 
unaccepted  check  which  it  has  refused  to  pay  though  the  holder 
acquired  the  check  on  the  oral  representation  of  the  bank  that 
the  drawer  had  funds  on  deposit  to  meet  the  check,  and  that  the 
check  was  good,  and  that  the  holder  might  safely  take  it  in  pay- 
ment for  goods  sold  the  drawer.***  And  so  a  telephone  message 
is  not  a  good  certification  but  a  telegram  sent  by  a  bank  that  it 
would  pay  a  certain  check  has  been  held  to  be  a  certification.**'' 

li^'  National     Reserve     Bank     v.  ^OQari^g   Nat.    Bank  v.   Bank  of 

Coon  Exchange  Bank,  171  App.  Div.  Albion,  52  Barb.  592. 

195,  157  N.  Y.   Supp.  316;  Jackson  ai  Atlantic    Bajik    v.    Merchants 

Paper  Co.  v.  Commercial  Bank,  199  Bank,  10  Gray  532;  Cooke  v.  State 

111.  151.  Nat.  Bank,  52  N.  Y.  96,  11  Am.  Rep. 

1^  Merchants      Bank      v      State  667. 

Bank,  10  Wall.  604,  19  L.  Ed.  1008 ;  **"  Rambo    v.    First    Nat.    State 

Cooke  V.    State   Nat.    Bank,   52   N.  Bank   of  Argentine,  88   Kans.  257, 

Y.  96,  11  Am.  Rep.  667.  128  Pac.   182. 

But    see    Atlantic   Bank   v.    Mer-  **''  Henrietta  Bank  v.  State  Bank, 

chants   Bank,   10   Gray  532.  —  Tex.  — ,  16  S.  W.  321 ;  Atchison 

Bank  v.  Garretson,  51  Fed.  168. 


204  SUBDIVISION   A — CHECKS.  241 

Below  is  a  form  of  certification: 


^  Detroit,  Mich.,  December  1,  1922. 

THE  %^LE  NATIONAL  BANK. 

Pay  to  the       %     % 

order  of  Albert^rte?^ , $200.00 

l^xvo^Mundrcd Dollars 

%    V  JOHN  MARSH 


204.  Forgery  and  alteration  of  check.  The  rules  g-overn- 
ing  forgeries  and  alterations  to  commercial  paper  in  general 
are  applicable  to  checks.^*''  The  bank  is  under  a  peculiar  obli- 
gation, however,  to  know  the  signatures  of  its  depositors 
on  the  checks  drawn  against  it.  But  the  bank  is  not 
presumed  to  have  any  peculiar  knowledge  of  the  gen- 
uineness of  the  contents  of  the  checks.  It  is  very  com- 
mon now  that  a  check  is  filled  out  by  a  clerk  and  then  signed  by 
the  maker.  Therefore  a  bank  is  not  charged  with  as  great  a 
degree  of  knowledge  as  to  the  genuineness  of  the  contents  of  the 
checks  as  of  the  signature  of  the  drawer.  If  the  bank  pays  a 
check  which  has  been  altered  in  any  material  respect  it  may  re- 
cover the  money  so  improperly  paid,  since  the  holder  of  the 
check  guarantees  the  genuineness  of  its  contents.  The  general 
rule  therefore  is  that  the  bank  is  strictly  held  to  know  the  signa- 
ture of  its  depositors  and  money  paid  on  forged  checks  cannot 
be  recovered.**  In  some  jurisdictions  there  are  statutes  pro- 
viding that  no  bank  shall  be  liable  to  a  depositor  for  the  pay- 
ment by  it  of  a  forged  or  raised  check,  unless  within  one  year 
after  the  return  to  the  depositor  of  the  voucher  of  such  pay- 
ment, such  depositor  shall  notify  the  bank  that  the  check  so  paid 
was  forged  or  raised.***  A  mutilated  check  puts  one  on  in- 
quiry; thus  a  bank  is  guilty  of  negligence  and  is  responsible  to 

210  As  to  liability  of  person  whose  327,  27  L.  R.  A.  635.  As  to  draw- 
name  is  forged,  see  note  36  L.  R.  ee's  duty  to  know  signature,  see 
A.  539.  As  to  rights  of  holder  of  note  27  L.  R.  A.  635.  As  to  bank's 
forged  check,  see  notes  17  Am.  St.  liability  to  depositors  for  payment 
Rep.  890  and  94  Am.  St.  Rep.  645.  of  forged  check,  see  notes  2  L.  R. 

22  First  Nat.  Bank  of  Danvers  v.  A.  96,  7  L.  R.  A.  596,  849  and  12 

First    Nat    Bank    of    Salem,    151  L.  R.  A.  793.    As  to  duty  of  deposi- 

Mass.  280,  24  N.  E.  44;  First  Nat.  tor  as  to  forged  check,  see  notes  27 

Bank  v.   Northwestern  Nat.   Bank,  L.  R.  A..  426,  36  L.  R.  A.  539. 

152  111.  296,  38  N.  E.  739,  26  L.  R.  22«  Leather  Mfgrs.  Bank  v.  Mor- 

A.    289;    Germania    Sav.    Bank    v.  gan,  117  U.  S.  96. 
Boutell,  60  Minn.    189,   62   N.   W. 


242  NEGOTIABLE    INSTRUMENTS,  §  205 

the  drawer  in  paying  without  inquiry  a  check  which  has  been 
torn  in  pieces  and  pasted  together  again.^^"  A  savings  bank  is 
not  liable  for  payments  made  upon  a  forged  draft  unless  negli- 
gence can  be  imputed  to  it;  that  is,  unless  the  discrepancy  be- 
tween the  signature  is  so  marked  and  plain  that  an  ordinary 
competent  clerk  should  detect  the  forgery.  Thus  the  liability 
differs  from  that  of  ordinary  banks  of  deposit,  which,  as  we 
have  seen,  are  absolutely  liable  for  payments  on  forged  checks 
no  matter  how  skillful  the  forgery  may  be.^^"  But  the  bank  is 
not  held  to  so  strict  a  knowledge  of  the  contents  of  the  check 
because  they  are  not  charged  with  knowledge  of  the  handwrit- 
ing in  the  body  of  the  check,  since  it  may  or  may  not  be  the 
handwriting  of  the  drawer.  The  bank  is  still  liable  to  a  payee 
or  indorsee  on  whose  •  indorsement  alone  the  check  is  payable, 
although  the  money  has  been  paid  on  a  forged  indorsement. 
But  the  bank  is  not  supposed  to  know  the  signature  of  indorsers, 
and  if  any  of  them  be  forged  the  bank  can  recover  back  the 
money  paid  out  on  the  check. 

Where  a  drawee  bank  paid  and  charged  to  the  account  of  the 
drawer  checks  indorsed  by  an  agent  of  the  payee  who  had  no 
authority  to  indorse  or  collect  the  checks  and  who  appropriated 
the  money,  said  drawee  bank  is  liable  in  conversion,  if  upon  de- 
mand for  their  surrender  the  bank  should  refuse  to  deliver  the 
checks.  The  bank  is  not  liable  to  the  payee  in  assumpsit  for 
money  had  and  received  under  such  circumstances.  And  should 
the  bank  deliver  the  checks,  a  plaintiff  could  present  them  to  the 
bank  for  payment,  and  should  payment  be  refused,  the  plaintiff 
could  notify  the  drawer  and  recover  from  him. 

§  205.  Memorandum  check.  A  memorandum  check  has 
been  described  to  be  a  contract  by  which  the  drawer  engages 
to  pay  the  bona  fide  holder  absolutely,  and  not  upon  a  condition 
to  pay  upon  presentment  at  maturity,  and  if  due  notice  of  the 
presentment  and  non-payment  should  be  given.*^  The  word 
"memorandum"  written  or  printed  upon  the  check  describes  the 
nature  of  contract  with  precision.  In  form  and  appearance  a 
memorandum  check  does  not  differ  from  an  ordinary  check  ex- 
cept that  the  words  "memorandum,"  "mem"  or  "memo"  are 
written  upon  the  face  of  the  check.    Such  a  check  is  given  by  the 

22b  Scholey     v.     Ramsbottom,     2  23  Turnbull  v.  Osborne,  12  Abbott 

Camp.   (Eng.)  485.  Prac.   (N.  S.)  200;  Franklin  Bank 

22c  Noah  V.  Bank  of  Savings,  171  v.    Freeman,   33   Mass.    (16   Pick.) 

App.   Div.    (N.   Y.)    191;    Kelly  v.  535. 
BuflFalo   Savings   Bank,    180   N.   Y. 
171. 


§§  206-206a  subdivision  a — checks.  243 

drawer  to  the  payee  more  in  the  nature  of  a  memorandum  of  in- 
debtedness than  as  payment.^'*  In  the  case  of  a  regular  check 
demand  for  payment  and  a  refusal  on  the  part  of  the  bank  are 
necessary  steps  before  the  holder  can  maintain  an  action  against 
the  drawer,  while  in  the  case  of  a  memorandum  check  the  drawer 
may  be  sued  the  same  as  upon  a  promissory  note.^^  If  such  a 
check  is  presented  for  payment,  and  the  drawer  has  sufficient 
funds  to  meet  it,  the  bank  must  honor  it  like  any  ordinary  check. 
If  the  agreement  between  the  drawer  and  payee  is  that  it  shall  not 
be  presented  for  payment,  any  remedy  of  the  drawer  for  the 
breach  of  such  agreement  is  solely  against  the  payee.^®  If  a 
memorandum  check  has  been  indorsed  to  a  bona  fide  holder  for 
value  the  check  then  presents  all  the  features  of  other  negotiable 
instruments. 

§  206.  Stale  check.  A  stale  check  is  one  where  there  has 
been  unreasonable  delay  by  the  holder  in  presenting  for  pay- 
ment. It  is  always  unsafe  to  delay  the  presentment  for  the 
double  reason  that  the  drawer  or  indorser  may  be  discharged  by 
loss  occasioned  by  the  failure  of  the  bank  and  because  a  stale 
check  is  looked  upon  with  suspicion  since  custom  has  established 
the  fact  that  checks  are  not  supposed  to  remain  long  in  circula- 
tion. Some  jurisdictions  hold  that  if  the  bank  pays  a  stale  check 
which  for  any  reason  may  be  invalid,  the  bank  will  be  held  to 
have  done  so  at  its  peril,  as  the  fact  that  the  check  was  stale  was 
sufficient  to  put  the  bank  upon  inquiry.*^  It  has  also  been  held 
that  a  purchaser  is  put  upon  notice  as  to  the  genuineness  of  a 
check  by  the  fact  that  it  is  stale.  There  is  no  absolute  rule  which 
may  be  laid  down  in  determining  when  a  check  is  stale.^'^* 

§  206a.  Cashier's  check.  A  cashier's  check  is  one  drawn 
by  a  bank  upon  itself.  It  is  a  bill  of  exchange  drawn  on  the 
bank  upon  itself,  and  is  accepted  by  the  act  of  issuance.  The 
right  of  countermand,  as  applied  to  ordinary  checks,  does  not 
exist  as  to  it. 

A  cashier's  check,  whether  certified  or  otherwise,  is  classed 
with  bills  of  exchange  payable  on  demand.^^ 

24  United    States    v.    Isham,    17  294;   Estes  v.   Shoe  Co.,   59  Minn. 

Wall.  496.  21  L.  Ed.  728.  504,  61  N.  W.  674 ;  First  Nat.  Bank 

asVan    Schaack,    Bank    Checks,  v.    Needham,   29   la.   249;    Bull   v. 

184.  Bank,  123  U.  S.  105.    As  to  when  a 

2«  Morse,  Banks,  313.  check  is  considered  stale,  see  note 

27  Lancaster  Bank  v.  Woodward,  13   L.    R.   A.   44. 

18  Pa.  St.  357.  28  Singer  Mfg.  Co.  v.  Summers, 

27a  Ames   V.   Merriam,   98   Mass.  143  N.  C.  102,  55  S.  E.  522. 


244  NEGOTIABLE   INSTRUMENTS.  §§  206b-206d 

§  206b,  Paid  or  cancelled  check.  A  check  if  payable  to 
order  when  paid  or  cancelled  is  presumed  to  be  a  receipt  for 
the  debt  or  obligation. 

A  bank  has  the  right  to  keep  a  cancelled  check  until  the  de- 
positor's account  is  balanced.  But  after  debiting  it  against  the 
drawer  in  account  with  the  bank,  it  is  the  duty  of  the  bank  to 
return  the  check  to  its  depositor,  who  has  the  better  right  to  its 
permanent  possession  as  it  is  to  him  a  voucher  of  payment  of  his 
debt  to  the  payee  named  in  it ;  and  the  bank,  until  it  returns  the 
check,  has  been  said  to  hold  it  only  as  agent  of  the  drawer.*®* 

§  206c.  Crossed  check.  A  crossed  check  is  one  which  in 
addition  to  the  ordinary  check  contains  also  the  name  of  a  cer- 
tain banker  through  whom  it  must  be  presented  for  payment. 
The  name  of  the  banker  is  usually  stamped  across  the  face  of 
the  check.    This  does  not  destroy  the  negotiability  of  the  check. 

Such  checks  are  used  in  Canada  and  in  England  but  not  often 
in  the  United  States. 

The  statute  in  England  provides  that  the  object  of  the  crossed 
check  is  to  provide  that  drawers  or  holders  of  drafts,  payable  to 
bearer  or  order  on  demand,  may  be  enabled  efifectually  to  direct 
the  payment  of  the  same  only  to  or  through  some  banker,  and 
that  the  crossing  shall  have  the  force  of  a  direction  to  the  bank- 
ers upon  whom  the  check  is  drawn,  that  it  is  to  be  paid  to  or 
through  some  banker,  and  that  the  same  shall  be  payable  only 
to  or  through  some  banker.*^"* 

§  206d.  Fraudulent  check.  It  is  usually  provided  by  stat- 
ute in  the  different  jurisdictions  that  one  issuing  a  check  or  other 
negotiable  instrument  without  having  a  deposit  in  bank  to  meet 
said  instrument  and  thereby  obtaning  credit  or  something  of 
value  thereon  is  guilty  of  a  crime. 

Under  many  of  these  statutes  if  the  check  is  issued  and  pay- 
able at  a  future  date,  it  is  not  fraudulent.*®"  A  bank  is  not  liable 
to  a  minor  or  infant  depositor  for  the  payment  of  checks  ob- 
tained by  fraud  by  the  payee  thereof.*®*" 

If  the  drawer  delivers  his  check  to  an  impostor  or  wrong  per- 
son and  the  bank  pays  the  check  the  drawer  must  suffer  the  loss 
and  not  the  bank.*®®  Thus  when  a  depositor  signed  a  check  in 
blank  and  it  was  stolen  and  a  scoundrel  filled  in  the  blank  with 
his  own  name  and  the  amount,  the  bank  has  a  right  to  pay  the 

28a  Morse  on  Banking,  291.  28d  Smalley   v.    Central    —    Ind. 

28b  Simmons   v.   Taylor,  2   C.   B.  App.  — ,  125  N.  E.  789. 

(N.  S.)  528,  27  L.  J.  C.  P.  45.  248.  28e  Meyer    v.    Indiana    National 

28'=  Brown  v.  The  State,  166  Ind.  Bank,  27  Ind.  App.  354. 
85. 


§  206e  SUBDIVISION  a — checks.  245 

money  to  such  scoundrel  and  the  depositor  is  the  loser.  But 
where  the  scoundrel  filled  the  name  as  "A.  B.''  and  not  his  own 
name  and  the  bank  paid  it  without  identification  of  the  scoundrel, 
the  bank  is  liable.^""' 

Where  the  drawer  of  a  check  delivers  it  to  an  impostor,  be- 
lieving him  to  be  the  payee  named  in  the  check,  the  indorsement 
thereof  by  the  impostor  is  not  a  forgery,  and  the  drawer  is  liable 
to  any  subsequent  bona  fide  holder.^*'  And  where  a  check  is  en- 
closed in  a  letter  which  is  directed  by  mistake  of  the  drawer  of 
the  check,  and  the  letter  is  delivered  to  another  person  of  the 
same  name  as  the  payee,  who  indorses  and  negotiates  the  check, 
which  is  finally  received  by  the  drawer  bank  and  paid  and 
charged  to  drawer's  account,  the  latter  cannot  recover  from  the 
bank.^sh 

§  206e.     Stolen  checks  or  stolen  negotiable  securities.    The 

thief  acquires  no  title  to  the  negotiable  security  which  he  steals 
and  neither  does  any  one  who  has  notice  that  the  instrument  was 
stolen.  The  owner  may  trace  the  instrument  or  its  proceeds  so 
long  as  it  or  its  substitute  can  be  identified  in  the  hands  of  the 
thief  or  holder  with  notice.^^' 

If  however  the  instrument  is  indorsed  in  blank,  or  payable  or 
indorsed  to  bearer,  a  bona  fide  holder  for  value  and  without  notice 
may  retain  the  instrument  as  against  the  true  owner,  upon  whom 
the  loss  falls,  and  enforce  payment  by  any  party  liable  thereon.^**^ 

Under  Section  57  of  the  Law  a  bona  fide  holder  of  a  check  pay" 
able  to  bearer  can  acquire  a  good  title  thereto  from  one  who  has 
stolen  it.^'^''  But  this  section  is  to  be  construed  in  connection 
with  Section  15  of  the  Law  and  if  the  check  is  incomplete  when 
stolen,  it  is  not  valid  in  the  hands  of  any  holder.^'^' 

When  a  blank  check  left  by  the  drawer  with  his  bookkeeper 
is  stolen  by  an  employee,  filled  out  and  collected,  the  payment 
of  the  drawer  bank  is  valid  as  against  the  drawer,  since  the 
drawer  is  under  a  duty  to  see  that  his  checks  do  not  get  into 
the  hands  of  those  for  whom  they  are  not  intended.^^"* 

Where  a  check,  complete  in  every  respect,  except  as  to  de- 

28*  Citizens  National  Bank  v.  28j  Jefferson  Bank  v.  Chapman- 
Reynolds  —  Ind.  App.  — ,  126  N.  E.  White-Lvons  Co.,  122  Tenn.  415, 
234.  123  S.  W.  641. 

28b  Burrows    v.    Western    Union  2Sk  Massachusetts  National  Bank 

Telegraph  Co.,  86  Minn.  499,  90  N.  v.   Snow,  187  Mass.   160;  Jefferson 

W.  1,111 ;  Meyer  v.  Indiana  National  Bank  v.  Chapman,  122  Tenn.  415. 

Bank,  27  Ind.  App.  354,  61   N.   E.  28i  Linick    v.    Nutting,    140   App. 

596.  Div.  (N.  Y.)  265. 

28h  Weisberger  v.  Bank,  84  Ohio  28m  Trust    Company   of   America 

St.  21.  V.  Conklin,  65  Misc.  Rep.   (N.  Y.) 

28i  Newton   v.    Porter,   69  N.   Y.  1,119  N.  Y.  Supp.  367. 
133. 


246  NEGOTIABLE    INSTRUMENTS.  §  206f 

livery,  is  stolen  from  the  drawer  by  the  payee  and  negotiated  by 
the  latter  to  a  holder  in  due  course,  the  holder  is  entitled  to  re- 
cover thereon. ^'^" 

When  an  instrument  is  stolen  and  negotiated,  the  burden  is 
upon  the  holder  to  show  that  he  himself  is  a  holder  in  due  course, 
or  that  he  claims  under  such  a  holder ;  and  there  is  no  presump- 
tion that  the  thief  negotiated  the  instrument  before  it  became  due. 

§  206£.  Check  as  payment.  In  some  jurisdictions  the  giv- 
ing of  a  check  to  a  creditor  is  not  in  itself  a  satisfaction  of  the 
debt  unless  the  check  is  paid;^^"  in  some  other  jurisdictions  a 
check  when  delivered  is  presumed  to  be  in  payment  of  the  obli- 
gation or  debt,  but  this  presumption  may  be  rebutted  by  the 
facts.  A  question  which  frequently  arises  is  whether  a  check 
given  for  a  less  amount  than  the  debt  or  obligation  and  marked 
in  full  payment  or  with  words  to  that  effect,  or  accompanied  by 
a  letter  stating  that  it  is  sent  in  full  payment,  is,  as  a  matter  of 
fact  a  full  payment,  that  is,  may  such  check  pay  a  less  amount 
for  a  larger  amount. 

The  general  rule  is  that  if  the  debt  or  obligation  is  unliqui- 
dated the  acceptance  of  the  smaller  amount  is  good  as  an  accord 
and  satisfaction,  thus  where  there  is  a  controversy,  and  the 
debtor  claims  to  owe  less  than  the  amount  paid,  while  the  credi- 
tor claims  more,  the  acceptance  of  a  check  in  compromise  is  bind- 
ing on  both  parties.  Where  there  is  no  dispute  as  to  the  amount 
owing  by  the  debtor,  and  he  only  seeks  to  set  off  an  alleged 
indebtedness  in  another  transaction,  the  acceptance  of  a  portion 
of  the  amount  admitted  to  be  due  is  not  a  satisfaction  of  the 
balance  of  the  accovmt.^^" 

A  memorandum  on  a  check  that  it  was  for  a  balance  due  is 
not  conclusive,  but  is  subject  to  be  explained  by  parol.*^' 

§  206g.  Stopping  payment.  The  order  to  stop  payment 
must  be  communicated  to  the  bank  before  the  check  to  which 
it  refers  has  been  paid ;  and  in  the  absence  of  a  rule  of  the  bank 
that  stop  orders  must  be  in  writing,  a  verbal  notice  is  suf- 
ficient."*""     If   a   bank    pays    a    check    after    payment   has   been 

28"  Schaefer  v.   Marsh,   90  Misc.  App.   300;   Cox  v.   Hayes,   18   Ind. 

Rep.  307,  153  N.  Y.  Supp.  16;  North-  App.  220. 

hampton  National  Bank  v.  Kidder,  2Sp  Carton     &    Jeffrey     v.     Wm. 

106  N.   Y.  221 ;   Hinckley  v.   Mer-  Thackberry  Co.,  139  Iowa  586,  117 

chants'   National   Bank,    131    Mass.  N.  W.  953. 

147.  38q  Bade  v.  Hibberd,  50  Ore.  501, 

280  Burkhalter  v.  Second  National  93  Pac.  364. 

Bank,  42  N.  Y.  538;  Union  Biscuit  2Sr  Brandt    v.    Public    Bank,    139 

Company  v.   Grocery  Co.,  143  Mo.  N.    Y.    App.    Div.    173,    123    N.   Y. 

Supp.  207. 


§  206f  SUBDIVISION  A — CHECKS.  247 

stopped,  it  cannot  charge  the  amount  against  the  depositor's  ac- 
count.^**' 

The  certification  of  a  check  by  the  drawee  bank  terminates 
the  drawer's  right  to  stop  payment.^^*  And  so  notice  to  a  bank 
by  a  depositor  that  his  certified  check,  indorsed  in  blank,  had 
been  lost  and  to  stop  payment,  will  not  justify  the  bank  in  re- 
fusing payment  to  a  holder  in  due  course.^^" 

The  Negotiable  Instruments  Law  provides:  "Notice  of  dis- 
honor is  not  required  to  he  given  to  the  drawer  *  *  where 
the  drawer  has  countermanded  payment.'"^^'' 

And  under  the  above  section  it  has  been  held  that  an  allega- 
tion that  payment  of  a  check  had  been  countermanded  is  suf- 
ficiently set  out  vi^here  the  check  was  set  forth  with  the  indorse- 
ment across  the  face,  "Pyt.  Stopped."*^* 

The  drawer  of  a  check,  who  has  countermanded  payment,  is 
not  entitled  to  notice  of  its  protest.^^" 

Below  is  given  a  form  of  request  frequently  required  by  banks 
for  stopping  payment  on  negotiable  instruments. 

CITY  TRUST  BANK, 

INDIANAPOLIS: 

Please  endeavor  to  stop  payment  of  my  check  or  draft 

Number   dated 

for DOLLARS 

($ )  and  payable  to  the  order  of 

My  reasons  for  wishing  payment  stopped  are: 

/  hereby  agree  to  hold  yoiu  harmless  for  said  amount, 
and  all  expenses  and  costs  incurred  by  you  on  account  of  your 
refusing  payment  of  said  check  or  draft,  and  agree  further  not 
to  hold  you  liable  on  account  of  payment  contrary  to  this  re- 
quest if  same  occurs  through  inadvertence  or  accident  only. 

Dated 

this  day  of 19 


Depositor. 

IMPORTANT. — Do  not  issue  duplicate  check  or  draft 
until  your  pass-book  or  statement  has  been  received  and  exam- 
ined.    When  issuing  duplicates,  please  notify  us, 

28»  People  Savings  Bank  &  Trust  43   Misc.  Rep.  45,  86  N.  Y.   Supp. 

Co.  V.  Lacey,  146  Ala.  688,  —  So.  857. 

Rep.    346;    German    National    Bank  ^Svjyjgg^  j^st.  Law,  §  114,  subd.  5. 

V.  Farmers'  Deposit  National  Bank,  ^Sw  National    Copper    Bank   v. 

118  Pa.  St.  294,  12  Atl.  Rep.  303.  Davis  Co.  Bank,  47  Utah,  236  152 

28t  National  Commercial  Bank  v.  Pac.  1180. 

Miller,  77  Ala.  168.  38"  pjrst  National  Bank  v.  Korn, 

28"  Poess  y.  Twelfth  Ward  Bank,  —  Mo.  App.  — ,  179  S.  W.  721. 


248  NEGOTIABLE    INSTRUMENTS.  §  207 

§  207.  Checkholder's  right  to  sue  the  bank.  Let  us  first 
consider  when  the  holder  of  a  certified  check  may  sue  the  bank 
and  then  consider  when  the  holder  of  an  uncertified  check  may 
sue  the  bank.  The  great  weight  of  authority  is  that  where  the 
bank  has  certified  a  check  any  holder  of  the  check  may  sue  the 
bank  to  compel  payment.^**  The  certification  creates  a  new  and 
binding  obligation  on  the  part  of  the  bank.  Delay  in  presenting 
a  certified  check  does  not  discharge  the  bank  from  this  obliga- 
tion. It  has  been  said  that  the  obligation  of  the  bank  after  cer- 
tifying a  check  is  simply  and  unconditionally  to  pay  upon  de- 
mand, and  in  all  such  cases  the  demand  may  be  made  whenever 
it  suits  the  convenience  of  the  party  entitled  to  the  stipulated 
payment.  When  the  business  of  a  bank  is  properly  conducted,  it 
is  not  possible  that  it  can  sustain  any  loss  or  prejudice  from  this 
interpretation  of  the  contract  which  it  makes  in  certifying  a 
check;  and  it  is  only  where  delay  may  be  prejudicial  that  the 
want  of  due  diligence  may  be  legally  imputed  and  operates  as  a 
bar  to  a  claim  which  the  holder  could  otherwise  maintain  against 
the  bank.^"  The  effect  of  a  certification  as  to  the  right  of  action 
which  may  be  maintained  by  the  holder  simply  shifts  from  the 
drawer  and  indorsers  to  the  bank.  His  right  to  sue  is  transferred 
from  a  right  against  the  drawer  to  a  right  against  the  bank.  A 
certification  does  not  become  effective  when  made  at  the  instance 
of  the  drawer  until  the  delivery  of  the  check  to  the  payee.^**" 

The  rule  as  to  the  right  of  a  holder  of  an  uncertified  check  to 
sue  the  bank  is  denied  by  the  great  weight  of  authority.  To  en- 
able the  holder  of  such  a  check  to  successfully  maintain  an  action 
against  the  bank  it  would  be  necessary  for  the  check  to  operate  as 
an  assignment  of  the  drawer's  funds.  This,  it  is  plain,  an  un- 
certified check  does  not  do,  since  it  is  but  an  order  to  pay  and  not 
an  absolute  assignment  of  anything. 

The  Negotiable  Instruments  Law  provides: 

"A  check  of  itself  does  not  operate  as  an  assignment  of  any 
part  of  the  funds  to  the  credit  of  the  drawer  with  the  hank,  and 
the  hank  is  not  liable  to  the  holder,  unless  and  until  it  accepts 
or  certifies  the  check."^^     It  would  seem  on  principle  that  there 

29Willits   V.    Bank,   2   Duer    (N.  30  Andrews  v.  German  Nat.  Bank, 

Y.)    121;   Merchants  Nat.   Bank  v.  9  Heisk   (Tenn.)  211,  24  Am.  Rep. 

State  Nat.  Bank,  10  Wall  604;  Nat.  300;   Robson   v.   Bennett,  2  Taunt. 

Commercial  Bank  v.  Miller,  77  Ala.  388,  11  Rev.  Rep.  614. 
168;  Meads  v.  Merchants  Bank,  25  ****  Anglo  South  American  Bank 

N.  Y.  143,  82  Am.  Dec.  331.    As  to  v.    National    City   Bank,    161    App. 

liability    of    bank    on    certification  Div.   (N.  Y.)  268,  146  N.  Y.  Supp. 

of  check,  see  note  19  U.  S.  L.  Ed.  457. 
1008. 


§  208  SUBDIVISION   A — CHECKS.  249 

is  no  assignment  to  the  holder  nor  privity  of  contract  betw^een 
the  bank  and  the  holder  of  an  uncertified  or  unaccepted  check, 
either  at  law  or  in  equity.  The  holder's  remedy  is  against  the 
drawer,  and  to  the  drawer  only  is  the  bank  liable  if  its  refusal  to 
pay  was  a  breach  of  its  contract.  A  check  is  clearly  not  an  as- 
signment of  money  in  the  hands  of  a  banker.  The  banker  is 
bound  by  his  contract  with  his  customer  to  honor  the  check,  when 
he  has  sufficient  assets  in  his  hands.  If  he  does  not  fulfill  his 
contract,  he  is  liable  to  an  action  by  the  drawer.^ 

The  payment  of  a  clearing  house  balance  is  not  a  payment  of 
any  particular  check,  and  does  not  become  so  until  the  time 
within  which  the  check  may  be  returned  has  expired.^^* 

§  208.     The  depositor's  right  to  draw  on  the  bank.     The 

implied  contract  between  the  banker  and  the  depositor  is  that  the 
banker  will  honor  his  checks  to  the  amount  of  his  deposits. 
Therefore  it  is  a  plain  proposition  that  only  the  depositor  or  his 
duly  authorized  agent  can  draw  against  the  deposits.  In  case 
the  deposit  is  made  by  a  partnership  the  check  must  be  signed  by 
the  partnership  name  and  may  be  issued  by  any  one  of  the  active 
partners.  Where  the  check  is  not  signed  by  the  partnership 
name,  but  instead  all  the  partners  sign  their  individual  names 
the  bank  may  honor  the  check.  Where  several  persons  not  a 
partnership  make  a  joint  deposit  it  is  necessary  that  all  their 
names  appear  on  the  check  unless  they  make  the  deposit  a  joint 
and  several  credit,  in  which  case  any  one  of  them  may  draw  on 
the  deposit. 

As  to  corporations  it  is  incumbent  upon  the  bank  to  ascer- 
tain from  the  charter  or  by-laws  of  the  corporations  what  officers 
are  authoried  to  draw  on  the  deposits  of  the  corporation.  But  if 
a  check  is  drawn  by  an  unauthorized  officer  and  the  corporation 
accepts  the  proceeds  of  the  check,  it  is  estopped  to  set  up  the 
officer's  want  of  authority.  Where  a  number  of  trustees  de- 
posit trust  funds  the  general  rule  is  that  all  their  names  must 
be  signed  to  the  check  in  drawing  on  the  bank,  but  a  court  of 
equity  may  sanction  the  drawing  of  a  check  by  a  less  number 
than  all. 

31  Neg.  Inst.  Law,  §  189,  where  ^^  Hopkinson  v.  Foster,  L.  R.  19 

all  cases  directly  or  indirectly  bear-  Eq.    74.      As    to    liability    of    bank 

ing    upon    or    citing    the    Law    are  upon     check    drawn    upon    it,    see 

grouped.      As    to    a    check    as    an  note  19  U.  S.  L.  Ed.  897. 

equitable   assignment,   see   notes   in  32a  Hentz  v.  Nationaal  City  Bank. 

7  L.  R.  A.  596.  9  L.  R.  A.  109:  and  159  App.  Div.  (N.  Y.)  743,  144  >J. 

as  to  checkholder's  right  to  sue  bank  Y,  Supp.  979- 
for  refusal  to  pay,  see  note  41  U.  S. 
L.  Ed.  207. 


250  NEGOTIABLE    INSTRUMENTS.  §  209 

An  agent  who  has  put  to  his  private  account  funds  of  an  un- 
disclosed principal  may  recover  damap:es  from  the  bank  for  re- 
fusal to  honor  his  check  upon  them,  although  he  had  improperly 
obtained  them. 

§  209.  Failure  of  bank  to  honor  check.— Where  the  bank 
possesses  funds  of  a  depositor  it  is  bound  to  honor  his  checks  to 
the  amount  of  his  deposits.  If  a  check  is  properly  drawn  and 
presented  for  payment  and  the  bank  fails  to  honor  it  when 
there  are  sufficient  funds,  the  depositor  may  maintain  an  action 
against  the  bank  not  only  for  a  breach  of  contract,  but  also  for  a 
tort;  in  the  latter  case  he  would  be  entitled  to  recover  damages 
for  injury  to  his  credit  or  any  other  injury  that  he  might  have 
suffered.^ 

The  drawer  must  have  sufficient  funds  in  the  bank  to  meet  the 
check  in  full  to  entitle  him  to  maintain  an  action  against  the 
bank  for  a  failure  to  honor  his  check,  because  the  bank  cannot 
be  required  to  make  a  part  payment.^  After  the  deposit  is  made 
the  bank  is  allowed  a  reasonable  time  in  which  to  enter  the  credit 
upon  its  books.  But  if  a  reasonable  time  has  elapsed  between 
the  deposit  and  the  presentment  of  the  check  the  bank  will  be 
liable  although  the  credit  was  not  entered  because  it  is  the  duty 
of  the  bank  to  properly  keep  its  books  and  to  properly  conduct 
its  business. 

A  bank  is  not  supposed  to  make  a  partial  payment  on  a  check 
if  it  has  not  sufficient  funds  to  pay  the  entire  amount.  In  prac- 
tice the  holder  of  the  check  sometimes  deposits  sufficient  of  his 
own  funds  to  the  drawer's  account  in  order  to  have  sufficient  on 
deposit  in  the  drawer's  name  so  that  the  latter's  check  will  be 
honored  by  the  bank. 

Overdraft  payments  are  considered  as  loans  made  to  deposi- 
tors and  if  the  loan  is  not  made  good  the  bank  may  then  sue  for 
the  repayment  of  the  loan  upon  the  implied  promise  on  the  part 
of  the  person  to  whom  the  loan  was  made  to  repay  the  same. 

33  Mt.     Sterling     Nat.     Bank    v.  15   L.   R.   A.   134.     As  to  right  to 

Greene,  99  Ky.  262,  35  S.  W.  911,  stop    payment   of    check,    see    note 

32  L.  R.  A.  568 ;  Svendsen  v.  State  30  L.  R.  A.  845. 

Bank,  64  Minn,  40,  65  N.  W.  1086,  34  pgnner  v.   Smith,   3   Neb.   107, 

31    L.   R.   A.   552.     As  to  liability  47  N.  W.  632,  11  L.  R.  A.  528. 
of  bank  for  refusal  to  pay,  see  note 


SUBDIVISION  B— TRAVELERS'  CHECKS. 

§  209a.  Meaning    of    term    and    ob-       §  209c.  Rights  and  liabilities, 
ject.  209d.  Advantages. 

209b.  Provisions.  209e.  Forgery  of  travelers'  checks. 

§  209a.  Meaning  of  term  and  object.  A  travelers'  check 
is  a  negotiable  instrument  upon  which  the  holder's 
signature  must  appear  twice  in  order  to  be  a  complete  in- 
strument. It  is  issued  by  a  bank  to  a  holder  who  must  place 
his  signature  upon  the  instrument  at  the  time  it  is  issued,  and  the 
instrument  must  be  countersigned  by  the  holder  before  it  is  paid. 

Checks  of  this  character  have  come  into  very  general  use, 
especially  by  travelers.  They  are  an  ingenious,  safe  and  con- 
venient method  by  which  the  traveler  may  supply  himself  with 
funds  in  almost  all  parts  of  the  civilized  world  without  the 
hazard  of  carrying  the  money  on  his  person.  The  bank  or  com- 
pany issuing  the  instrument  has  the  right  to  refuse  to  pay  it 
when  it  does  not  bear  the  countersign  agreed  upon.  The  owner 
of  the  check  also  has  the  right  to  insist  it  shall  not  be  paid  when 
it  is  not  countersigned  as  agreed.-^  It  is  a  safe  and  yet  con- 
venient way  in  which  to  carry  funds  in  addition  to  the  well- 
known  and  reliable  letter  of  credit. 

§  209b.  Provisions.  In  order  to  insure  himself  against 
loss,  the  traveler  or  holder  is  required  at  the  time  of  purchase  to 
sign  his  name  to  the  checks  in  a  space  reserved  for  "Holder's 
signature."  Travelers'  checks  can  not  be  cashed  unless  they  are 
countersigned,  and  then  only  if  "holder's  signature"  and  "coun- 
tersignature" correspond,  and  the  countersignature  must  be  af- 
fixed to  the  instrument  in  the  presence  of  the  correspondent  of 
the  bank  or  company  issuing  the  same. 

The  amount  paid  in  European  or  foreign  countries  is  specified 
on  each  check,  so  that  the  holder  knows  exactly  how  much  for- 
eign money  he  is  to  receive,  and  it  is  provided  that  the  fixed 
amounts  will  be  paid  without  deduction,  excepting  for  the  gov- 
ernment stamp  tax,  if  any.  In  countries  not  specially  designated, 
it  is  provided  that  the  equivalent  of  the  dollar-amount  will  be 
paid  at  regular  market  rates. 

It  is  usually  provided  that  if  the  instrument  is  lost,  the  amount 
will  be  refunded  upon  the  execution  of  a  satisfactory  bond  of 

1  Samberg  v.   American   Express      879,  L.  R.  A.  1917F,  p.  558  note. 
Company,  136  Mich.  639,  99  N.  W. 

251 


252  NEGOTIABLE    INSTRUMENTS.  §§  209c-209e 

indemnity,   and   that   unused  checks   will  be   redeemed  at  their 
face  value. 

If  the  instrument  is  issued  by  an  agent  of  the  issuer  of  the 
instrument,  such  agent  receives  from  the  holder  a  certain  amount 
of  money  for  the  issuer,  not  as  a  deposit  or  for  safe-keeping, 
but  upon  a  contract  vi^herein  the  issuer  undertakes  that  he  will, 
within  one  year  from  the  date  of  the  checks  when  countersigned, 
pay  the  amount  stated  in  the  check  to  the  order  of  the  payee 
therein  named.^  It  will  be  seen  that  identification  is  easily  es- 
tablished by  means  of  two  of  the  travelers'  signatures,  one  being 
placed  on  the  check  at  the  time  of  purchase  and  the  other  at  the 
time  of  payment  in  the  presence  of  the  bank  officer,  that  is,  the 
paying  agent. 

§  209c.  Rights  and  liabilities.  The  company  or  issuer  of 
the  check  has  the  right  to  refuse  to  pay  when  the  check  does 
not  bear  the  countersign  agreed  upon.  The  owner  of  the  check 
also  has  the  right  to  insist  it  shall  not  be  paid  when  it  is  not 
countersigned  as  agreed. 

The  instrument  is  not  effective  as  a  draft  or  check,  or  order 
for  the  payment  of  money,  until  the  purchaser,  who,  in  the 
presence  of  the  agent  of  the  issuer,  has  signed  his  signature,  has 
also  countersigned  it.^ 

§  209d.  Advantages.  These  travelers'  checks  are  payable 
all  over  the  world,  being  cashed  by  banks,  bankers,  and  tourists' 
agents ;  they  are  also  readily  taken  in  settlement  of  travelers' 
bills  by  steamship  companies  and  the  principal  hotels  and  stores. 

§  209e.  Forgery  of  travelers'  checks.  One  issuing  travelers' 
checks  under  the  agreement  to  pay  them  when  countersigned 
by  the  signature  placed  on  their  face  is  liable  to  the  purchaser 
for  checks  paid  on  a  forged  signature.^ 

a  Sullivan   v.   Knauth.  220  N.   Y.  4  Sullivan  v.   Knauth.  220  N.  Y. 

216.  115  N.  E.  460  L.  R.  A.  1917F.  216,  115  N.  E.  460,  L.  R.  A.  1917F, 

p.  554.  p.   554 ;   Samberg  v.  American   Ex- 

3  Sullivan    v.    Knauth,    161    App.  press   Company,    136  Mich.  639,  99 

Div.  148,  146  N.  Y.  Supp.  583.  N.  W.  879. 


CHAPTER  XlX-a 

LOST  AND  DESTROYED  NEGOTIABLE  INSTRUMENTS. 

§  209f.  In  general.  §  209k.  Form  of  bond  of  indemnity 

209g.  Diligence  of  owner,  for  paying  lost  note. 

209h.  No  title  in  finder.  2091.  Copy  admissible  in  evidence. 

209i.  When    party    liable    not  dis-         209m.  Burden  of  proof. 

charged.  209n.  Suit  at  law  or  in  equity. 

209j.  Rule  as  to  indemnity.  209o.  Demand,  protest  and  notice 

as  to  lost  instrument.' 

§  209f.  In  general.  There  are  certain  duties  and  rights  of 
the  loser,  finder  and  holder  of  lost  and  destroyed  negotiable  in- 
struments which  should  be  given  separate  consideration.  The 
duties  and  rights  as  to  ordinary  chattels  differ  from  those  as  to 
coins,  bank  bills  and  negotiable  paper.  Negotiable  paper  takes 
the  place  and  performs  to  a  large  extent  the  office  of  money  and 
it  would  be  embarrassing  if  every  taker  of  such  instruments  was 
bound  to  inquire  into  the  title  of  the  holder  and  if  he  were 
obliged  to  take  it  with  all  the  imperfections  and  subject  to  all 
the  defenses  which  attach  to  it  in  the  hands  of  the  holder.  So  a 
bona  fide  holder  for  value  without  notice  may  obtain  good  title 
to  certain  negotiable  instruments,  such  as  those  negotiable  by 
delivery  against  the  parties  thereto,  as  well  as  against  the  true 
owner ;  this  rule  applies  to  negotiable  instruments  negotiable  by 
delivery  such  as  those  payable  to  bearer  or  indorsed  in  blank. 

§  209g.  Diligence  of  owner.  As  soon  as  the  owner  discov- 
ers that  he  has  lost  a  negotiable  instrument  he  should  instantly 
give  notice  of  the  loss  to  all  the  parties  on  such  paper  and  inform 
them  not  to  pay  the  amount  to  any  one  but  to  the  loser  or  his 
order.  Thus,  if  an  unaccepted  bill  of  exchange  be  lost  the 
drawee  should  be  advised  not  to  accept  the  same. 

§  209h.  No  title  in  finder.  No  title  to  a  lost  bill  or  note 
vests  in  the  finder  and  the  owner  when  he  has  identified  it  may 
maintain  trover  against  the  finder.  If  the  finder  has  received 
payment  of  the  bill  or  note  an  action  for  money  had  and  received 
for  his  use  may  be  maintained  against  him.  The  owner  may  like- 
wise maintain  an  action  of  replevin  against  the  finder.*  And  it 
has  been  held  that  the  finder  has  no  lien  on  the  bill  or  note  for  his 
expenses  on  account  of  finding  the  instrument. 

1  Halbert  v.  Rosenbalm,  49  Neb.  498,  68  N.  W.  622. 

253 


254  NEGOTIABLE    INSTRUMENTS.  §§  209i-209k 

§  209i.  When  party  liable  not  discharged.  A  party  liable 
will  not  be  discharged  if  he  pay  the  amount  to  the  holder  of  the 
lost  instrument  before  maturity  as  such  a  payment  is  not  made 
in  the  usual  course  of  business.^  Neither  will  the  party  liable 
be  discharged  if  he  had  notice  of  the  loss  unless  the  holder  is  a 
bona  fide  holder  for  value  and  entitled  to  enforce  payment. 

§  209j.  Rule  as  to  indemnity.  Ordinarily  where  a  writing 
is  merely  evidence  of  a  contract,  the  loss  or  destruction  does  not 
destroy  the  cause  of  action  but  in  case  of  negotiable  instruments 
where  the  parties  liable  are  entitled  to  have  the  writings  deliv- 
ered up  to  them  for  their  security  or  to  enable  them  to  enforce 
their  rights  under  them  when  they  are  called  on  to  perform 
their  obligations,  in  case  such  instruments  are  lost  or  destroyed, 
an  action  can  not  be  maintained  unless  their  rights  can  be  fully 
secured  by  a  bond  of  indemnity  or  other  sufficient  security.  As 
the  parties  liable  upon  a  negotiable  instrument  are  entitled  to  the 
instrument  at  time  of  payment  and  as  this  is  not  possible  with  a 
lost  instrument,  the  owner  should  tender  a  sufficient  indemnity  in 
some  form  against  any  future  claim  by  the  finder  or  holder  upon 
a  lost  instrument.  This  indemnity  should  be  offered  to  every 
party  of  whom  payment  is  demanded. 

There  are  some  exceptions,  however,  as  to  the  requirement  of 
a  bond  of  indemnity  as  where  a  note  is  payable  to  order  and  is 
unindorsed  or  where  it  has  been  specially  indorsed,  or  where 
the  lost  instrument  has  been  traced  to  the  defendant's  custody, 
or  where  it  is  shown  that  the  defendant  is  protected'  by  the 
Statute  of  Limitations  against  future  liability.^ 

§  209k.  Form  of  bond  of  indemnity  for  paying  lost  note. 
The  following  is  a  form  of  indemnity  bond  for  paying  a  lost 
note: 

INDEMNITY  BOND  FOR  PAYING  LOST  NOTE. 

Know  All  Men  By  These  Presents,  That  we,  AB,  prin- 
cipal, of and  CD,  surety,  of 

,  are  held  and  firmly  bound 

unto  EF,  of ,  in  the  penal  sum  of 

,  lawful  money  of  the  United 

States,  to  be  paid  to  the  said  EF,  his  executors,  administrators 
or  assigns,  for  which  payment  well  and  truly  to  be  made,  we 

2  Hinckley  v.  Union  Pacific  Rail-  ^  Moore  v.  Fall,  42  Maine  450. 

road  Co.,  129  Mass.  52. 


§  2091  LOST  AND  DESTROYED.  255 

bind  ourselves,  our  heirs,  executors  and  administrators,  firmly 
by  these  presents. 

Sealed  with  our  seals  and  dated  the day  of 

19 

THE  CONDITION  of  this  obligation  is  such  that  where- 
as AB,  principal,  is  the  owner  of  a  certain  promissory  note,  dated 

the day  of ,  for  $ , 

and  payable days  after  date,  signed  and  made 

by and  payable  to  the  order  of 

,  due and  which 

said  note  has  been  lost  and  cannot  now  be  produced  by  him,  and 

Whereas,  said  EF  has  this  day  paid  to  said  AB  the  full 
amount  due  thereon  upon  the  agreement  that  this  bond  of  in- 
demnity would  be  given  and  that  said  AB,  principal,  and  CD, 
surety,  will  indemnify  and  save  EF  harmless,  and  will  deliver 
up  said  note  to  EF  when  found. 

Now,  THE  CONDITION  of  this  obligation  is  such  that 
the  above  bounden  AB,  principal,  and  CD,  surety,  their  heirs, 
executors,  administrators,  or  any  of  them  shall  well  and  truly 
indemnify  and  save  harmless  the  said  EF,  his  executors  and  ad- 
ministrators from  and  against  any  claim  on  said  note  and  any 
and  all  damages,  costs,  charges,  actions  or  suits  by  reason  there- 
of, and  also  deliver  or  cause  said  note  to  be  delivered  to  said  EF, 
if  found,  then  this  obligation  to  be  void,  otherwise  to  remain 
in  full  force  and  virtue. 

(SEAL) 

(SEAL) 

State  of 1 

County   of >    ss. 

City  of J 

On  this day  of ,  19 , 

before  me,  the  subscriber,  personally  appeared 

and ,  to  be  known  to  be  the  same 

persons  who  executed  the  foregoing  instrument,  and  they  each 
acknowledged  to  me  that  they  executed  the  same. 


Notary  Public. 
My  commission  expires 

§  2091.  Copy  admissible  in  evidence.  An  affidavit  by  the 
plaintiff  addressed  to  the  court  is  admissible  to  prove  the  loss  of 
a  bill  or  note  and  to  lay  the  foundation  for  secondary  evidence 
of  its  contents.* 

^Katzenberg  v.  Lehman,  80  Ala.  513. 


256  NEGOTIABLE  INSTRUMENTS.  §§  209m-209n 

The  original  existence,  genuineness,  identity  and  loss  or  de- 
struction of  the  instrument  must  be  proved  if  disputed  in  a  suit 
against  the  maker,  otherwise  a  copy  will  not  be  received  in  ev- 
dence.** 

The  contents  and  terms  of  a  note  cannot  be  shown  by  parol 
nor  the  character  in  which  it  had  been  signed  by  the  makers, 
whether  as  principal  or  sureties,  when  there  has  been  no  showing 
that  the  note  was  lost  or  destroyed  or  not  within  the  reach  of 
the  court's  process.® 

The  loss  must  usually  be  proved  by  circumstantial  evidence 
and  the  courts  are  less  exacting  as  to  proof  where  the  maker  is 
safe  against  any  future  claim  of  a  bona  fide  transferee.  Where 
the  circumstances  are  suspicious  or  the  maker  is  not  protected 
and  safe  the  courts  are  more  exacting;  and  where  the  note  is 
not  negotiable  the  proof  need  not  be  so  strong  as  in  case  of 
negotiable  paper.'' 

And  it  should  be  remembered  that  it  must  be  affirmatively 
shown  that  the  lost  instrument  was  negotiable  since  that  fact 
will  not  be  presumed.* 

Should  the  negotiable  instrument  be  lost  after  suit  is  brought 
upon  the  same,  the  court  still  has  jurisdiction  and  there  may  be 
recovery,  as  in  case  of  lost  notes.* 

§  209m.  Burden  of  proof.  When  the  loss  of  a  negotiable 
instrument  by  the  original  owner  is  proven  the  burden  of  proof 
is  said  to  shift  and  the  holder  must  show  that  he  acquired  the 
instrument  as  a  bona  fide  purchaser  or  from  some  one  who  held 
title  as  a  bona  fide  holder.*** 

Neglect  to  offer  indemnity  to  the  maker  or  acceptor  on  de- 
mand before  payment  does  not  deprive  the  payee  of  his  right 
of  action  but  it  will  deprive  him  from  recovering  costs.** 

§  209n.  Suit  at  law  or  in  equity.  There  is  a  conflict  as  to 
whether  or  not  a  proceeding  upon  a  lost  or  destroyed  negotiable 
instrument  should  be  at  law  or  in  equity.  In  those  jurisdictions 
which  have  separate  proceedings  at  law  and  in  equity  the  pro- 
ceeding is  usual  in  equity.  And  in  such  jurisdictions  there  are 
usually  certain  exceptions  so  that  the  proceeding  may  be  at  law 
in  certain  cases  as  where  the  lost  negotiable  instrument  is  proved 

5  Field  V.  Anderson,  55  Ark.  546,  » Beoteler    v.    Dexter,    20    D.    C. 

18  S.  W.  1038.  Rep.  26. 

«  Merrill   v.   Timbrell,    123   Iowa  !«  Warren  v.  Smith,  35  Utah  455, 

879.  100  Pac.  1069,  136  A.  S.  R.  1071. 

''  Nagel  V.  Mignot.  8  Mart.  488.  ^^  Commercial  Bank  v.  Benedict, 

s  Hough  V.  Barton,  20  Vt.  455.  18  B.  Mon.  307. 


§  209o  LOST  AND  DESTROYED,  257 

to  have  been  destroyed,  or  if  a  negotiable  instrument  transferable 
by  delivery  be  traced  to  the  defendant's  possession  after  it  is 
lost  or  where  the  debt  would  be  barred  by  the  Statute  of  Limi- 
tations if  a  third  party  were  to  demand  payment  of  the  instru- 
ment.*" 

§  209o.     Demand,  protest  and  notice  as  to  lost  instrument. 

The  Negotiable  Instruments  Law  in  Section  160  of  the  Law  pro- 
vides : 

"When  a  bill  is  lost  or  destroyed  or  is  wrongly  detained  from 
the  person  entitled  to  hold  it,  protest  may  he  made  on  a  copy  or 
■mrittcn  particulars  thereof." 

The  loss  of  a  negotiable  instrument  is  no  excuse  for  want  of  a 
demand,  protest  or  notice  because  it  does  not  change  the  contract 
of  the  parties  and  the  drawer  and  indorsers  on  such  failure  will 
be  discharged.*^ 

12  Torey  v.  Foss,  40  Maine  74.  ^^  Kavanaugh    v.    Bank.    59   Mo. 

App.  '540. 


CHAPTER  XX. 
SOME  OTHER  KINDS  OF  COMMERCIAL  PAPER. 

§210.  In  general.  §215.  Draft. 

211.  Bill  of  lading.  216.  Due  bill. 

212.  Certificate  of  deposit.  217.  Letters  of  credit 

213.  Certificate  of  stock.  218.  Paper  money. 

214.  Coupon  bonds.  219.  Warehouse  receipt. 
214a.  Liberty  Bonds.  219a.  Miscellaneous. 

§  210.  In  generaL  Among  the  most  common  species  of 
commercial  paper  other  than  bills  of  exchange,  promissory  notes 
and  bank  checks  are  bills  of  lading,  certificates  of  deposit,  cer- 
tificates of  stock,  coupon  bonds,  drafts,  due  bills,  letters  of  credit, 
paper  money  and  warehouse  receipts.-^ 

§211.  Bill  of  lading.  A  bill  of  lading  is  an  instrument  is- 
sued by  a  common  carrier  to  any  person  desiring  to  have  goods 
transferred  from  one  place  to  another.  It  contains  a  receipt 
acknowledging  the  receipt  of  the  goods  and  also  an  agreement  to 
carry  them  to  a  certain  destination  to  a  party  designated  in  the 
instrument  as  the  consignee.-**  In  commercial  transactions  it  is 
regarded  as  the  symbolical  representative  of  the  goods  which  it 
describes ;  and  its  assignment  carries  with  it  such  rights  as  the 
party  in  possession  of  the  goods  could  transmit  by  actual  cor- 
poral transfer  of  the  goods  themselves.-*''  It  should  contain  a 
description  of  the  quantity  and  condition  of  the  goods  received, 
the  marks  on  the  same,  the  names  of  the  consignor  and  consignee., 
the  place  of  shipment,  the  place  of  discharge,  and  the  price  of  the 
freight.^ 

The  bill  of  lading  is  generally  issued  in  sets  of  three  and  some- 
times in  sets  of  four,  yet  there  need  not  be  more  than  one  copy  as 
the  number  is  immaterial.^    When  issued  in  sets  of  three,  one  is 

1  As  to  what  instruments  are  ne-  tie  to  the  property,  see  note  22  L. 

gotiable,  see  notes  7  L.  R.  A.  537  R.  A.  423. 
and  8  L.  R.  A.  393.  i""  Yergen     v.     Northern     Pacific 

la  Knox  V.  The   Nevella,   Crabbe  Railway  Co.,  19  N.  D.  70,  121  N.  W. 

534;  1  Smith  Lead.  Cas.  879;  Haille  205. 

V.  Smith,  1  Bos.  &  Pul.  564;  How-  ^  Gage  v.   Morse,   12   Allen   410; 
ard  V.  Shepard.  19  L.  J.  C.  B.  248;  Germania    Fire    Ins.    Co.   v.    Mem- 
Sanders  V.  Vanzellcr,  12  L.  J.  Exch.  phis  etc.  R.  R.,  72  N.  Y.  90;  Belger 
497.    As  to  effect  of  attaching  draft  v.  Diasmore,  51  N.  Y.  166. 
to  bill  of  lading  upon  passing  of  ti-          SDo^s  v.  Perrin,  16  N.  Y.  325. 

258 


§211  OTHER   KINDS   OF   COMMERCIAL   PAPER.  259 

retained  by  the  common  carrier,  a  second  by  the  consignor,  and 
a  third  is  to  be  sent  to  the  consignee.  A  bill  of  lading  in  the 
strict  commercial  sense  of  the  term  is  not  negotiable  in  like  man- 
ner as  bills  of  exchange  and  promissory  notes.*  Yet  they  are 
assignable  and  pass  from  hand  to  hand  as  other  non-negotiable 
instruments.  It  is  more  correct  to  speak  of  a  bill  of  lading  as  a 
quasi  negotiable  instrument  since  it  is  rather  like,  than  of  them.** 
It  differs  from  the  promissory  note,  bill  of  exchange  and  check, 
in  that  it  calls  for  a  delivery  of  goods  instead  of  the  payment  of 
money.  It  is  held  that  goods  shipped  by  a  bill  of  lading  drawn 
to  the  order  of  the  shipper  may  be  transferred  by  delivery  of 
the  bill. 

The  character  of  bills  of  lading  is  now  regulated  in  many 
jurisdictions  by  statute,  and  in  some,  bills  of  lading  are  declared 
to  be  negotiable  like  other  commercial  paper.  But  the  United 
States  Supreme  Court  has  declared  that  it  does  not  follow  under 
such  statutes  that  all  the  consequences  incident  to  the  assignment 
of  bills  and  notes  ensue  or  are  intended  to  ensue  from  such  nego- 
tiations ;  and  that  the  rule  that  a  bona  Ude  purchaser  of  a  lost  or 
stolen  bill  or  note  is  not  bound  to  look  beyond  the  instrument 
has  no  application  to  the  case  of  a  lost  or  stolen  bill  of  lading.*" 

If  the  owner  should  lose  or  have  stolen  from  him  a  bill  of 
lading  assigned  in  blank,  the  finder  or  thief  could  confer  no 
title  upon  an  innocent  third  person.** 

If  the  consignee  has  received  the  bill  of  lading  of  the  goods, 
deliverable  to  him  or  his  assigns,  or  assigned  to  him  or  his 
assigns,  and  assigned  it  to  a  bona  Me  third  party,  then  the  vefi- 
dor's  right  to  stop  the  goods  in  transitu  and  hold  them  as  security 
for  the  purchase  money  is  defeated,  and  the  assignee  of  the  bill 
acquires  as  perfect  a  title  to  the  goods,  although  they  have  not 
reached  the  buyer's  hands,  as  if  they  had  actually  passed  through 
his  hands  and  been  delivered  bodily  to  him.^  But  a  sale  of 
goods  not  yet  received  by  the  vendee,  without  a  transfer  of  the 
bill  of  lading,  would  not  divest  the  right  of  stoppage  in  transitu. 

4  Gurney  v.   Behrend,  3  E.  &  B.  4b  ghaw  v.  Railroad  Co.,  101  U.  S. 

622,  22  L.  J.  Q.  B.  265;  Blanchard  557. 

V.    Page,   8    Gray    297 ;    Davenport  *>  Raleigh  &  Gaston  v.  Lowe,  101 

Nat.  Bank  v.  Homeyer,  45  Mo.  145 ;  Ga.  320,  28  S.  E.  867. 

National   Bank  v.   Merchants   Nat.  ^Lickbarrow  v.   Mason,  1   Smith 

Bank,  91  U.  S.  98,  23  L.  Ed.  208;  Lead.    Gas.   895;   Dows   v.   Greene, 

Barnard  v.  Campbell,  55  N.  Y.  462.  24  N.  Y.  641 ;  Becker  v.  Hallgarten, 

4a  National    Bank    of    Bristol    v.  86  N.  Y  167;  Newhall  v.  Cent.  P. 

Baltimore  &  O.  R.  Co.,  99  Md.  661,  R.  R.  Co.,  51   Cal.  345;   Gurney  v. 

59  Atl.  134,  105  Am.  St.  Rep.  321.  Behrend,  2  El.  &  B.  622;  Emery  v. 

Irving  Nat.  Bank,  25  Ohio  St.  360. 


260  NEGOTiAnr.E  instruments.  §212 

And  after  goods  have  reached  the  consignee,  the  right  of  stop- 
page in  transitu,  as  its  very  terms  import,  is  at  an  end.*^" 

Sometimes  for  the  protection  of  the  vendor  the  bill  of  lading 
for  the  goods  shipped  is  sent  to  the  vendee,  attached  to  a  bill 
of  exchange  for  the  purchase  money;  the  purpose  of  this  is  to 
make  the  passing  of  title  to  the  goods  contingent  upon  the  hon- 
oring of  the  bill  of  exchange."  A  party  discounting  a  bill  of 
exchange  on  the  faith  of  the  indorsement  of  a  bill  of  lading 
for  goods  has  such  security  for  the  draft  as  he  would  acquire  if 
the  goods  themselves  w^ere  delivered  to  him  instead  of  the  bill 
of  lading.®" 

§  212.  Certificate  of  deposit.  A  certificate  of  deposit  is  an 
instrument  in  the  form  of  a  receipt  given  by  a  banker  for  a  cer- 
tain sum  of  money.  When  the  time  of  payment  is  specified  and 
the  words  of  negotiability  are  used  it  is  in  effect,  then,  a  promis- 
sory note.  Otherwise  it  only  circulates  as  a  negotiable  instru- 
ment by  assignment. 

In  general  negotiability  of  such  an  instrument  depends  upon 
its  wording  and  is  controlled  by  the  same  rules  that  govern 
promissory  notes.'' 

It  has  been  held  that  Section  66  of  the  Negotiable  Instruments 
Law  applies  to  one  who  indorses  in  blank  a  certificate  of  deposit; 
and  if  the  paper  is  dishonored  owing  to  the  insolvency  of  the 
bank  he  can  be  held  as  indorser'^* 

So  also  it  has  been  held  that  Section  71  of  the  Negotiable  In- 
struments Law  as  to  presentment  applies  to  a  certificate  of  de- 
posit payable  upon  demand,  and  presentment  of  such  a  certificate 
within  a  reasonable  time  after  its  issue  must  be  made  in  order 
to  charge  an  indorser  thereon.'^"  However,  an  indorsee  may  not 
be  held  to  the  same  degree  of  diligence  in  presenting  it  for  pay- 
ment as  the  law  requires  in  other  cases.'^" 

A  certificate  of  deposit  is  payable  on  demand  upon  return 
of  the  certificate  properly  indorsed.  If  the  money  is  to  remain 
in  the  bank  for  ninety  days  or  more  it  usually  draws  interest, 

5a  Louisville  &  Nashville  R.  Co.  v.  Lindsay  v.  McClelland,  18  Wis.  481 ; 

Barkhouse,  100  Ala.  543,  13  So.  534.  London    (S.  C.)    v.  Hagerstown  S. 

®  Shepard   v.    Harrison,    L.    R.   4  Bank,    12    Casey    498;    Easton    v. 

Q.  B.  197,  5  H.  L.  116;  Indiana  etc.  Hyde,  13  Minn.  90. 

Bank  v.  Colgate,  4  Daly  41;  Marine  ''*  Jensen  v.  Wilslef,  36  Nev.  37 

Bank  V.  Wright,  48  N  Y.  1.  132  Pac.  16. 

*3  Mather    v.    Gordon    Bros.,    77  ''''  Anderson  v.  First  Nat.  Bank  of 

Conn.  341,  59  Atl.  424.  Charlton,  144  Iowa  251,  122  N.  W 

'  Huse    V.    Hamblin,   29   la.    501 ;  918. 

Rindskoff    v.    Barrett,    11    la.    172;  ^o  Ljndsel  v.   McCIellan,   18   Wis 

Ford    V.    Mitchell,     15    Wis.     304;  481. 


§  213  OTHER  KINDS  OF  COMMERCIAL  PAPER.  261 

but  such  arrangements  must  be  made  at  the  time  of  the  deposit. 
Certificates  of  deposit  for  a  definite  period  of  time  arc  known 
as  time  certificates  of  deposit. 

An  ordinary  deposit  slip  signed  by  the  cashier  of  the  bank  in 
which  the  deposit  is  made  is  not  a  certificate  of  deposit. 

The  certificate  of  deposit  is  used  instead  of  drawing  a  check 
on  the  fund  deposited,  whenever  the  depositor  desires  a  continu- 
ing security,  drawing  interest,  and  payable  on  demand  or  at  some 
time  in  the  future. 

A  certificate  of  deposit  is  prima  facie  a  conditional  payment 
only  if  transferred  in  payment  of  a  debt. 

§213.  Certificate  of  stock.  A  certificate  of  stock  is  a  sim- 
ple certification  that  a  certain  person  is  the  owner  of  so  many 
shares  of  the  stock  of  the  company  mentioned.  It  is  signed 
and  sealed  by  the  president  and  secretary  of  the  company.  It  is 
not  regarded  as  coming  within  the  classification  of  negotiable 
instruments,  but  subject  to  certain  rules,  it  inures  to  the  benefit 
of  the  bearer.  It  is  one  of  that  class  of  instruments,  while  not 
negotiable  in  the  sense  of  the  law  merchant,  it  is  so  framed  and 
so  dealt  with,  as  frequently  to  convey  as  good  a  title  to  the  trans- 
feree as  if  it  were  negotiable.  A  share  in  the  capital  stock  of  a 
corporation  is  not  a  debt,  nor  money,  nor  a  security  for  money, 
but  it  is  a  species  of  incorporeal  personal  property.  The  capital 
stock  of  the  corporation  is  so  much  money,  or  property  assessed 
at  money  valuation,  which  is  divided  into  a  number  of  shares, 
which  shares  are  the  holders  'interest  in  the  corporate  estate.'^'' 
A  certificate  of  stock  is  a  muniment  of  title  of  the  same  nature 
as  the  note  or  bond  of  a  private  person,  ordinarily  called  a  "chose 
in  action"  or  of  a  State  or  United  States  bond,  or  certificate  of 
debt.^" 

It  is  not  the  stock  itself  but  only  evidence  of  the  stock,  and 
not  money,  therefore  it  is  not  as  fully  negotiable  as  a  promissory 
note  or  check.  The  certificate  is  passed  from  hand  to  hand  by 
assignment  of  the  certificate  and  by  the  rules  of  most  corpora- 
tions there  must  be  an  assignment  on  the  books  of  the  company 
in  order  that  the  person  holding  the  certificate  may  be  entitled 
to  all  the  rights  of  an  owner  of  a  certificate  of  stock  in  the  first 
instance. 

The  general  rule  is  that  the  purchaser  of  the  certificates  of 
stock  gets  no  better  title  than  his  vendor  had ;  and  if  stock  which 
is  payable  to  bearer  or  assigned  in  blank  is  stolen  or  found,  and 

'^*'  Allen  V.  Pegram,  16  Iowa  173.  ^e  Hutchins    v.     State     Bank,     12 

Mete.  (Mass.)  421. 


262  NEGOTIABLE   INSTRUMENTS.  §  214 

unlawfully  transferred  to  an  innocent  purchaser  for  value,  the 
real  owner  may  nevertheless  recover  it.** 

§214.  Coupon  bonds.  A  coupon  bond  is  a  primary  obliga- 
tion, in  the  nature  of  a  promissory  note,  promising  to  pay  a  sum 
of  money  on  a  day  certain  in  the  future,  to  which  are  attached 
certain  other  obHgations  called  coupons,  or  interest  certificates, 
and  of  which  there  are  usually  as  many  as  there  are  payments  to 
be  made.  The  term  "coupon"  is  derived  from  the  French 
"cotiper" — to  cut,  and  is  so  called  because  it  is  cut  off  when  it  is 
presented  for  payment.  They  may  be  severed  and  negotiated 
before  the  maturity  of  the  interest  they  represent,  and  thus  pass 
as  separate  and  independent  securities,  like  other  commercial 
instruments.  In  their  form  coupon  bonds  usually  resemble  prom- 
issory notes  more  than  they  do  bank  notes,  checks  or  bills  of 
exchange.  They  are  fully  negotiable  if  they  contain  words  of 
negotiability.  Each  coupon  is  in  itself  a  separate  instrument  con- 
taining a  distinct  and  independent  promise  to  pay  the  sum  named. 
The  holder  of  a  coupon  bond  does  not  necessarily  have  to  own 
the  bond  to  recover  on  the  coupon  and  he  can  sue  on  the  coupon 
without  producing  the  bonds  to  which  they  were  attached.^ 

They  are  issued  by  the  federal  and  state  governments,  by  mu- 
nicipal and  other  public  corporations ;  and  by  all  sorts  of  private 
corporations,  such  as  railroads,  canal  companies  and  the  like. 
A  large  portion  of  the  wealth  of  this  country  is  represented  in 
these  bonds.  The  signature  to  these  instruments  is  generally 
written  by  the  president  of  the  corporation,  or  the  chief  executive 
of  the  municipality  issuing  them ;  and  there  is  generally  a  counter 
signature  by  the  secretary,  or  treasurer,  or  chief  clerk  of  the 
corporation  or  municipality.  The  signature  to  the  coupons, 
where  the  bonds  are  properly  signed  and  sealed,  need  not  be 
written,  but  may  be  printed  in  facsimile,  or  otherwise. 

Coupon  bonds  are  generally  made  payable  to  the  party  to 

^Bereich  v.  Marye,  9  Nev.  312;  Commonwealth,     18     Gratt.     776; 

Burton's    Appeal,   93    Pa.    St.   214;  Com'rs  of  Knox  Co.  v.  Aspinwall, 

Howard  v.   Howard,  7   Wall.   415,  21   How.  589;  Town  v.  Culver,   19 

19  L.  Ed.  122.  Wall.  84 ;  Beaver  Co.  v.  Armstrong, 

9  Clark   V.    Iowa    City,   20   Wall.  44  Pa.  St.  63;  Maddox  v.  Graham, 

584,  22   L.  Ed.  427;   Thompson  v.  2  Mete.    (Ky.)   56;  Brainard  v.  N. 

Lee   County,  3  Wall.   327;   City  v.  Y.  &  H.  R.  R.  Co.,  25  N.  Y.  496; 

Lamson,    9    Wall.    477,    19   L.    Ed.  Evertsen   v.   Nat.   Bank,   11    N.   Y. 

725;   Clarke  v.  Janesville,  10  Wis.  S.   C.    (4  Hun)    694;   Langston   v. 

136;  Rose  v.  City  of  Bridgeport,  17  S.  C.  R.  R.  Co.,  2  S.  C.  249;  Nat. 

Conn.  243 ;  R.  R.  v.  Cleway,  13  Ind.  Ex.   Bank.  v.   Hartford   R.   R.  Co., 

161 ;    Commonwealth    v.    Industrial  8  R.  I.  375.     As  to  negotiability  of 

Assn.,    98    Mass.    12;    Spooner    v.  coupon  bonds,  see  note  1  L.  R.  A. 

Holmes,   102  Mass.  503;  Arents  v.  299. 


§  214a  OTHER  KINDS  OF  COMMERCIAL   PAPER.  263 

whom  they  are  issued,  or  bearer,  and  in  such  cases  are  trans- 
ferable by  delivery.  Sometimes  they  are  payable  to  order,  and 
then  pass  by  indorsement;  sometimes  they  are  payable  to  the 
holder,  which  term  is  regarded  as  equivalent  to  bearer;  some- 
times they  are  payable  to  a  certain  party  "or  his  assign,"  in 
which  case  the  party's  assignment  is  necessary  to  pass  title,  but 
if  he  makes  an  assignment  in  blank,  the  title  then  passes  by 
delivery. 

The  rights  of  the  purchaser  or  holder  of  a  coupon  bond  are 
determined  by  the  same  principles  which  control  those  of  the 
purchaser  or  holder  of  a  bill  or  note. 

The  Negotiable  Instruments  Law  in  some  states  has  the  fol- 
lowing provision : 

"The  owner  or  holder  of  any  corporate  or  municipal  bond  or 
obligation  (except  such  as  are  designated  to  circulate  as  money, 
payable  to  bearer)  heretofore  or  hereafter  issued  in  and  payable 
in  this  state,  but  not  registered  in  pursuance  of  any  state  law, 
may  make  such  bond  or  obligation,  or  the  interest  coupon  accom- 
panying the  same,  non^negotiable,  by  subscribing  his  name  to  a 
statement  indorsed  thereon,  that  such  bond,  obligation  or  coupon 
is  his  property;  and  thereon  the  principal  sum  therein  mentioned 
is  payable  only  to  such  owner  or  holder,  or  his  legal  representa- 
tives or  assigns,  unless  such  bond,  obligation  or  coupon  be  trans- 
ferred by  indorsement  in  blank,  or  payable  to  bearer,  or  to  order, 
with  the  addition  of  the  assignor's  place  of  residence." 

§  214a.  Liberty  bonds.  Liberty  bonds  are  negotiable  paper 
and  the  purchaser  of  such  bonds,  although  they  have  been  stolen, 
acquires  a  good  title  thereto,  as  against  the  true  owner,  providing 
he  purchased  in  good  faith,  and  for  a  valuable  consideration. 
This  rule  is  limited  in  its  application  to  bonds  which  are  not 
mature  at  the  time  they  are  stolen  and  placed  in  circulation. 

But  the  purchaser  of  Liberty  Bonds  is  liable  to  the  real  owner 
if  he  purchases  the  same  in  what  amounts  to  bad  faith.  Such 
bonds,  being  negotiable  instruments,  payable  to  bearer,  are  subject 
to  the  provisions  of  the  Negotiable  Instruments  Law.  One  of 
the  provisions  of  that  statute,  Section  56,  declares  that  one  who 
takes  a  negotiable  instrument  with  "knowledge  of  such  facts 
that  his  action  in  taking  the  instrument  amounted  to  bad  faith" 
is  not  a  holder  in  due  course  and  does  not  acquire  a  valid  title, 
and  the  purchaser  in  such  circumstances  is  liable  to  the  real 
owner  of  the  bonds  for  their  value.-^* 

lOArnd  v.  Aylesworth,  145  Iowa      185;  Ward  v.  City  Trust  Co.,   117 

App.  Div.  130  (N.  Y.). 


264  NEGOTIABLE   INSTRUMENTS.  §§215-216 

Where  circumstances  showed  that  a  bank  had  kept  "in  an 
insecure  place  government  liberty  bonds  payable  to  bearer,  which 
could  not  be  readily  identified,"  the  bank  was  held  liable  for 
the  theft  of  the  bonds.^* 

It  has  been  held  that  the  class  of  securities  generally  designated 
as  municipal  bonds  are  subject  to  the  provisions  of  the  Nego- 
tiable Instruments  Law.*^ 

§  215.  Draft  by  bank.  It  is  customary  in  the  transaction  of 
banking  business  for  one  bank  to  issue  drafts  upon  a  bank  located 
in  another  state.  It  has  been  decided  that  such  drafts  are  checks 
and  the  parties  thereto  are  subject  to  the  same  liabilities  and  pos- 
sess the  same  rights  as  though  such  drafts  were  drawn  upon  a 
particular  bank  or  banker  by  an  individual.*^  By  the  weight  of 
authority  a  draft  upon  a  bank  not  payable  immediately  is  a  bill 
of  exchange  rather  than  a  check.*"* 

§  216.  Due  bill.  A  due  bill  is  an  instrument  whereby  one 
person  acknowledges  his  indebtedness  to  some  other  party  in 
form  as  follows:  "Due  B  two  hundred  dollars,  payable  to  his 
order,  (signed  A)."  Thus  it  is  in  substance  a  promissory  note. 
If  the  bill  contains  words  importing  a  promise  to  pay  and  ren- 
dering the  instrument  negotiable  it  is  generally  treated  as  a  prom- 
issory note.*^ 

A  particular  kind  of  due-bill  is  the  clearing-house  due-bill  or 
clearing-house  certificate.  It  is  a  device  of  clearing-house  asso- 
ciations to  save  inconveniences  and  labor  incident  to  the  settling 
of  balances  between  the  members  of  the  association.  A  clearing- 
house is  a  place  or  institution  where  the  settlement  of  mutual 
claims,  especially  of  banks,  is  effected  by  the  payment  of  differ- 
ences called  balances.  Clerks  from  each  bank  attend  the  clear- 
ing-house with  checks  and  drafts  on  the  other  banks  belonging 
to  the  clearing-house.  These  exchanges  are  distributed  by  mes- 
sengers among  the  clerks  of  the  banks  that  must  pay  them.  The 
exchanges  which  a  bank  takes  to  the  clearing-house  are  called 

11  Merchants'   National    Bank   of  Pa.  St.  474.     As  to  nature  of  bank 

Vandervoort  v.  Affholter,  —  Ark.  draft,  see  note  23  L.  R.  A.  173. 

— ,  215  S.  W.  648.  15  Sackett    v.    Spencer,    29   Barb. 

i2Neg.   Inst.   Law,    §    332    (New  180;    Russell   v.   Whipple,   2   Conn. 

York)  ;  Laws  of  N.  Y.  1871,  ch.  81;  536;  Carver  v.  Hayes,  47  Me.  257; 

Laws  of  N.  Y.  1873,  ch.  595.  Hussey   v.    Winslow,   59   Me.    170; 

13  Borough  of  Monvale  v.  People's  Franklin  v.  March,  6  N.  H.  364 ; 
Bank,  74  N.  J.  L.  464,  67  Atl.  67.  Cummings   v.   Freeman,  2  Humph. 

14  Bowen  V.  Newell.  8  N.  Y.  190.  144;  Huych  v.  Meador,  24  Ark. 
Contra:    Champion  y.   Gordon,   70  192;  Marrigan  v.  Page,  4  Humph, 

?47, 


§§217-218  OTHER  KINDS  OF  COMMERCIAL  PAPER.  265 

creditor  exchanges ;  the  exchanges  which  it  receives  from  the 
Other  banks  represented  there  are  called  debtor  exchanges.  The 
balances  are  paid  by  the  debtor  banks  to  the  clearing-house  for 
the  creditor  banks.  The  certificates  or  due-bills  are  issued,  in- 
stead of  the  actual  payment  of  money,  by  one  member  of  the 
association  to  another.  They  are  not  merely  certificates  of  deposit 
creating  a  contract  of  bailment  but  are  as  negotiable  as  checks 
payable  to  bearer,  or  as  promissory  notes  payable  to  order  or 
bearer. 

Some  jurisdictions  have  by  statutory  enactment  extended  the 
law  of  bills  of  exchange  and  promissory  notes  to  all  instruments 
in  writing  whereby  any  person  acknowledges  any  sum  of  money 
to  be  due  to  any  other  person. 

§  217.  Letters  of  credit.  Letters  of  credit,  sometimes  called 
bills  of  credit,  are  open  instruments  of  request  from  some  person, 
usually  a  merchant  or  banker,  to  any  other  person  to  advance 
money  or  give  credit  to  some  third  party  and  promising  that  he 
will  repay  the  same  to  the  party  advancing  it  or  will  accept  bills 
drawn  upon  himself  for  a  like  amount.  If  addressed  to  some  par- 
ticular person,  that  person  alone  can  advance  money  upon  them 
and  then  recover  of  the  writer,^®  but  if  they  are  addressed  to 
any  person  in  general  then  anybody  can  advance  money  upon 
them  and  recover  of  the  writer.  Bills  of  credit  are  usually  issued 
by  banks  or  merchants. 

These  letters  are  often  used  by  travelers  and  agents  to  obviate 
the  risk  and  burden  of  carrying  about  money.  In  such  cases  a 
deposit  is  made  by  the  bearer  of  the  letter  with  the  banker  as  an 
indemnity. 

§  218.  Paper  money.  Paper  money  in  its  most  common 
form  is  that  of  United  States  treasury  notes.  United  States  silver 
and  gold  certificates  and  bank  notes.  United  States  treasury 
notes  differ  very  little  from  promissory  notes  payable  on  demand 
except  as  to  the  texture  of  the  paper  on  which  they  are  printed. 
The  purpose  of  the  quality  of  the  paper  used  is  to  prevent  counter- 
feiting. Treasury  notes  differ  from  other  paper  money  in  that 
they  have  been  made  a  legal  tender  by  the  federal  government. 
Gold  and  silver  certificates  circulate  as  money.  They  specify  on 
their  face  that  there  has  been  placed  or  deposited  in  the  treasury 
of  the  United  States  a  sum  of  gold  or  silver  as  indicated  by  the 
certificate  which  is  payable  to  the  bearer  on  demand.  These 
certificates  are  not  a  legal  tender.     Bank  notes  or  bank  bills  are 

1*  Robins    v.    Bingham,    4   Johns.      to  what  a  letter  of  credit' is,  see  note 
476 ;  Walsh  v.  Bailie,  10  Johns.  180 ;      7  L.  R.  A.  209. 
Taylor  v.  Wilmore,  10  Ohio  490.    As 


266  NEGOTIABLE    INSTRUMENTS.  §§  219-219a 

the  promissory  notes  of  an  incorporated  bank  and  are  intended  to 
circulate  as  money.  They  are  not  legal  tender,  but  may  be  tendered 
in  payment  of  debts  the  same  as  other  money,  if  not  objected  to. 
They  are  payable  to  bearer  on  demand  and  are  negotiable.  It  has 
been  held  that  a  bona  fide  holder  can  compel  payment  to  him  al- 
though they  are  proven  to  have  been  stolen  from  the  rightful 
owner.  The  mere  possession  of  the  note  is  prima  facie  evidence  of 
bona  fide  ownership  and  this  presumption  is  so  strong  that  it  can 
not  be  overturned  by  showing  the  holder  was  negligent  in  taking 
the  notes  without  inquiry.  All  that  it  is  necessary. to  show  in  this 
connection  is  that  they  were  obtained  in  the  usual  course  of 
business. 

The  payment  of  bank  notes  is  secured  by  the  deposit  of  gov- 
ernment bonds,  and  the  banks  issuing  said  notes  being  so  closely 
supervised  by  the  government,  the  said  notes  circulate  without 
regard  to  the  banks  which  gave  them  life.  The  financial  stand- 
ing of  the  national  bank  note  differs  in  nothing  from  the  treasury 
note,  except  that  the  treasury  note  is  a  legal  tender  and  the  bank 
note  is  not. 

§  219.  Warehouse  receipt.  A  warehouse  receipt  is  a  receipt 
showing  the  acceptance  of  grain  or  other  goods  which  are  to  be 
delivered  to  the  bearer.  As  to  grain,  upon  its  receipt  by  the  ware- 
houseman or  elevator  company  an  instrument  is  issued  which  sets 
out  that  a  certain  quantity  of  grain  and  kind  has  been  received 
and  a  promise  is  made  to  deliver  it  to  the  order  of  the  depositor. 
Such  warehouse  receipts  are  taken  by  the  depositor  or  the  ex- 
changes of  the  cities  as  the  representative  of  the  grain  itself  and 
when  the  latter  is  sold  the  receipts  are  transferred  by  assignment 
and  delivery,  or  by  delivery  alone.  In  such  manner  the  title 
to  the  grain  will  be  transferred  just  as  if  the  grain  itself  had 
been  delivered. 

These  receipts  represent  goods  and  not  money  and  so  are  not 
negotiable  as  promissory  notes  and  bills  of  exchange.-^'' 

§219a.  Miscellaneous.  Post  ofifice  money  orders  are  not 
negotiable  instruments.  The  restrictions  and  limitations  which 
the  postal  laws  and  regulations  place  on  money  orders  are  in- 
consistent with  the  character  of  negotiable  instruments.-^^ 

17  Second    Nat.    Bank    v.    Wall-  Bank   v.   Boyce,   78   Ky.   42;   Gris- 

ridge,   19  Ohio   St.  419;  Burton  v.  wold  v.  Haven,  25  N.  Y.  595. 

Curyea,  40  111.  320;  Canadian  Bank  See  also,  Allen  v.  Maury,  66  Ala. 

V.  McCrea,  40  111.  281;  Spanglcr  v.  10;  Fourth  Nat.  Bank  v.  St.  Louis 

Butterfiest,    6    Colo.   356;    Solomon  Compress  Co.,  11  Mo.  App.  333. 

V.   Bushnell,   11   Oreg.  272,   50  Am.  ^^  Bolognesi  v.  United  States,  189 

Rep.  475;  Durr  v.  Hervey,  44  Ark  Fed.  335,  111  C.  C.  A.  67,  36  L.  R. 

301,   51   Am.   Rep.  594;   Louisville  A.  (N.  S.)  143  and  notes. 


CHAPTER  XXI. 

SURETYSHIP  AND  GUARANTY. 

§  220.  Terms    defined    and     distin-  §  225.  Liability   of    concealed    sure- 
guished.  ties  on  accommodation  pa- 

220a.  Who  are  principals  and  who  per. 

sureties.  226.  Remedies  of  guarantors, 

221.  Consideration  as   to  a  guar-         226a.  Limit  of  surety's  recovery. 

222.  Gua'lS.ty     as     affected     by         226b.  Trial  of  suretyship. 

statute  of  frauds.  227.  Discharge  of  guarantors  and 
222a.  Conditional   guaranties.  sureties. 

223.  Negotiability  of  guaranties.  227a.  Contribution   between   sure- 

224.  Notice    to   guarantor    of   de-  ties. 

fault  of  principal  when  de- 
mand is  made. 

§220.  Terms  defined  and  distinguished.  Guaranty  is  an 
undertaking  by  one  person  that  another  shall  perform  his  contract 
or  fulfill  his  obligation,  and  in  case  he  does  not  do  so  the  guar- 
antor promises  to  answer  in  damages.  A  guarantor  of  a  bill  or 
note  is  one  who  engages  that  the  note  shall  be  paid.  A  contract 
of  suretyship  is  a  contract  by  which  the  surety  becomes  bound 
as  the  principal  or  original  debtor  is  bound.  It  is  a  primary  obli- 
gation, and  the  creditor  is  not  required  to  proceed  first  against 
the  principal  before  he  can  recover  from  the  surety. 

The  surety  is  bound  with  his  principal  as  an  original  promisor, 
that  is,  he  is  a  debtor  from  the  beginning  and  must  see  that  the 
debt  is  paid  and  is  held  ordinarily  to  know  every  default  of  his 
principal,  and  cannot  protect  himself  by  the  mere  indulgence  of 
the  creditor,  nor  by  want  of  notice  of  the  default  of  the  principal, 
however  such  indulgence  or  want  of  notice  may,  in  fact,  injure 
him.*  Being  bound  with  the  principal  his  obligation  to  pay  is 
equally  absolute.  One  who  signs  a  promissory  note  on  the  face 
thereof,  and  who  in  that  way  becomes  a  surety  for  the  principal 
maker  is,  under  the  Negotiable  Instruments  Law,  primarily  liable 
for  the  payment  of  such  note.**  On  the  other  hand,  the  con- 
tract of  a  guarantor  is  his  own  separate  contract;  it  is  in  the 
nature  of  a  warranty  by  him  that  the  thing  guaranteed  to  be 

1  Millan  v.  Bull's  Head  Bank,  32         la  Rouse  v.   Wooten,   140   N.   C. 
Ind.  n.    See  note  13  L.  R.  A.  (N.      557,  53  S.  E.  430,  111  Am.  St.  Rep. 
S.)    204.     As  to  signing  by  surety      875. 
for  surety,  see  note  21  L.  R.  A.  247. 

267 


268  NEGOTIABLE   INSTRUMENTS.  §220 

done  by  the  principal  shall  be  done,  and  is  not  merely  an  en- 
gagement jointly  with  the  principal  to  do  the  thing.^  A  guaran- 
tor, not  being  a  joint  contractor  with  his  principal,  is  not  bound 
to  do  what  the  principal  has  contracted  to  do,  like  a  surety,  but 
only  to  answer  for  the  consequences  of  the  default  of  the  prin- 
cipal. 

The  guarantor  has  to  answer  for  the  consequences  of  his  prin- 
cipal's default.  A  surety  is  an  insurer  of  the  debt.  A  guarantor 
is  an  insurer  of  the  solvency  of  the  debtor.  A  surety  may  be  sued 
as  promisor,  but  a  guarantor  cannot.  The  surety  and  the  princi- 
pal being  equally  bound  may  be  joined  as  defendants  in  one  suit 
or  the  surety  may  be  sued  alone,  without  any  effort  having  been 
made  to  recover  the  debt  from  the  principal ;  but  a  guarantor,  be- 
ing bound  by  a  separate  contract,  must  be  sued  separately. 

The  Negotiable  Instruments  Law  provides: 

"A  person  placing  his  signature  upon  an  instrument  otherwise 
than  as  maker,  drawer  or  acceptor  is  deemed  to  be  an  indorser, 
unless  he  clearly  indicates  by  appropriate  words  his  intention  to 
be  bound  in  some  other  capacity."^^ 

The  intention  must  be  by  appropriate  language  used  for  that 
purpose;  and  such  intention  may  not  be  inferred  from  conduct, 
or  from  language  that  is  not  clear.  But  where  one  wrote  upon 
the  back  of  a  note  the  words :  "I  hereby  guarantee  payment  of 
the  within  note,"  the  word  "guarantee"  indicated  his  intention 
not  to  be  bound  as  mdorser.^'' 

By  way  of  summary  some  of  the  differences  between  a  surety 
and  guarantor  may  be  stated  as  follows : 

Some  Differences  Between  Surety  and  Guarantor. 

1.  A  surety  is  a  co-maker  with  the  principal;  a  guarantor  is 
not. 

2.  A  surety  agrees  to  do  the  thing  itself ;  a  guarantor  agrees 
that  the  principal  will  do  it,  and  if  he  does  not,  he  will  pay  the 
damages. 

3.  The  entire  contract  of  the  surety  does  not  have  to  be  in 
writing;  the  entire  contract  of  the  guarantor,  except  in  some 
jurisdictions  as  to  the  statement  of  the  consideration,  must  be 
in  writing. 

4.  The  surety  is  primarily  liable ;  the  guarantor  is  secondarily 
liable  as  he  agrees  to  act  if  the  principal  does  not. 

2  La   Rose   et   al.    v.    Logansport  2a  Ngg   i^st.  Law,  §  63. 

Bank,    102     Ind.    332 ;    Reigert    v.  2b  Noble      v.      Beeman-Spaulding 

White,   52   Pa.   St.   438;   Harris   v.  Co.,  65  Ore.  93,  131   Pac.   1006,  46 

Newell,  42  Wis.  687.  L.  R.  A.  (N.  S.)  162. 


§§  220a-221  suretyship  and  guaranty.  269 

5.  The  surety  and  principal  may  be  sued  jointly,  but  the  guar- 
antor and  principal  must  be  sued  separately. 

6.  An  extension  of  time  ordinarily  releases  the  surety,  whether 
he  is  damaged  or  not,  but  a  guarantor  is  released  only  in  case  he 
is  damaged  by  the  extension. 

7 .  A  surety  is  not  released  by  failure  to  receive  notice,  as  there 
is  no  legal  duty  resting  upon  a  holder  of  paper  to  notify  the 
surety  of  default;  the  guarantor  is  discharged  if  he  has  been 
damaged  by  failure  to  receive  notice  of  the  default  of  the  prin- 
cipal. 

8.  The  surety's  contract  is  negotiable;  the  guarantor's  con- 
tract is  not  negotiable  in  most  jurisdictions  but  is  assignable. 

9.  In  some  jurisdictions  by  statute  a  creditor  upon  receiving 
notice  from  the  surety  to  sue  upon  an  instrument  must  do  so  to 
preserve  his  rights ;  the  guarantor  does  not  have  this  right  against 
a  creditor. 

§  220a.  Who  are  principals  and  who  sureties.  The  ac- 
ceptor of  a  bill  of  exchange  and  the  maker  of  a  note  are  prin- 
cipals as  to  the  other  parties  thereto.  And  to  the  holder  of  such 
bill  or  note  the  drawer  of  such  bill  and  the  indorsers  of  such 
bill  or  note  are  sureties  of  the  acceptor  or  maker.^'^ 

The  fact  that  the  liability  of  the  drawer  or  indorser  is  fixed 
by  due  demand  and  notice,  does  not  change  their  relation  as 
sureties  of  the  debt ;  it  only  fixes  their  liability  as  sureties  for 
its  payment,  provided  nothing  is  done  by  the  creditor  to  relieve 
them  from  liability.^** 

If  a  final  judgment  has  been  entered  against  the  drawer  or 
indorser,  the  relation  of  suretyship  ceases,  and  his  liability  is 
merged  in  that  of  a  principal  judgment  debtor  unless  the  statutes 
should  otherwise  provide.^^ 

§  221.  Consideration  as  to  guaranties.  The  general  doctrine 
upon  this  subject  is  that  a  consideration  is  necessary  to  support  a 
guaranty.^  In  some  instances  the  consideration  of  the  note  or  bill 
is  of  itself  sufficient,  while  in  other  cases  an  independent  con- 
sideration is  required.  A  guaranty  of  the  payment  of  a  negotiable 
promissory  note,  written  by  a  third  person  upon  the  note  before 
its  delivery,  requires  no  other  consideration  to  support  it,  and 
need  express  none  other  than  the  consideration  which  the  note 

^oGunnis  v.  Welgley,  114  Pa.  St.  3e  Bray  v.   Manson,  8   M.  &  W. 

194.  668. 

SdPriest  v,  Watson,  7  Mo.  App.  3  Davis  v.  Wells,  104  U.  S.  159, 
578,  26  L.  Ed.  686;  Rause  v.  Glissman, 

29  111.  App.  321. 


270  NEGOTIABLE   INSTRUMENTS.  §  222 

upon  its  face  implies  to  have  passed  between  the  original  parties.* 
In  such  a  case  the  credit  is  given  to  both,  and  not  to  one  alone, 
although  only  one  may  derive  any  substantial  benefit  from  the 
transaction.     But  a  guaranty  written  upon  a  promissory  note, 
after  the  note  has  been  delivered  and  taken  effect  as  a  contract, 
requires  a  distinct  consideration  to  support  it,  and   if   such   a 
guaranty  does  not  express  any  consideration,  it  is  void,  where  the 
Statute  of  Frauds  of  the  state  requires  the  consideration  to  be 
expressed  in  writing  as  a  contract  of  guaranty  not  entered  into 
at  the  same  time  as  the  original  obligation  or  its  acceptance  by 
the  guarantee  must  be  supported  by  a  consideration  distinct  from 
that  of  the  original  obligation.^*    There  seems  to  be  an  excep- 
tion to  this  requirement,  as  in  the  case  where  the  guaranty  was 
agreed  upon  at  the  time  of  making  the  principal  contract,  and  it 
was  merely  committed  to  writing  afterwards.     If  the  considera- 
tion is  a  continuous  thing,  running  along  at  the  time  both  of  the 
principal  contract  and  of  the  guaranty,  it  is  considered  a  con- 
temporaneous guaranty  and  does  not  require  a  distinct  considera- 
tion. 

§  222.  Guaranty  as  affected  by  statute  of  frauds.  Guaranty 
is  an  undertaking  to  answer  for  the  debt  or  default  of  another 
within  the  meaning  of  the  Statute  of  Frauds,  and  must  accord- 
ingly be  in  writing  and  signed  by  the  party  to  be  bound  or  by  his 
lawful  agent.  That  statute  provides  that  no  action  shall  be 
brought  to  charge  any  person,  upon  any  special  promise  to  answer 
for  the  debt,  default  or  miscarriage  of  another,  unless  the  prom- 
ise, contract  or  agreement,  upon  which  such  action  shall  be 
brought,  or  some  memorandum  or  note  thereof,  shall  be  in 
writing  and  signed  by  the  party  to  be  charged  therewith,  or  b> 
some  person  thereunto  by  him  lawfully  authorized;  and  the 
consideration  of  any  such  promise,  contract  or  agreement  need 
not  be  set  forth  in  such  writing,  but  may  be  proved. 

Since  a  guaranty  is  a  promise  or  an  undertaking  by  one  person 
to  answer  for  the  debt,  default  or  miscarriage  of  another  person 
the  question  arises  as  to  whether  or  not  a  writing  setting  out  the 
consideration  and  signed  by  the  person  to  be  charged  thereby  is 
necessary.  The  courts  in  this  country  are  agreed  that  the  signa- 
ture of  the  party  to  be  charged  must  be  obtained,  but  the  de- 
cisions are  at  a  variance  as  to  whether  the  consideration  for  the 
guaranty  should  also  be  set  out  in   full.'*     If  the  statute  only 

4  Moses  V.   Lawrence   Co.   Bank,  See  also  note  44  L.  R.  A.   (K.  S.) 

149  U.  S.  298,  Zl  L.  Ed.  743.  481. 

4"  Clements  v.  Jackson  County  Oil  ^  Nichols  v.  Allen,  23  Minn.  543  ; 

and  Gas  Company,  —  Okla.  — ,  161  Rigbey   v.    Norwood,   34  Ala.    129; 

Pac.  216,  L.  R.  A.   1917C,  p.  437.  Reed  v.  Evans,  17  Ohio  128;  Gil- 


§§  222a-223  suretyship  and  guaranty.  271 

requires  the  promise  to  be  in  writing^  it  seems  that  the  considera- 
tion need  not  be  in  writing.^  This  is  estabHshed  upon  the  prin- 
ciple that  the  promise  is  not  the  entire  agreement  and  therefore 
does  not  inckide  the  consideration.  In  order  that  the  agreement 
may  be  controlled  by  the  statute  it  must  contain  a  promise  to 
answer  for  the  debt  of  another  both  in  form  and  in  fact/  It 
has  been  held  that  if  the  transaction  be  nothing  more  than  an 
indirect  way  of  guaranteeing  the  payment  of  one's  transfers  to 
his  creditor,  such  as  giving  the  note  of  another  which  is  payable 
to  himself  with  a  guaranty  that  this  third  person's  note  will  be 
paid,  the  guaranty  is  substantially  that  the  guarantor's  original 
debt  will  be  paid  by  the  collection  of  this  third  person's  note; 
and  for  this  reason  the  guaranty  need  not  be  in  writing. 

§  222a.  Conditional  guaranties.  A  conditional  guaranty  is 
one  which  depends  upon  some  condition,  for  example  a  guaranty 
of  the  collectibility  of  an  instrument,  in  which  case  there  is  no 
right  of  recourse  against  the  guarantor  until  the  holder  has  first 
made  proper  effort  to  collect  from  the  principal  debtor. 

The  Negotiable  Instruments  Law  provides  as  follows: 

"Subject  to  the  provision  of  this  act,  zvhen  the  instrument  is 
dishonored  for  non-payment,  an  immediate  right  of  recourse 
to  all  parties  secondarily  liable  thereon,  accrues  to  the  holder/"^* 

This  section  does  not  change  the  law  as  to  conditional  guar- 
anties for  the  express  terms  of  such  contract  exclude  the  idea 
of  an  intention  to  incur  the  liability  prescribed  by  said  section.''* 

§  223.  Negotiability  of  guaranties.  Whether  a  guaranty  on 
a  negotiable  bill  or  note  is  itself  negotiable  is  a  question  concern- 
ing which  there  is  much  confusion.  It  is  held  by  some  cases  that 
the  guaranty  does  not  fall  within  the  rule  of  negotiability,  and 
can  inure  only  to  the  benefit  of  the  person  to  whom  it  was  given. 
On  the  other  hand,  it  is  held  in  some  jurisdictions  that  the  guar- 
anty passes  with  the  instrument,  and  inures  to  the  benefit  of  the 
holder.  Some  of  those  cases,  holding  that  it  passes  with  the  in- 
strument as  being  negotiable,  treat  it  in  the  nature  of  an  indorse- 
ment, while  still  others  hold  that  it  is  not  negotiable  on  the 
ground  that  it  is  a  contract  of  the  common  law  and  not  of  the  law 
merchant,  and  consequently  is  incapable  of  negotiability  by  any 
intention  of  the  guaranty.    Authorities,  however,  are  not  wanting 

lighan  v.  Boardman,  29  Me.  79.  '^*  The    question    as    to    when    a 

^  Violett  V.  Patten,  5  Cranch  142,  guaranty  is  a  continuing  one  is  dis- 

3  L.  Ed.  61.  cussed  in  the  note  39  L.  R.  A.  (N. 

^Birkmyr  v.  Darnell.  3  Ld.  Ray-  S.)  724. 

mond  1085,  6  Mod.  248,  1  Salk.  27.  'b  ^eg.  Inst.  Law,  §  84. 


272  NEGOTIABLE   INSTRUMENTS.  §§  224-225 

evidence  as  against  all  parties  except  a  bona  fide  holder  without 
which  decline  to  take  this  view  where  the  guaranty  is  by  a  third 
person,  and  not  by  the  holder  of  the  instrument,  and,  while  not 
readily  allowing  negotiability  to  a  guaranty,  allowing  it  to  the 
guaranty  if  the  language  of  the  guaranty  does  not  restrain  it. 
The  better  doctrine  seems  to  be  to  hold  the  guaranty  as  non- 
negotiable,  since  it  is  a  common  law  contract  and  is  not  properly 
considered  an  indorsement.  It  may  be  transferred  with  the  in- 
dorsement by  assignment  and  the  assignee  can  then  maintain  an 
action  upon  the  guaranty  in  his  own  name  under  statutes  of 
most  of  the  states.''" 

§  224.  Notice  to  guarantor  of  default  of  principal  when  de- 
mand is  made.  The  guarantor's  contract  is  more  rigid  than 
that  of  an  indorser  and  he  is  bound  to  pay  the  amount  upon  a 
presentment  made  and  notice  given  to  him  of  dishonor,  within  a 
reasonable  time.*  And  in  the  event  of  a  failure  to  make  present- 
ment and  give  notice  within  such  reasonable  time,  he  is  not  abso- 
lutely discharged  from  all  liability,  but  only  to  the  extent  that 
he  may  have  sustained  loss  or  injury  by  the  delay.  The  same  per- 
son may  be  a  guarantor  and  also  an  indorser  of  a  note ;  and  in 
such  case  the  failure  to  give  him  due  notice  of  demand  and  non- 
payment will  discharge  him  as  indorser,  but  he  will  still  be  bound 
as  a  guarantor,  as  the  rule  as  to  notice  does  not  apply  to  guar- 
antors.** In  case  the  principal  is  insolvent  at  and  before  ma- 
turity of  the  bill  or  note,  the  guarantor  is  liable,  because  it  is 
presumed  that  the  guarantor  has  suffered  nothing  in  that  case 
from  the  failure  to  give  notice  of  the  default.® 

§  225.  Liability  of  concealed  sureties  on  accommodation 
paper.  If  a  person  signs  an  instrument  as  an  accommo- 
dation for  another  party  and  writes  the  word  surety  after  his 
signature,  he  must  be  treated  as  such  by  all  subsequent  holders 
whether  he  be  the  drawer  or  acceptor  of  a  bill  of  exchange,  the 
maker  of  a  promissory  note  or  the  indorser  of  either.*"  But  in 
case  the  instrument  does  not  disclose  his  real  character  as  a  surety 
the  question  then  arises,  can  such  relation  be  shown  and  the  liabil- 
ity fixed  in  accordance  therewith.  The  English  equitable  rule  is 
that  the  character  of  a  concealed  surety  who  appears  on  the  in- 
strument as  a  regular  acceptor  or  indorser  may  be  shown  by  parol 

70  Cowles  V.  Peck,  55  Conn.  251 ;  *"  Brown  v.  Curtiss,  2  N.  Y.  225. 

Summers  v.  Barrett,  65  Iowa  292.  '-*  Wolfe  v.  Brown,  5  Ohio  St.  304. 

SQay   V.    Edgerton,   19   Ohio    St.  lo  Hunt  v.  Adams,  5  Mass.  358; 

553;     Montgomery    v.     Kellog,    43  Robison    v.     Lyle,    10    Barb.    512; 

Miss.  486.  Sayles  v.  Sims,  73  N.  Y.  552. 


§§  226-226b  suretyship  and  guarantV.  273 

notice.-^*  However,  the  great  weight  of  judicial  opinion  denies 
the  admissibility  of  parol  evidence  to  prove  the  party's  real  char- 
acter where  it  would  materially  change  the  party's  liability  to  the 
paper  and  follows  the  English  common  law  rule,  which  permits 
all  subsequent  holders  to  a  bill  or  note  to  treat  all  the  prior  par- 
ties according  to  their  ostensible  character.^*  But  if  the  con- 
cealed surety  is  a  co-maker  or  drawer  and  proo.  of  his  character 
would  not  reverse  the  evident  intention  of  the  parties  as  to  his 
relation  to  the  paper,  the  general  trend  of  judicial  opinion  in  this 
country  is  to  admit  such  proof.-^' 

§  226.  Remedies  of  guarantors.  The  remedies  which  are 
available  to  guarantors  are  of  two  classes.  The  first  and  most 
common  is  that  by  which  the  guarantor  pays  the  debt  and  re- 
covers of  the  principal  and  all  other  parties  whom  the  holder 
may  have  held  liable.^*  But  he  can  only  recover  a  sum  equal 
to  the  amount  he  was  compelled  to  pay  with  interest  on  the 
same.^"  The  second  method  which  he  may  pursue  is  to  file  a 
bill  in  equity  making  as  parties  thereto  the  creditor  and  the 
principal  parties,  to  enjoin  proceedings  against  himself  until  the 
resources  of  the  principal  have  first  been  exhausted.***  The  credi- 
tor may  demand  the  guarantor  to  indemnify  him  against  loss.^'^ 
This  is  a  very  unusual  proceeding  and  the  interests  of  the  guar- 
antor can  always  be  fully  protected  by  the  former  proceeding. 

§  226a.  Limit  of  surety's  recovery.  The  limit  of  the  surety's 
recovery  who  pays  a  bill  or  note,  or  other  obligation  of  his  prin- 
cipal is  the  amount  with  legal  interest  necessary  to  indemnify 
him.-*''*  So  if  he  compromises  the  debt  he  can  only  recover  back 
the  amount  accepted  by  the  creditor  in  compromise  of  it. 

A  surety  who  makes  payment  is  subrogated  to  all  the  rights  of 
the  holder  and  to  the  enjoyment  of  all  the  securities  which  his 
principal  w^as  entitled  to  for  the  payment  of  the  debt.*'^'' 

§  226b.  Trial  of  suretyship.  The  statutes  in  some  states 
provide  that  when  any  action  is  brought  against  two  or  more  de- 

11  Erwin  v.  Lancaster,  6  Best  &  524 ;  Edgerly  v.  Emerson,  23  N.  H. 
S.   Q.    B.   572;    Hollier   v.   Eyre,  9      555. 

CI.  &  P.,   1,  45;   Strong  v.  Foster,  15  Pgtre  v.  Duncombe,  20  L.  J.  Q. 

17  C.  B.  201.  B.  242. 

12  Farmers  etc.  Bank  v.  Rath-  i«  Humphrey  v.  Hitt,  6  Gratt.  524. 
hone,  26  Vt.  19;  Stephens  v.  Mo-  i'' Humphrey  v.  Hitt,  6  Gratt.  524. 
nongahela,  88  Pa.  St.  157.  i^a  Smith  v.  Mason.  44  Neh.  611, 

13  Hubbard  v.  Gurney,  64  N.  Y.  6Z  N.  W.  41. 

460 ;  Sayles  v.  Sims,  43  N.  Y.  552 ;  i''"  Sheahan    v.    Davis,    27    Oreg. 

Stillwell  V.  Aaron,  69  Mo.  539.  279.  40  Pac.  405,  50  Am.  St.  Rep. 

14  Humphrey    v.    Hitt,    6    Gratt.      722. 


274  NEGOTIABLE    INSTRUMENTS,  §227 

fendants  upon  a  contract,  any  one  or  more  of  the  defendants 
being  surety  for  the  others,  the  surety  may,  upon  written  com- 
plaint to  the  court,  cause  the  question  of  suretyship  to  be  tried 
and  determined  upon  the  issue  made  by  the  parties  at  the  trial 
of  the  cause,  or  at  any  time  before  or  after  the  trial,  or  at  a 
subsequent  term;  but  such  proceedings  shall  not  affect  the  pro- 
ceedings of  the  plaintiff.  And  if  the  finding  upon  such  issue 
be  in  favor  of  a  surety,  the  court  shall  make  an  order  directing 
execution  to  be  levied,  first  upon  the  property  of  the  principal 
exhausting  his  property,  before  levy  shall  be  made  upon  the  prop- 
erty of  the  surety. 

§  227.  Discharge  of  guarantors  and  sureties.  Guarantors 
and  sureties  may  be  discharged  in  any  one  of  the  following  three 
ways:  (1)  By  a  discharge  of  the  principal,  as  anything  which 
discharges  the  principal  will  discharge  the  guarantor  or  surety  ;*** 
(2)  by  the  signature  having  been  obtained  by  fraud  ;-^^  and  (3) 
lastly  by  the  surrender  to  the  principal  or  other  party  to  the  paper 
of  the  collateral  securities.^®  Any  alteration  of  the  written  in- 
strument which  will  discharge  the  principal  will  also  discharge 
the  surety.  The  surety  may  be  released  by  an  alteration  which 
does  not  release  the  principal  debtor.  In  the  case  where  a  cred- 
itor receives  from  the  principal  debtor  payment  of  interest  in  ad- 
vance on  a  past  due  note  an  agreement  to  give  time  is  necessarily 
implied  and  the  creditor  thereby  debars  himself  in  the  meantime 
of  suing  on  the  note,  and  the  surety  is  therefore  discharged,  un- 
less the  creditor  can  show  mistake,  or  possibly  an  agreement  that 
the  right  of  suit  should  not  be  suspended.^^  Another  classifica- 
tion of  matters  which  will  discharge  a  surety  is  as  follows  :*^* 

(1)  Misrepresentation  or  concealment  to  induce  his  becoming 
surety.  The  contract  is  voidable  from  the  beginning  as  between 
the  surety  and  all  parties  privy  to  such  misrepresentation  or  con- 
cealment ;^"  if  a  principal  signed  under  duress,  the  holder  guilty 
of  the  duress  could  not  enforce  the  obligation  against  a  surety.*^" 

(2)  Diversion  of  the  instrument  from  the  agreed  purpose.  As 
where  accommodation  paper  is  signed  that  it  shall  be  used  for 
a  particular  purpose  and  diversion  in  its  use  operates  a  discharge 

IS  Broadway       Sav.       Bank       v.  Wheat.  554 ;  Galbraith  v.  Fullerton, 

Schmucker,  7  Mo.  App.  171;  Glous-  53    111.    126;    Muirhead   v.    Kirkpat- 

ter    Bank    v.    Worcester,    10    Pick.  rick,  9  Harris  237. 

528.  ^**  Daniel   on    Negotiable  Instru- 

i«  Melick  V.  First  Nat.  Bank,  52  ments. 

la.  94.  sibLe^ls   ^    Brown,  89  Ga.   115, 

20  Dillon  V.  Russell,  5  Neb.  484;  14  S.  E.  881. 

Kirkpatrick  v.  Hawke,  80  111.  122.  2io  Griffith  v.  Sitgravcs,  90  Pa.  St. 

21  McLemore      v.      Powell,      12      161. 


§  227  SURETYSHIP  AND  GUARANTY.  275 

of  the  accommodation  party  as  to  all  other  parties  who  have 
knowledge  of  such  diversion.^^''  (3)  Alteration.  Any  material 
variation  in  the  instrument  without  the  consent  of  the  surety 
will  discharge  him.^^*  (4)  Payment.  Thus  payment  by  the 
parties  primarily  liable  discharges  parties  secondarily  liable  as 
payment  by  the  maker  or  acceptor  discharges  the  drawer  and  in- 
dorsers ;  and  a  tender  of  payment  which  the  holder  refuses  to 
accept  will  discharge  a  surety .^^'  (5)  Release.  A  release  of  the 
acceptor  or  maker  discharges  the  drawer  and  indorsers.*^' 
(6)  Satisfaction.  The  holder's  claim  may  be  extinguished  as  to 
an  indorser  or  drawer,  and  the  debt  not  be  satisfied,  but  if  there 
is  a  satisfaction  by  one,  it  operates  as  to  all.^^''  (7)  Covenant 
not  to  sue  a  prior  party.  This  discharges  the  surety  because 
it  disables  him  from  suing  should  he  pay  the  debt.  (8)  Parting 
with  security  for  the  debt.  Thus  if  any  collateral  security  which 
the  creditor  held  be  released,  or  a  judgment  lien  given  up  or  a 
levy  withdrawn,  the  surety  is  discharged.^^'  (9)  Agreement  to 
indulge  prior  party  by  extension  of  time  or  forbearance  of  suit. 
The  weight  of  authority  seems  to  be  against  this  last  proposi- 
tion.*^' It  is  held  by  the  weight  of  authority  that  the  plea  of 
fraud  or  misrepresentation  will  not  avail  to  discharge  a  guarantor 
or  surety  as  against  a  bona  fide  holder.  The  surety  or  guarantor 
is  discharged  if  the  holder  surrenders  the  collateral  securities  to 
the  principal  or  any  other  party  to  the  paper  ;*^  if  the  holder 
enters  into  a  binding  contract  for  the  extension  of  time  they  are 
discharged.*^  Under  the  principle  of  subrogation,  the  guarantor 
or  surety  has  a  vested  interest  in  the  collateral  security,  which 
can  not  be  jeopardized  or  destroyed  without  his  discharge  from 
his  liability.  The  agreement  for  an  extension  of  the  time  of 
payment  in  order  to  be  a  discharge  must  not  only  be  based  upon 
a  valuable  executed  consideration  of  some  sort,  but  the  agree- 
ment must  be  absolute  and  for  an  extension  of  payment  for  a 
definite  period  of  time.*^ 

21"  Haworth  v.  Crosby,  120  Iowa  21"  Story  on  Note,  §  403. 

612.  94  N.  W.  1098.  2li  state  Bank  of  Lock  Haven  v. 

2ie  Stutts  V.  Strayer,  60  Ohio.  St.  Smith,  155  N.  Y.  185,  49  N.  E.  680. 

384,  54  N.  E.  368,  71  Am.  St.  Rep.  2ij  Wolstenhohne    v.     Smith,    34 

723.  Utah  300,  97  Pac.  329. 

21'  Hudson  Bros.  Commission  Co.  **  Muirhead  v.  Kirkpatrick,  supra. 

V.    Glencoe    Sand    and    Gravel    Co.,  ^speHo^vs    v.    Prentiss,    3    Denio 

140  Mo.  103,  41  S.  W.  450,  62  Am.  512.     See  also  Fanning  v.  Murphy, 

St.  Rep.  722.  126   Wis.   538.    105    N.   W.    1056,   4 

2i9  Montgomery  v.  Sayre,  100  Cal.  L.  R.  A.  (N.  S.)  666. 

182,  34  Pac.  646,  38  Am.   St.  Rep.  24  Norris    v.    Cumming,    2   Rand. 

271.  323 ;  Smith  v.  Sheldon,  35  Mich.  42. 


276  NEGOTIABLE    INSTRUMENTS.  §  227a 

It  has  been  held,  however,  that  payment  of  interest  in  advance 
on  a  past  due  note  operates  to  extend  the  time  of  payment  and 
releases  the  sureties.^* 

§  227a.  Contribution  between  sureties.  The  right  to  con- 
tribution arises  out  of  an  implied  promise  amongst  co-sureties 
to  share  equally  the  burdens  of  co-suretyship,^^  and,  therefore, 
does  not  exist  where  there  is  an  express  understanding  to  the 
contrary.^* 

If  one  co-surety  be  required  to  pay  the  whole  debt,  the  others 
are  bound  to  contribute  in  equal  proportions,  and  the  co-surety 
may  recover  of  the  others  their  aliquot  shares.*'^  The  liability 
of  co-sureties  to  each  other  for  contribution  is  not  joint  but  sev- 
eral.^^ 

The  right  of  contribution  arises  between  co-sureties  though 
the  same  debt  be  secured  by  different  instruments,  executed  by 
different  sureties ;  and  though  one  portion  of  the  debt  be  secured 
by  one  instrument,  and  one  portion  by  another ;  and  even  though 
the  surety  demanding  contribution  did  not  at  the  time  of  the 
contract  know  that  he  had  any  co-sureties.^ 

Where  the  debt  is  paid  by  several  sureties  in  equal  propor- 
tions, the  equities  between  them  as  co-sureties  cease,  and  each 
becomes  an  independent  creditor  of  the  principal  for  the  amount 
he  may  have  paid ;  so  that  if  one  of  them  subsequently  re- 
ceived indemnity  from  the  principal  for  his  own  debt,  the  others 
are  not  entitled  to  participate  therein,  such  indemnity  not  pro- 
ceeding from  securities  held  by  the  surety  or  creditor  previous 
to  the  payment  of  the  debt,  although  the  general  rule  is  that  a 
co-surety  is  entitled  to  participate  in  any  indemnity  which  any 
of  his  co-sureties  may  obtain  from  the  principal,  directly  or  in- 
directly.^'' 

The  co-surety,  in  order  to  maintain  his  suit  for  contribution, 
must  have  made  payment  under  a  legal  and  fixed  obligation, 
but  not  necessarily  under  compulsion  of  suit  or  legal  process.^* 

One  of  two  co-sureties  on  a  note  paid  the  note  at  maturity  to 
a  holder  in  due  course  and  sued  his  co-surety  for  contribution 

24aMatchett   v.   Winona,    113   N.  29  Craythorn    v.    Swinburne,     14 

E.  1.  Ves.  169;  McBride  v.  Potter  Lovell 

25  Hedges    v.    Mehring,    —    Ind.  Co.,  169  Mass.  7,  47  N.  E.  242,  61 

App.  — .  115  N.  E.  433.  Am.  St.  Rep.  265. 

2«  Chappell  V.  McKeough,  21  Colo.  30  joUe  y.  Boeckeler,  12  Mo.  App. 

277,  40  Pac.  769.  55. 

27  Caldwell  v.   Hurley.  41    Wash.  31  Nixon  v.  Beard.  Ill   Ind.  140; 

296,  83  Pac.  318.  Afarch   v.   Barnet,   114  Cal.  375,  46 

28VOSS  V.  Lewis,  126  Ind.  155,  25  Pac.  152. 
N.  E.  892. 


§227a  SURETYSHIP  AND  GUARANTY.  277 

who  pleaded  failure  of  consideration  between  the  principal  maker 
and  the  payee,  but  this  was  held  to  be  no  defense  to  his  claim 
for  contribution.^ 

To  give  credit  to  a  note,  A  and  B  agreed  to  become  accom- 
modation co-makers  on  a  note  payable  to  C ;  A  signed  as  a 
co-maker  and  there  being  no  more  room  on  the  face  of  the  note, 
B  wrote  his  name  on  the  back  and  no  notice  of  dishonor  of  the 
note  was  given  to  B.  C  sued  and  recovered  of  A,  and  A  sued 
B  for  contribution  and  recovered,  oral  evidence  being  admitted 
to  show  that  they  were  co-sureties.^* 

A  surety  indorser  who  pays  the  note  can  not  recover  contribu- 
tion from  other  indorsing  sureties  without  showing  presentment 
and  notice  of  dishonor.*'* 

While  the  drawer  and  indorsers  of  a  bill  are  sureties  of  the 
acceptor  as  to  the  holder  of  said  bill,  they  are  not  as  between 
themselves  co-sureties,  liable  for  contribution  to  each  other  in  the 
event  that  any  one  should  pay  the  amount  for  the  acceptor ;  for 
each  prior  party  is  a  principal  as  between  himself  and  each  sub- 
sequent party. 

32  Cummins  v.  Line,  43  Okla.  575,  34  Bennett  v.   Kistler,   163  K.   Y. 
143  Pac.  672.                                              Supp.  555. 

33  Hunter  v.  Harris,  63  Ore.  505, 
127  Pac.  786. 


CHAPTER  XXI— A. 


NEGOTIABLE  INSTRUMENTS  WITH  COLLATERAL  SECURITY. 


8  227b.  Meaning  of  term  collateral 
security. 

227c.  Form  oi  promissory  note 
with  collateral  security. 

227d.  Holder  of  collateral  security 
a  holder  for  value — when 
transfer  is  for  debt  cre- 
ated at  time  of  transfer. 

227e.  Holder  of  collateral  security 
a  holder  for  value — when 
transfer  is  for  a  pre-exist- 
ing debt. 

227f.  Holder  of  collateral  security 
a  holder  for  value — when 
transfer  is  as  collateral  for 
a  debt  not  yet  due. 

227g.  Presumption  as  to  owner- 
ship. 

227h.  Whether  or  not  note  secured 
by  collateral  is  negotiable. 

227i.  Whether  or  not  collateral 
note  or  bill  is  negotiable. 

227j.  Effect  of  agreement  for  de- 
lay. 

227k.  Provision  for  deposit  of  ad- 
ditional collateral. 

2271.  Proviso  in  note  authorizing 
sale  of  collaterals. 

227m.  What  amounts  to  payment. 

227n.  In  some  jurisdictions  by 
statute,  the  surrender  of 
collateral  discharges  in- 
dorser. 


§  227o.  Holder  receiving  collateral 
not  required  to  proceed 
upon  same  before  suing  in- 
dorser. 

227p.  Collateral  security  must  be 
exhibited. 

227q.  Right  of  maker  to  claim  a 
defense  because  holder 
has  collateral  security. 

227r.  Amount  of  recovery  on  col- 
lateral security. 

227s.  Rights  of  indorsee  as  to  stip- 
ulations in  collateral  note. 

227t.  Whether  surrender  of  col- 
lateral   discharges    surety. 

227u.  Whether  surrender  of  col- 
lateral discharges  guaran- 
tor. 

227v.  Effect  upon  necessity  of 
presentment,  protest,  and 
notice  as  to  drawer  or  in- 
dorser  when  they  are  in 
possession  of  security. 

227w.  Accommodation  paper  as 
collateral  security. 

227x.  Collateral  released  or  lost. 

227y.  Miscellaneous. 

227z.  Form  of  guaranty  oi  col- 
lateral note. 

227aa.  Form  of  note  with  trans- 
fer of  account. 


§  227b.  Meaning  of  term  collateral  security.  Collateral  se- 
curity in  its  broad  sense  means  any  security  in  addition  to  the 
original  obligation  or  security.^  Accepted  bills  of  exchange^  and 
promissory  notes^  may  be  held  as  collateral  security;  they  may 

3  Wright  v.  Ross,  36  Calif.  414; 
Polhemus  v.  Prudential  Realty  Cor- 
poration, 74  N.  J.  L.  570,  67  Atl. 
303. 


*  Schnitzler  v.  Wichita  Fourth 
National  Bank,  1  Kan.  App.  674,  42 
Pac.  496. 

^  Cornwell  v.  Baldwin's  Bank,  12 
N.  Y.  App.  Div.  227,  43  N.  Y.  Supp. 
77L 


278 


§  227b  WITH    COLLATERAL   SECURITY.  279 

be  given  to  secure  the  payment  of  another  bill  or  note  being  an 
additional  obligation,  that  is,  a  separate  obligation  attached  to 
another  obligation  to  guarantee  its  payment  *  As  applied  to  the 
law  of  negotiable  instruments  collateral  security  in  its  perfect 
state  is  said  to  be  a  separate  obligation,  as  the  negotiable  bill  of 
exchange  or  promissory  note  of  a  third  person,  or  other  repre- 
sentative of  value,  indorsed,  where  necessary,  and  dehvered  by 
a  debtor  to  his  creditor,  to  secure  the  payment  of  his  own  obli- 
gation, represented  by  an  independent  instrument.'*  Collateral 
security  is  a  concurrent  security  to  the  holder  of  the  original 
obligation  whether  antecedent  or  newly  created  and  is  designed 
only  to  increase  the  means  of  the  holder  to  realize  the  principal 
debt  which  it  is  given  to  secure.^  It  has  been  stated  that  the  use 
of  the  term  "collateral  security"  is  intended  to  express,  that  it 
is  not  received  in  payment  of  the  principal  debt,  and  that  it  is 
not  an  additional  right  to  which  the  creditor  is  absolutely  en- 
titled.'^ 

Thus,  collateral  security  is  a  separate  obligation,  as  the  nego- 
tiable bill  of  exchange  or  promissory  note  of  a  third  person, 
delivered  by  a  debtor  to  his  creditor  to  secure  the  payment  of  his 
own  obligation  represented  by  an  independent  instrument  as  a 
bill  of  exchange  or  promissory  note;^  it  is  security  for  the  ful- 
fillment of  a  pecuniary  obligation  or  payment  of  money  in  addi- 
tion to  the  principal  security;  the  collateral  security  stands  with 
the  principal  promise  as  a  cumulative  means  for  securing  the 
payment  of  the  obligation  -^  it  is  subsidiary  to  the  principal  debt 
— running  parallel  with  it — collateral  to  it — and  when  collected, 
is  to  go  to  the  credit  of  the  principal  debt ;  or  if  the  principal 
debt  be  paid  ofif,  the  debtor  is  usually  entitled  to  a  restoration 
of  the  collateral  security.^® 

Interpreted  in  the  terms  of  negotiable  instruments,  a  nego- 
tiable bill  or  note  given  as  collateral  security  to  another  nego- 
tiable bill  or  note,  known  as  the  principal  obligation,  is  concur- 
rent security  for  said  principal  bill  or  note  and  is  designed  to 
increase  the  means  of  the  holder  of  said  principal  bill  or  note  to 
realize  on  said  bill  or  note  which  it  is  given  to  secure ;  it  is  sub- 

4  Butler  V.  Rockwell,  14  Colo.  125,      57  Fed.  107,  110,  9  U.  S.  App.  203,  6 
136,  23  P.  462 ;  Schnitzler  v.  Wichita      C.  C.  A.  683. 

Fourth  National  Bank,  1  Kan.  App,  *  International  Trust  Company  v. 

674,  42  P.  496,  500.  Union  Cattle  Co.,  3  Wyo.  803,  804; 

5  International  Trust  Company  v.  31  Pac.  408,  19  L.  R.  A.  640. 
Union  Cattle  Company,  3  Wyo.  803.  »  Moffatt  v.  Corning,  14  Colo.  104, 

«  Osborne  v.   Stringham,  4  S.  D.       123,  24  Pac.  7. 
593,  598,  57  N.  W.  776.  lo  Munn  v.  McDonald,  10  Watts 

''McCormick  v.  Falls  City  Bank,       (Pa.)  270,  273;  McCormick  v.  Falls 

City  Bank,  57  Fed.  107. 


280  NEGOTIABLE    INSTRUMENTS.  §  227c 

sidiary  to  said  principal  bill  or  note,  that  is,  collateral  to  it  and 
when  collected  is  to  go  to  the  payment  of  said  principal  bill  or 
note. 

§  227c.     Form  of  promissory  note  with  collateral  security. 

The  following  is  a  form  of  promissory  note  with  collateral 
security : 

$ No Due 

INDIANAPOLIS,  IND 

days  after  date 

promise  to  pay  to  the  order  of  the  CITY  TRUST  BANK 

of  Indianapolis,  Indiana. 
Dollars, 

Negotiable  and  Payable  at  the  office  of  the  CITY  TRUST  BANK 

of  Indianapolis, 

With  five  per  cent.  Attorney's  fees  upon  the  principal  of  this 
note.  Value  received,  without  any  relief  whatever  from  Valua- 
tion or  Appraisement  laws  of  the  State  of  Indiana.  With  interest 
at  the  rate  of  eight  per  cent,  per  annutn  after  maturity  until 
paid.  The  drawers  and  endorsers  severally  waive  presentment 
for  payment,  protest,  notice  of  protest  and  notice  of  non-payment 
of  this  note. 

Address 

have  transferred  and  delivered  to  the  CITY  TRUST 

BANK  of  Indianapolis,  Ind.,  as  Collateral  Security  for  the  pay- 
ment of  this  and  of  any  other  liabilities  of  the  undersigned  to  said 
payee,  or  assigns,  due  or  to  become  due,  or  that  may  hereafter 
be   contracted,   the  folloiving  property,   the   value   of  which  is 

Dollars, 

vis: 

And  the  Undersigned  hereby  gives  the  said  Payee  and  Assigns 
authority  to  sell  and  to  transfer  and  assign  the  said  property,  or 
any  part  thereof,  or  any  substitutes  therefor,  and  all  additions 
thereto,  on  the  maturity  of  the  above  note,  or  any  time  there- 
after, or  before  in  the  event  of  the  said  security  depreciating 
in  value,  at  any  public  or  private  sale  without  advertising  the 
.■ante,  or  demanding  payment  or  giving  notice,  with  the  right 
lo  said  payee  and  assigns  themselves  to  be  the  purchasers,  when 
sale  is  made  at  any  broker's  board  or  public  sale.  And,  after 
■  Jeducting  all  costs  and  expenses  to  apply  the  residue  to  the 
•Kiyment  of  any,  either  or  all  liabilities  as  aforesaid,  as  said 
■ayee  or  assignee  shall  elect,  returning  the  overplus  to  the  under- 


§§  227d-227e  with  collateral  security.  281 

signed,  and  in  case  the  proceeds  of  the  sale  of  said  property  shall 
not  cover  the  principal,  interest  and  expenses,  the  undersigned  en- 
gages to  pay  the  deficiency  forthwith  after  such  sale,  with  legal 
interest. 


§  227d.  Holder  of  collateral  security  a  holder  for  value — 
When  transfer  is  for  debt  created  at  time  of  transfer.  The 
holder  of  a  negotiable  instrument  as  collateral  security  for  a 
debt  contracted  at  the  time  of  the  transfer  is  a  bona  fide  holder 
for  value,  provided  the  bill  or  note  transferred  as  collateral  secur- 
ity is  itself  not  overdue  at  the  time,  thus  the  indorsee  of  a  col- 
lateral instrument  executed  by  a  third  party  is  a  holder  for  value, 
if  said  instrument  is  indorsed  as  collateral  security  for  a  debt 
contracted  at  the  time  of  such  indorsement ;  this  is  true  whether 
the  bill  or  note  of  said  third  party  is  payable  to  order  or  is  pay- 
able to  bearer.  But  in  no  case,  however,  should  the  collateral 
instrument  be  overdue  at  the  time  of  its  transfer.** 

A  creditor  who  receives  the  bill  or  note  of  a  third  party  from 
his  debtor  as  collateral  security  for  his  debt  is  entitled  to  the 
full  protection  of  a  bona  fide  holder  for  value,  free  from  all  equi- 
ties which  might  have  been  pleaded  between  the  original  parties.*^ 

§  227e.  Holder  of  collateral  security  a  holder  for  value — 
When  transfer  is  for  a  pre-existing  debt.  Prior  to  the  adoption 
of  the  Negotiable  Instruments  Law  in  the  various  jurisdictions 
there  was  much  conflict  of  authority  as  to  whether  one  who  takes 
a  note  merely  as  collateral  security  for  a  pre-existing  debt  is  a 
holder  for  value.  Since  the  adoption  of  the  Law  such  holder  is 
generally  regarded  as  a  holder  for  value.*^ 

Under  the  Wisconsin  negotiable  instruments  law,  however, 
"the  indorsement  or  delivery  of  negotiable  paper  as  collateral 
security  for  a  pre-existing  debt,  without  other  consideration,  and 
not  in  pursuance  of  an  agreement  at  the  time  of  delivery  by  the 
maker,  does  not  constitute  value."^'* 

§  227f.  Holder  of  collateral  security  a  holder  for  value- 
When  transfer  is  as  collateral  for  a  debt  not  yet  due.  If  the 
debt  is  not  due  and  the  collateral  bill  or  note  is  indorsed  as 

**  Texas  Banking  Co.  v.  Turnley,  13  Melton   v.    Pensaloca   Bank   & 

61  Tex.  369;  Best  v.  Crall,  23  Kan.  Trust  Co.,  190  Fed.  126,  111  C.  C. 

482;  Miller  v.  Boykin,  70  Ala.  476.  A.    166;   Voss  v.   Chamberlain,    139 

12  Bank  of  Commerce  v.  Wright,  Iowa  569,  117  N.  W.  269,  19  L.  R. 

63  Ark.  604,  40  S.  W.  81.    Contra,  A.  (N.  S.)  106,  130  A.  St.  Rep.  331. 

Thompson  v.  Maddux,  117  Ala.  468,  ^^Neg.    Inst.    Law     (Wis.),    §§ 

23  So.  157,  1675-71, 


282  NEGOTIABLE    INSTRUMENTS.  §§  227g-227h 

security  and  there  is  an  agreement  for  delay  until  the  collateral 
matures,  such  agreement  constitutes  a  consideration  and  makes 
the  holder  a  holder  for  value. 

But  if  the  debt  is  due  and  there  is  no  agreement  for  delay, 
the  holder  will  not  be  protected  against  equities.^'* 

§  227g.  Presumption  as  to  ownership.  If  the  collateral  nego- 
tiable instrument  is  transferable  by  delivery,  that  is,  by  being 
payable  to  bearer  or  having  a  blank  indorsement,  the  holder  is 
prima  facie  proprietor  and  owner.  But  if  it  is  payable  to  order 
and  unindorsed,  the  holder  has  only  the  equitable  title  and  cannot 
claim  the  rights  of  an  indorsee.-^® 

§  227h.  Whether  or  not  note  secured  by  collateral  is  nego- 
tiable. A  promissory  note  M^hich  contains  a  statement  to  the 
effect  that  the  maker  has  deposited  collateral  security  for  its 
payment  does  not  make  it  non-negotiable ;  although  it  may  appear 
on  the  face  of  the  note  that  its  payment  is  secured  by  collateral 
consisting  of  personal  property  or  a  mortgage  on  real  property, 
yet  if  otherwise  in  proper  form,  it  is  negotiable.-^'^  And  a  note  is 
negotiable  which  contains  a  recital  that  on  non-payment,  the 
holder  may  sell  the  collateral  and  apply  the  proceeds  to  "pay- 
ment and  necessary  charges."  So  a  stipulation  in  a  note  whereby 
the  legal  title  to  the  property  for  which  it  was  given,  as  security 
for  payment,  is  in  the  holder  of  the  collateral,  has  been  held 
not  to  make  the  note  non-negotiable  ;**  and  also  the  negotiability 
of  a  note  made  payable  to  a  bank  is  not  affected  by  a  stipula- 
tion therein  authorizing  the  bank  to  appropriate  to  the  payment 
of  the  note  any  money  that  the  maker  may  have  in  the  bank,^® 
and  it  has  been  held  that  a  stipulation  in  a  note  payable  on  de- 
mand, giving  the  bank  power  to  sell  the  collateral  before  the 
maturity  of  the  note,  in  the  event  the  securities  depreciate  in 
value,  does  not  change  the  promise  to  pay  "on  demand"  so  as 
to  make  the  note  non-negotiable. 


20 


15  Bone  V.  Tharp,  63  Iowa  224.  ter,  98  Ala.  602  14  So.  Rep.  545,  39 

1*  Bank  of  Chadron  v.  Anderson,  Am.  St.  Rep.  88;  Heard  v.  Dubuque 

6  Wyo.  520,  48  Pac.  197.  Co.  Bank,  8  Neb.  10,  30  Am.  Rep. 

1'' Valley  National  Bank  v.  Crow-  811;  Third  National  Bank  v.  Bow- 
ell,  148  Pa.  St.  284.  23  Atl.  Rep.  man-Spring  Co.,  50  App.  Div.  66.  64 
1068;  Farmer  v.  First  National  N.  Y.  Supp.  410. 
Bank  of  Malvern,  89  Ark.  132,  115  i'' Louisville  Banking  Co.  v.  Grav, 
S.  W.  1141,  131  A.  S.  R.  79;  Dor-  123  Ala.  251,  26  So.  205,  82  A.  S.  R. 
sey  V.  Wolff,  142  111.  589,  32  N.  E.  120;  Louisville  Banking  Co.  v. 
495,  34  A.  S.  R.  99,  18  L.  R.  A.  428 ;  Howard,  123  Ala.  380,  26  So.  207. 
Albertson  v.  Laughlin,  173  Pa.  St.  82  A.  S.  R.  126. 
525,  34  Atl.  216,  51  A.  S.  R.  177,  20  prinden  v.  Muskegon  Savings 
Ann.  Cas.  1912D  9  note.  Bank  (Mich.),  140  N.  W.  Rep.  549. 

18  First  National  Bank  v.  Slaugh- 


§  227i  WITH    COLLATERAL   SECURITY.  283 

A  Statement  that  the  collateral  security  has  been  deposited  for 
the  performance  of  the  promise  contained  in  the  note  has  been 
held  not  to  affect  its  negotiability  ^^  but,  a  stipulation  in  a  note 
that  the  title  to  property  for  which  the  note  is  given  shall  re- 
main in  the  payee,  and  he  shall  have  the  right  to  declare  the 
money  due  and  take  possession  of  the  property  whenever  he 
may  deem  himself  insecure,  "even  before  the  maturity  of  the 
note"  renders  the  note  non-negotiable  -^^  so,  also  a  stipulation  that 
the  payee  may  sell  certain  warehouse  receipts  given  as  collateral, 
and  if  they  depreciate  in  value,  may  sell  them  before  the  in- 
strument would  otherwise  become  due  makes  the  note  non-nego- 
tiable because  such  alternative  introduces  elements  of  uncer- 
tainty.^^ 

And  a  promissory  note  is  not  certain  as  to  terms  and  there- 
fore non-negotiable  which  contains  an  agreement  to  pay  a  sum 
certain  as  the  purchase  price  o^  property  sold,  with  an  option  on 
the  part  of  the  payee  to  take  possession  of  the  property  in  case 
of  default  in  payment;**  and  if  a  mortgage  note  incorporates 
by  reference  provisions  of  the  mortgage  requiring  something  to 
be  done  in  addition  to  the  payment  of  money  it  is  non-nego- 
tiable.25 

§  227i.  Whether  or  not  collateral  note  or  bill  is  negotiable. 
Securities  given  as  collateral  to  negotiable  paper  are  held  in  most 
jurisdictions  to  partake  of  the'  negotiability  of  the  instrument 
secured  to  the  exclusion  of  defenses  by  the  maker  as  against  bona 
fide  purchasers  of  the  note  and  security  ;-^  in  some  jurisdictions, 
however,  a  different  rule  maintains,^''  and  notes  which  are  them- 
selves given  as  collateral  security  are  held  non-negotiable.*^ 

The  effect  on  the  negotiabih'ty  of  a  note  of  a  reference  therein 
to  another  instrument,  collateral  thereto,  securing  it,  often  de- 
pends on  whether  the  note  and  security  are  to  be  construed  to- 
gether.2» 

21  Wise  V.   Charlton,  4   A.  &  E.  450;  Craft  v.  Buiister,  9  Wis.  503: 

486;  Fancourt  v.  Thorne,  9  Q.   B.  Hamilton  v.  Fowler,  99  Fed.  18.  40 

312.  C.  C.  A.  47 ;  Thompson  v.  Maddux. 

22Kimpton  V.  Studebaker  Broth-  117  Ala.  468,  23  So.  157. 

ers  Co.,  14  Idaho  552,  94  Pac.  1039,  27  Baily   v.    Smith,    14    Ohio    St. 

125  Am.  St.  Rep.  185.  396.  84  Am.  Dec.  385 ;  Watkins  v. 

23  Continental  National  Bank  v.  Gocssler,  65  Minn.  118,  67  N.  W. 
Wells,  72>  Wis.  332,  41  N.  W.  409 ;  796 ;  Butler  v.  Slocomb,  Z2,  La.  Ann. 
Cushman  v.  Haynes,  Z7  Mass.    (20  170.  39  Am.  Rep.  265. 

Pick.)  132.  28  Arnj^rican     National     Bank     v. 

24  Wright  V.  Traver,  73  Mich.  493,  Sprague,  14  R.  I.  410;  Costelo  v. 
41  N.  W.  517.  3  L.  R.  A.  50.  Crowcll,  127  Mass.  293,  34  Am.  Rep. 

25  Bright  V.  Offield,  81  Wash.  443.  367. 

2«Gabbert   v.    Schwartz,   69   Ind.  2932  l.  R.  A.  (N.  S.)  858,  note. 


284  NEGOTIABLE    INSTRUMENTS.  §  227j 

A  memorandum  on  a  note  that  the  same  was  issued  as  collat- 
eral to  A's  draft  accepted  by  B  has  been  held  to  make  the  note 
non-negotiable  because  not  payable  at  all  events  since  payment 
of  the  draft  would  discharge  the  maker  and  indorsers  of  the  note 
and  render  the  note  null  and  void  ;^*'  so  also  is  a  promissory  note 
which  states  that  it  is  to  be  held  as  collateral  security  for  the 
payment  of  certain  debts  of  a  third  person  ;^^  and  a  statement 
that  the  note  is  "given  as  collateral  security  with  agreement"  has 
been  held  to  make  the  note  non-negotiable.^^ 

§  227j.  Effect  of  agreement  for  delay.  There  is  no  exten- 
sion of  a  bill  or  note,  so  as  to  postpone  suit  or  as  to  discharge 
indorsers  or  sureties,  whether  another  bill  or  note,  either  of 
the  maker  or  a  third  person,  is  taken  merely  as  collateral  secur- 
ity, and  there  is  no  agreement  postponing  the  remedy,  although 
indulgence  may  in  fact  be  granted  ;^^  it  is  otherwise,  however, 
if  there  is  an  agreement  for  delay.^* 

If  a  bill,  note  or  check  taken  as  collateral  security  is  payable 
at  a  future  day  to  the  original  obligation,  there  arises  an  implica- 
tion of  agreement  for  delay  until  its  maturity.  The  holder  may 
show,  however,  that  it  was  agreed  that  there  should  be  no  delay, 
or  that  the  remedy  against  the  drawer  or  indorser  was  reserved  \^'^ 
but  when  the  debt  is  not  yet  due  and  the  collateral  instrument 
is  indorsed  as  security  with  an  agreement  that  there  shall  be  a 
delay  until  the  collateral  shall  mature,  such  agreement  by  the 
creditor  constitutes  a  consideration  and  makes  the  indorsee  a 
<bona  fide  holder  for  value,^*'  and  has  been  held  to  create  an 
■extension  of  time  so  as  to  discharge  sureties  or  indorsers;  the 
receipt  of  collateral  security  by  the  holder,  from  the  maker  or 
acceptor,  with  agreement  to  apply  the  proceeds  to  payment  of 
the  bill  or  note  will  not  in  anywise  affect  the  rights  of  the  holder 
against  the  drawer  or  indorsers,  provided  it  is  not  accompanied 
,by  any  stipulation  for  indulgence  or  delay.^^ 

30  American  National  Bank  v.  34  Martin  v.  Bell,  18  N.  J.  L.  167. 
Sprague.  14  R.  I.  411 ;  Gibson  v.  35  Pomeroy  v.  Tanner,  70  N.  Y. 
Hawkins,   69   Ga.   354;    Haskell    v.      547 

Lambert,  16  Gray  592.  36  Daniel,  §  825. 

31  Haskell  v.  Lambert,  16  Gray  37  Cary  v.  White,  52  N.  Y.  138; 
(Alass.)  592;  American  National  Bank  v.  Matson,  99  Tenn.  390,  41 
Bank  v.  Sprague,  14  R.  I.  410.  S.  W.  1062 ;  Hoover  v.  McCormick, 

32  Costello  V.  Crowell,  127  Mass,  84  Wis.  215,  54  N.  W.  505 ;  Dodson 
293.  V.  Taylor,  56  N.  J.  L.  11,  28  Atl. 

33  Gary  v.  White,  52  N.  Y.  138;  316. 
Cooper  V.  Gibbs,  4  McLean  (U.  S-) 

396.  6  Fed.  Gas.  No.  3,194. 


§§  227k-227m         with  collateral  security.  285 

§  227k.  Provision  for  deposit  of  additional  collateral.  Some 
jurisdictions  hold,  that  a  promissory  note  with  an  agreement 
therein  that  if  there  is  any  depreciation  before  the  note  matures, 
in  the  collateral  security,  the  holder  may  require  further  security, 
is  not  negotiable.^^  And  it  has  been  held  that  when  there  is  a 
stipulation  in  a  note,  that  in  case  of  depreciation  the  maker  shall 
deposit  additional  securities  and  in  the  event  of  default  of  such 
deposit,  the  principal  obligation  shall  become  due  and  payable, 
the  stipulation  makes  the  note  non-negotiable.^* 

§  2271.     Proviso  in  note  authorizing  sale  of  collaterals.    The 

Negotiable  Instruments  Law  provides  as  follows : 

"The  negotiable  character  of  an  instrument  otherwise  nego- 
tiable is  not  affected  by  a  provision  ivhich  authorizes  the  sale  of 
collateral  securities  in  case  the  instrument  be  not  paid  at  ma- 
ttirity."*^ 

It  often  happens  that  notes  of  this  character  are  non-negotiable 
because  of  provisions  as  to  the  time  of  payment,  or  because  of 
provisions  requiring  something  to  be  done  in  addition  to  the 
payment  of  money ;  but  a  statement  that  collateral  security  has 
been  deposited  for  the  performance  of  the  promise  contained  in 
the  instrument  is  only  a  recital  which  does  not  affect  its  nego- 
tiability. And  a  provision  merely  authorizing  the  sale  of  the 
collateral,  if  the  note  is  dishonored,  does  not  make  the  note  non- 
negotiable.** 

Thus  a  promissory  note  does  not  lose  its  negotiable  character 
because  it  recites  that  the  maker  has  deposited  collateral  secur- 
ity for  its  payment  which  he  agrees  may  be  sold  in  a  certain 
manner.^ 

§  227m.  What  amounts  to  payment.  The  mere  acceptance 
of  collateral  security  does  not  operate  as  a  payment,"**  but  pay- 
ment and  satisfaction  of  the  security  operates  as  a  payment  of 
the  instrument  secured.** 

An  agreement  to  rely  on  the  collateral  security  may  amount 
to  a  payment ;  thus  where  a  bank,  at  which  an  instrument  secured 

38  Lincoln  National  Bank  v.  ^i  Perry  v.  Bigelow,  128  Mass. 
Perry,  32  U.  S.  App.  15,  66  Fed.  887,       129. 

14  C.  C.  A.  273.  42  Bank  of  Carroll  v.  Taylor,  67 

39  Holiday  State  Bank  v.  Hofif-  Iowa  572,  25  N.  W.  810;  Duncan  v. 
man,  85  Kans.  71 ;  Hibernia  Bank  &  City  of  Louisville,  13  Bush  (Ky.) 
Trust  Co.  V.  Dresser,  132  La.  532.  378.  26  Am.  Rep.  201. 

Contra,   Finley   v.    Smith,    165    Ky.  43  Hook  v.  White,  36  Cal.  299. 

445  ;  Kennedy  v.  Broderick,  216  Fed.  ^4  Sampson  v.  Fox,  109  Ala.  662, 

Rep.  137,  132  C.  C.  A.  381.  19  So.  896,  55   Am.   St.   Rep.   950; 

40  Neg.  Inst.  Law,  §  5,  subd.  1.  Kent  v.  May,  13  Mich.  38. 


286  NEGOTIABLE   INSTRUMENTS.  §§  227n-227q 

by  chattel  mortgage  was  payable,  agreed  that  it  would  look  to 
the  mortgaged  property  alone,  the  maker  was  released,  if  at  the 
date  of  such  agreement  such  property  was  sufficient  to  pay  the 
note,  notwithstanding  it  had  depreciated  in  value  at  the  time  the 
mortgage  was  foreclosed."*^ 

§  227n.  In  some  jurisdictions  by  statute,  the  surrender  of 
collateral  discharges  indorser.  In  at  least  one  jurisdiction, 
namely,  that  of  the  state  of  Wisconsin,  the  Negotiable  Instru- 
ments Law  provides  that  "a  person  secondarily  liable  on  the  in- 
strument is  discharged  by  giving  up  or  applying  to  other  pur- 
poses collateral  security  applicable  to  the  debt."'*^ 

By  judicial  interpretation  of  the  above  statute  it  has  been  de- 
termined that  the  surety  is  discharged  only  to  the  extent  cor- 
responding with  the  value  of  the  security  given  up  or  applied 
to  other  purposes.^'^ 

§  227o.     Holder  receiving  collateral  not  required  to  proceed 
upon  same  before  suing  indorser.     The  holder  who  has  re- 
ceived collateral  from  the  maker  is  not  required  to  proceed  on 
,  the  collateral  before  suing  the  indorser."*^ 

§  227p.  Collateral  security  must  be  exhibited.  The  col- 
lateral security  must  be  exhibited  to  the  person  from  whom  pay- 
ment is  demanded,  and  when  it  is  paid  must  be  delivered  up  to 
the  party  paying  it.  That  is,  the  maker  is  entitled  to  require  that 
the  collateral  be  tendered  with  the  note  or  the  demand  of  pay- 
ment will  not  be  sufficient  and  the  maker  may  require  that  the 
collateral  be  delivered  with  the  note.** 

§  227q.  Right  of  maker  to  claim  a  defense  because  holder 
has  collateral  security.  Although  the  holder  may  have  other 
collateral  securities  for  the  same  debt  more  than  sufficient  to 
cover  it,  from  which,  however,  the  debt  had  not  been  realized, 
yet,  such  fact  does  not  furnish  a  good  defense  that  the  maker 
may  take  advantage  of  .^® 

And  if  the  indorser  has  deposited  with  the  holder  security 
for  the  payment  of  the  note  the  maker  can  not  claim  it  as  a 
defense  when  proceeded  against  by  the  holder.^* 

45  First   National   Bank   v.   Wat-  48  Buck  v.  Freehold  Bank,  Z7  N. 

kins,  154  Mass.  385,  28  N.  E.  275.  J.  Law  307. 

46Neg.  Inst.  Law   (Wis.),  §1679  49  Ocean  National  Bank  v.  Fant, 

—1,  Sub.  Div.  4A.   See  also  Rogers  50  N.  Y.  474. 

V.    School    Trustees,    46    111.    428 ;  ^o  Lord  v.  Ocean  Bank,  20  Pa.  St. 

Union  National  Bank  v.  Cooley,  27  384. 

La.  Ann.  202.  ^^  People's  National  Bank  v.  Rice, 

47  State   Bank   of  La   Crosse  v.  149  App.  Div.  (N.  Y.)  18. 
Michel,  152  Wis.  88. 


§§  227x-227\\  WITH  collateral  security.  2S7 

§  227r.  Amount  of  recovery  on  collateral  security.  The 
holder  is  limited  as  to  the  amount  he  may  recover  on  the  co1 
lateral  security  to  the  amount  of  the  debt  which  it  secures,''*  and 
even  though  the  debt  secured  by  the  collateral  is  less  in  amount 
than  the  collateral,  yet  if  there  is  no  defense  to  the  collateral 
note,  the  holder  is  generally  entitled  to  recover  the  full  amount 
holding  the  balance  in  trust,^^  and  if  the  instrument  has  been 
fraudulently  pledged  to  a  holder  in  good  faith,  the  real  owner 
may  pay  that  debt  and  be  entitled  to  receive  the  instrument.^'* 

§  227s.     Rights  of  indorsee  as  to  stipulations  in  collateral 

note.  A  provision  in  a  collateral  note  that  the  collateral  secur- 
ity was  deposited  for  the  payment  of  the  original  obligation  or 
any  other  liability  of  the  maker  to  the  holder  runs  in  favor  of 
the  indorsee  and  the  security  may  be  applied  to  the  payment  of 
an  indebtedness  due  from  the  maker  to  an  indorsee,  as  such  a 
provision  tended  to  facilitate  the  negotiation  of  the  paper.'* 

§  227t.  Whether  surrender  of  collateral  discharges  surety. 
If  any  collateral  security  which  the  creditor  held  be  released,  it 
is  held  that  the  surety  is  discharged  ;'*  but  the  surety  will  not 
be  discharged  in  any  case  where  it  can  be  clearly  established  that 
the  parting  with  the  security  has  worked  no  real  injury.  And 
he  is  discharged  only  to  the  extent  that  he  would  be  injured 
if  held  bound.'^'' 

§  227u.  Whether  surrender  of  collateral  discharges  guar- 
antor. In  some  jurisdictions  it  is  held  that  a  guarantor  is  dis- 
charged if  the  holder  surrenders  to  the  principal  debtor,  or  other 
party  to  the  paper,  collateral  securities  which  he  holds  as  security 
for  the  guaranteed  debt.  The  theory  of  this  rule  is  that  by  sub- 
rogation, the  guarantor  has  a  vested  interest  in  the  collateral 
security,  which  cannot  be  jeopardized  or  destroyed  without  his 
discharge  from  his  liability.*^* 

In  other  jurisdictions  it  is  held  that  the  guarantor  will  be  dis- 
charged to  the  extent  of  the  value  of  the  collaterals  surrendered 
or  the  security  released.'*^* 

52  Hardy  v.   Sibley,  46  Ohio   St.  539 ;  Allen  v.  O'Donald,  23  Fed.  573 ; 

15;  Duncan  &  Sherman  v.   Gilbert,  Mayhew  v.  Boyd,  5  Md.  102. 

30  N.  J.  L.  527;  Fisher  v.  Fisher,  98  5'' Payne  v.  Commercial  Bank,  6 

Mass.  303.  Smedes  &  M.  24. 

'^S  Toole  V.  Newman,  75  111.  215.  ^spjolland    v.    Johnson,    51    Ind. 

54  Stoddard  v.    Kimball,  6  Cush.  346 ;  Hayes  v.  Ward,  4  Johns.  Ch. 

469;   Chicopee    Bank   v.   Chapin,   8  123,  8  Am.  Dec.  554. 

Mete.  (Mass.)  40.  5Sa  poerderer  v.    Moors,  91    Fed. 

sSQleon  V.  Rosenbloom,  247  Pa.  476,   ZZ   C.    C.   A.  641;   Holmes   v. 

St.  250.  Williams,  177  111.  386,  53  N.  E.  93. 

5«Shutts   V.   Fingar,    100   N.   Y. 


288  NEGOTIABLE    INSTRUMENTS.  §  227v 

§  227v.  Effect  upon  necessity  of  presentment,  protest  and 
notice  as  to  drawer  or  indorser  when  they  are  in  possession  of 
security.  The  weight  of  authority  is  to  the  effect  that  the  pos- 
session before  maturity  of  security  or  the  possession  of  the  prop- 
erty of  the  primary  obHgor  by  the  drawer  or  an  indorser  excuses 
the  holder  of  the  instrument  from  presentment,  protest  and 
notice,  as  to  such  drawer  or  indorser ;  thus  if  the  indorser  re- 
ceives collateral  security  from  the  maker  or  other  party  for  whose 
benefit  the  instrument  was  executed  he  is  bound  without  demand 
and  notice,  provided,  however,  the  security  received  was  full 
or  comprised  all  the  maker's  property;'*'*  and  notice  of  dishonor 
is  waived  when  the  indorser,  before  maturity,  has  taken  col- 
lateral security  sufficient  to  cover  his  contingent  liability  or  has 
taken  an  assignment  of  all  the  estate  of  the  maker  for  the  pur- 
pose of  meeting  his  responsibilities  ;®"  but  the  taking  of  insuffi- 
cient security  is  not  a  waiver  of  notice.** 

In  some  jurisdictions  an  indorser  is  entitled  to  notice  regard- 
less of  the  collateral  taken,  so  long  as  the  maker  of  the  note 
remains  primarily  liable.*^ 

If  the  bill  or  note  has  been  transferred  to  the  holder  by  mere 
delivery  without  indorsement,  as  collateral  security,  the  transferer 
is  not  entitled  to  insist  on  a  strict  presentment  at  maturity  to 
the  maker  or  acceptor;  nor  will  he  be  released  from  the  debt 
for  which  the  bill  or  note  is  delivered  as  collateral  security  unless 
he  can  show  that  he  has  actually  sustained  damage  or  prejudice 
by  such  non-presentment.®* 

There  is  a  conflict  among  the  authorities  as  to  whether  when 
a  transferrer  indorses  a  bill  or  note  merely  as  collateral  security 
for  or  on  account  of  a  precedent  debt,  without  any  new  considera- 
tion therefor,  he  is  entitled  to  require  strict  presentment  and 
notice  as  an  indorser.  Some  jurisdictions  maintain  that  the  re- 
sponsibility of  the  creditor  is  limited  to  the  loss  occasioned  by 
his  negligence  in  respect  to  presentment  and  notice;®"*  the  con- 
trary view  is  better,  that  is,  the  indorsee  of  a  collateral  bill  or 
note  should  discharge  a  holder's  duties,  for  the  legal  effect  of 
taking  a  bill  or  note  as  collateral  security  is,  that  if,  when  the 

59  Daniel,  §  1428.  negan,   1    McLean    (U.    S.)    309,   4 

*0  Prentiss  v.  Danielson,  5  Conn.  Fed.  Cas.  2,205. 

175,  13  Am.  Dec.  52 ;  Mead  v.  Small,  «a  Kramer  v.   Sandford,  4  Watts 

2  Me.  207,  11  Am.  Dec.  62;  Perry  &  S.  (Pa.)  328,  331,  39  Am.  Dec.  92; 

V.  Green,  19  N.  J.  L.  61,  38  Am.  Dec.  Wilson  v.  Senier,  14  Wis.  38. 

536.  63  Van  Wart  v.  Wooley,  3  B.  & 

61  Olendorf  v.  Swartz,  5  Cal.  480,  C.  439. 

63  Am.  Dec.  141 ;  Burrows  v.  Han-  64  Westphal    v.    Ludlow,   6    Fed. 

348,  2  Am.  Lead.  Cas.  260. 


§§  227w-227y         with  collateral  security.  289 

bill  or  note  arrives  at  maturity,  the  holder  is  guilty  of  laches, 
and  omits  duly  to  present  it,  and  to  give  notice  of  its  dishonor, 
the  bill  becomes  money  in  his  hands,  as  between  him  and  the 
person  from  whom  he  received  it.*'* 

§  227w.  Accommodation  paper  as  collateral  security.  Ac- 
commodation paper  may  be  used  as  collateral  security  and  un- 
less the  transferrer  in  addition  to  knowing  that  it  is  accommo- 
dation paper,  knows  also  that  such  use  is  restricted,  he  can  re- 
cover upon  it.®* 

Accommodation  makers  or  indorsers  of  negotiable  paper  are 
not  liable  to  a  holder  thereof,  where  the  same  has  been  fraudu- 
lently diverted  from  the  purpose  for  which  it  was  made  or  the 
indorsement  given,  and  the  holder  has  received  it  solely  as  col- 
lateral security  for  an  antecedent  debt.*'' 

The  maker  of  an  accommodation  note  cannot  set  up  the  want 
of  consideration  as  a  defense  against  it  in  the  hands  of  a  third 
person,  though  it  be  there  as  collateral  security  merely.*^ 

§  227x.  Collateral  released  or  lost.  If  a  creditor,  having  in 
his  hands  collateral  security,  relinquishes  or  loses  it  by  his  wilful 
acts  or  through  his  negligence,  the  surety  will  be  discharged.*^ 

A  surety  is  not  released  by  delay  on  the  part  of  the  creditor 
in  enforcing  collateral  security  for  the  debt ;  and  the  creditor 
or  obligee  is  not  required  to  resort  to  such  other  security  to 
enforce  the  payment  of  his  claim.'^* 

§  227y.  Miscellaneous.  A  guarantee  has  no  right  to  sur- 
render to  the  debtor,  collateral  securities  held  by  him,  and  if  he 
does  so  without  the  guarantor's  consent  or  if  he  releases  other 
security,  the  guarantor  will  be  discharged  to  the  extent  of  the 
value  of  the  collaterals  surrendered  or  the  security  released.'^^ 

«5  Peacock   v.    Pursell.    14   C.    B.  122,    32    S.    E.    1002;    Otis   v.   Von 

(N.    S.)    728;   Rumsey   v.    Laidley,  Starch,  15  R.  I.  41,  23  Atl.  39;  Grif- 

34  W.  Va.  721.  12  S.  E.  866,  26  Am.  feth  v.  Moss,  94  Ga.  199,  21   S.  E. 

St.  Rep.  935.  463. 

e«Dunn  V.  Western,  71  Me.  270;  ''»  Thorn  v.  Pinkham,  84  Me.  101. 

Continental      National      Bank      v.  24  Atl.  718,  30  Am.  St.  Rep.  335; 

Townsend,  87  N.  Y.  8.  Jones   v.    Tincher,    15   Ind.   308,   11 

67  Sutherland  v.  Mead,  80  N.  Y.  Am.  Dec.  92 ;  Osborne  v.  Smith,  18 

S.  504,  80  App.  Div.  103.  Fed.  126,  5  McCrary  487. 

*S  Lord  V.  Ocean  Bank,  20  Pa.  St.  '^^  Foerderer  v.  Moors,  91  Fed.  476, 

384;  Miller  v.  Earned,  103  111.  579.  ZZ  C.  C.   A.  641;  Holmes  v.   Will- 

Contra,  Boykin  v.  Bank  of  Mobile,  lams,  177  111.  386,  53  N.  E.  93;  Lan- 

72  Ala.  262,  47  Atl.  Rep.  411.  caster  First  National  Bank  v.  Shrei- 

6»  Parsons  v.  Harrold,  46  W.  Va.  ner,  110  Pa.  St.  188,  20  Atl.  718. 


290  NEGOTIABLE    INSTRUMENTS.  §  227y 

A  transferree  taking  collateral  by  way  of  substitution  for  other 
collateral  surrendered  becomes  a  holder  for  value7^ 

Though  the  holder  have  in  his  hands  collateral  security  for  the 
payment  of  the  instrument,  the  indorser  cannot  compel  him  to 
sue  the  maker  or  to  enforce  his  security.  If  the  indorser  desires 
the  benefit  of  any  security  held  by  the  creditor,  he  must  pay  the 
debt,  fulfill  the  contract  and  enforce  his  right  of  subrogation  to 
such  securities.''^ 

Where  one  security  is  accepted  by  the  creditor  in  satisfaction 
of  another,  the  debt  evidenced  by  the  latter  is  discharged  ;'^'*  but 
one  merely  taking  a  security  as  collateral  for  a  pre-existing  debt 
does  not  discharge  the  debt  unless  it  is  paid  or  the  debtor  is  in- 
jured by  the  laches  of  the  creditor  ;^^  payment  to  the  creditor  of 
collateral  held  as  security  for  the  debt,  or  a  sale  of  it  and  the 
appropriation  of  the  proceeds  by  the  creditors,  operates  as  a  satis- 
faction of  the  debt ;  and  where  the  amount  received  is  less  than 
the  debt  it  will  be  considered  as  satisfaction  pro  tanto;"^^  and  if 
the  creditor  converts  the  security  so  as  to  be  unable  to  deliver 
it  when  the  debtor  is  willing  to  pay,  the  amount  thereof  must  be 
credited  upon  the  debt.'^^ 

The  fact  that  plaintifif  holds  collateral  security  for  the  note  in 
suit  or  that  he  has  been  so  negligent  in  disposing  of  such  col- 
lateral that  the  maker  would  have  a  cause  of  action  against  him 
therefor,  is  not  a  good  defense  to  an  action  at  law  f^  that  a  bill 
or  note  was  given  as  collateral  security  and  without  valuable  con- 
sideration is  a  good  defense  as  between  the  parties  privy  to  it, 
that  is,  the  consideration  is  open  to  inquiry. 

TaVoss  V.  Chamberlain,  139  Iowa  158  111.  88.  42  N.  E.  129,  30  L.  R.  A. 

569.  117  N.  W.  269.  380;  Farn.sley  v.  Anderson  Foundry 

73  First  National  Bank  v.  Wood,  etc.   Works,   90   Ind.   120;    Hunt  v. 

71    N.    Y.    405;    German- American  Nevers.   15  Pick.  500,  26  Am.   Dec. 

Bank  v.  Milliman,  31   N.  Y.  Misc.  616;  Dismukes  v.  Wright,  20  N.  C. 

87,  65  N.  Y.  Supp.  242.  74.  ^ 

'''*  Fidelity  Insurance  etc.  v.  Shen-  ''^  Ashton's  Appeal,  73  Pa.  St.  153. 

andoah  Valley  Railroad  Co.,  86  Va.  ''^  Taggard  v.  Curtenius,  15  Wend. 

1.  9  S.  E.  759,  19  Am.  St.  Rep.  858.  155 ;  Ambler  v.  Ames.  1  App.  Cas. 

''5  Dugan  V.  Sprague,  2  Ind.  600;  (D.   C.)    191;   Carson  v.   Buckstaff, 

Day  V.  Neal.  14  Johns.  404 ;  Dickin-  57  Neb.  262,  77  N.  W.  670. 

son  V.  King,  28  Vt.  378.  '"» Leighton    v.    Bowen,    75    Me. 

"^^  Levy  V.  Chicago  National  Bank,  504. 


§§  227z-227aa        with  collateral  srcltrity.  291 

§  227z.  Form  of  guaranty  of  collateral  note.  The  following 
is  a  form  of  a  guaranty  of  a  collateral  note: 

GUARANTY  OF  COLLATERAL  NOTE. 

IN  CONSIDERATION  of  One  Dollar  ($1.00)  and  other  val- 
uable consideration  paid  to  the  undersigned,  the  receipt  of  which 
IS  hereby  acknowledged,  and  of  the  making,  at  the  request  of  the 
undersigned,  of  the  loan  evidenced  by  the  within  note  and  con- 
tract, the  undersigned  hereby  jointly  and  severally  guarantee  to 
the  CITY  TRUST  BANK,  of  Indianapolis,  its  successors,  en- 
dorsers or  assigns,  the  punctual  payment,  at  maturity,  of  the  said 
note  and  contract  and  of  the  said  loan,  and  hereby  assent  to  all 
the  terms  and  conditions  of  the  said  note  and  contract,  especially 
agreeing  that  so  long  as  the  maker  is  bound  by  the  said  note 
and  contract  and  the  conditions  therein  contained,  that  he  will 
remain  bound — waiving  any  defenses  that  the  maker  or  makers 
could  not  maintain  as  maker. 

The  undersigned  hereby  waives  demand  of  payment,  and  also 
waives  the  protest,  and  notice  of  protest  of  the  within  note. 


§  227aa.  Form  of  note  with  transfer  of  account.  The  fol- 
lowing is  a  form  of  a  promissory  note  with  collateral  security 
in  the  form  of  the  transfer  of  an  account: 

NOTE  WITH  TRANSFER  OF  ACCOUNT. 

$ (Race)     Date 

On  demand  after  date  we  promise  to  pay  to  the  order  of 

THE  CITY  TRUST  BANK 

of  Indianapolis 

DOLLARS 

at  the  office  of  the  CITY  TRUST  BANK,  of  Indianapolis,  value 
received  with  interest. 

Per 

To  secure  the  payment  of  this  note  and  for  value  received  we 
hereby  sell,  transfer  and  assign  to  the  CITY  TRUST  BANK, 
our  right,  title  and  interest  in  the  account  mentioned  herein, 

viz.: ,  and  we 

hereby  constitute  ourselves  as  the  Agents  for  the  said  CITY 
TRUST  BANK,  for  the  purpose  of  collecting  this  account,  and 
agree  to  turn  over  to  the  said  CITY  TRUST  BANK,  of  In- 
dianapolis, the  proceeds  of  said  account  as  soon  as  collected. 


CHAPTER  XXI— B. 

WHO  MAY  SUE— WHO  MAY  BE  SUED. 

§  227bb.  In  general.  §  227hh.  Payee. 

227cc.  Party  in  interest.  227ii.  Drawer. 

227dd.  Holder  may  sue  when  an-         227jj.  Agent. 

other   is   entitled  to  pro-         227kk.  Public  officials. 

ceeds.  22711.  Holder    of    instrument    for 

227ee.  Instruments       payable  to                         collection. 

bearer     or     indorsed  in         227mm.  Who   may    sue — Miscella- 

blank.  neous. 

227ff.  Acceptor.  227nn.  Parties  to  actions — Defend- 

227gg.  Drawee.  ants. 

§  227bb.  Who  may  sue — In  general.  The  statutes  today 
largely  determine  as  to  who  may  sue  on  negotiable  instruments. 
Those  states  which  have  adopted  the  Negotiable  Instruments 
Law  are  governed  by  provisions  of  that  law  and  in  it  there  is  an 
express  provision  that  the  holder  of  a  negotiable  instrument  may 
sue  in  his  own  name  and  it  defines  the  holder  as  the  payee  or  the 
indorsee  of  a  bill  or  a  note  in  possession  thereof  or  its  bearer.* 

These  provisions  are  as  follows :  "The  holder  of  a  negotiable 
instrument  may  sue  thereon  in  his  own  name."^ 

"Holder  means  the  payee  or  indorsee  of  a  bill  or  note,  who  is 
in  possession  of  it  or  bearer  thereof."^ 

Thus  a  holder  is  one  to  whom  a  negotiable  instrument  is  nego- 
tiated, or  to  whom  it  is  transferred  by  operation  of  law. 

Possession  of  a  negotiable  instrument  is  prima  facie  evidence 
of  the  right  of  the  holder  to  sue,'*  and  as  the  term  holder  is  now 
statutory  and  means  the  payee  or  indorsee  of  a  bill  or  note  who 
is  in  possession  of  it,  or  bearer  thereof,^  the  holder  may  sue  on 
it  in  his  own  name,  that  is,  the  payee  or  indorsee  of  negotiable 
paper  who  is  entitled  to  receive  the  sum  for  which  it  calls,  may 
sue  on  it  in  his  own  name.® 

§  227cc.  Party  in  interest.  One  holding  a  full  legal  title  to 
a  negotiable  instrument  by  transfer  may  maintain  an  action  there- 
on against  the  maker  notwithstanding  he  has  no  beneficial  in- 

1  Schmidt  v.  Pegg,  172  Mich.  159,  440,  55,  p.  124,  68  Am.  St.  Rep.  46. 

137  N.  W.  524;  Dennis  v.  Coffin,  16  ^  Qlson   v.   Rosenbloom,   247   Pa. 

Pa.  Dist.  311.  St.  250. 

a  Neg.  Inst.  Law,  §  90.  <*  Olson  v.   Rosenbloom,  247   Pa. 

3  Neg.  Inst.  Law,  §  191,  sub.  7.  St.  250. 

^Brennan  v.   Brennan,   122   Cal. 

292 


§  227dd  WHO  MAY  SUE  OR  BE  SUED.  293 

terest  in  the  proceeds  the  transfer  having  been  made  to  enable 
him  to  reaHze  on  the  claim  in  the  interest  of  the  original  payee.' 

Where  an  instrument  is  payable  to  bearer  or  is  indorsed  in 
blank,  proceedings  may  be  had  in  the  name  of  any  person  who 
is  the  holder  of  the  instrument  without  being  required  to  show 
an  interest  in  it.* 

Agents,  receivers,  assignees,  trustees,  heirs  or  personal  repre- 
sentatives may  sue  on  a  note  or  bill  payable  to  bearer,  or  in- 
dorsed in  blank.^ 

In  some  jurisdictions  there  are  statutes  that  every  action  must 
be  prosecuted  in  the  name  of  the  real  party  in  interest,  except 
that  an  executor,  administrator,  or  trustee  of  an  express  trust 
may  sue  without  joining  with  him,  the  person  for  whose  benefit 
the  action  is  brought.  These  statutes  have  been  construed  as  a 
rule  so  as  to  permit  no  defense  to  a  party  suing  upon  negotiable 
paper  in  order  to  show  that  the  transfer,  under  which  the  party 
proceeding  holds  it,  is  without  consideration  or  subject  to  equity 
between  him  and  his  assignor,  or  merely  for  purpose  of  collec- 
tion or  other  like  defense.-^® 

§  227dd.  Holder  may  sue  when  another  is  entitled  to  pro- 
ceeds. The  owner  and  holder  of  a  negotiable  instrument  may 
maintain  an  action  to  enforce  collection  thereof  even  though  a 
third  party  may  be  entitled  to  the  proceeds.^^ 

Thus,  where  a  promissory  note  was  indorsed  by  the  payee  to  a 
third  party  "for  collection"  for  the  account  of  the  payee,  the 
indorsee  has  such  legal  title  as  to  authorize  him  to  proceed  in  his 
own  name,  subject,  however,  to  the  same  defenses  that  could 
be  made  to  it  in  the  hands  of  the  original  payee.** 

However,  some  jurisdictions  apparently  limit  the  right  of  re- 
covery to  the  real  owmer.*' 

Some  jurisdictions  maintain  that  an  action  may  be  had  in  the 
name  of  a  person  who  is  the  beneficial  owner  of  a  part  only  of 
the  instrument  sued  on,  provided  he  holds  the  legal  title.*^ 

Since  the  legal  title  passes  by  gift  regardless  of  the  question 
of  consideration,  a  donee  may  sue  ;^^  and  a  person  holding  col- 

'  Johnson  v.  Catlen,  27  Vt.  87,  62  N.   Haven   Mfg.   Co.  v.   N.   Haven 

Am.  Dec.  622.  Pulp  Co.,  79  Conn.  127. 

8  Sterling  v.  Bender,  7  Ark.  201,  12  Wilson  v.  Tolson,  79  Ga.  137. 

44  Am.  Dec.  539;  Hovey  v.  Selring,  ^^  Rich  v.  Starbuck,  51  Ind.  87. 

24  Mich.  232,  9  Am.  Rep.  122.  ^^  Allensworth      v.       Moore,      3 

»  Perry  v.  Wheeler,  63  Kan.  870,  Greene  (Iowa)  273. 

66  Pac.  Rep.  1007.  i5  pHtchard  v.  Hirt,  39  Hun  (N. 

10  Hays  V.  Hathorn,  74  N.  Y.  488.  Y.)  378. 

11  Stanley  v.  Penny,  75  Kan.  179; 


294  NEGOTIABLE    INSTRUMENTS.  §  227ee 

laterals  for  the  benefit  of  creditors  may  sue  ;**  also  a  receiver 
may  sue  ;^^  and  where  a  promissory  note  was  attached  and  sold 
under  an  execution,  the  purchaser  was  entitled  to  sue  in  his  own 
name  without  an  indorsement  to  him.-^*  The  holder  of  a  note 
although  not  the  beneficial  owner  may  sue  in  his  own  name  by 
consent  of  the  owner,  and  to  do  so  may  strike  out  his  own  as 
well  as  subsequent  indorsements.*"  And  the  Negotiable  Instru- 
ments Law  has  been  construed  to  permit  an  action  on  a  note  by 
the  party  holding  the  legal  title  to  it,  although  other  parties 
are  beneficially  interested  in  it.*" 

§  227ee.  Instruments  payable  to  bearer  or  indorsed  in  blank. 
A  holder  of  a  negotiable  instrument  payable  to  bearer  or  payable 
to  order  and  indorsed  in  blank  can  sue  on  it  in  his  own  name.** 

Any  holder  of  a  bill  or  note  who  can  trace  a  good  legal  title 
to  it  may  sue  upon  it  in  his  own  name  whether  or  not  he  holds 
the  beneficial  interest  in  it.  And  the  defendant  can  question  the 
title  of  the  holder  only  when  necessary  to  preclude  further  lia- 
bility upon  the  instrument  or  to  let  in  a  defense  which  he  de- 
sires to  set  up.** 

The  holder  may  sue  in  his  own  name  on  an  instrument  which 
has  been  indorsed  in  blank  regardless  of  the  fact  that  subsequent 
indorsements  appear  on  the  instrument  as  these  may  be  stricken 
out  as  unnecessary  to  make  title.*' 

Where  a  negotiable  instrument  is  payable  to  bearer,  the  original 
holder  or  someone  to  whom  the  legal  title  has  been  transferred 
by  delivery  must  bring  suit  on  the  instrument.*^ 

Where  a  negotiable  instrument  is  in  efifect,  payable  to  order, 
and  has  not  been  indorsed  in  blank,  only  the  original  payee  or 
the  person  to  whom  the  instrument  has  been  indorsed  can  main- 
tain an  action  upon  it.*® 

The  person  in  possession  of  a  negotiable  instrument  is  pre- 
sumed to  be  the  owner  and  holder  thereof,  and  may  sue  thereon.** 

1*  Nelson    v.    Edwards,    40   Barb.  herd,  13  D.  C.  66;  In  re  Wagner,  11 

(N.  Y.)  279.  D.  C.  395;  Jump  v.  Leon  192  Mass. 

"Merchants  Loan  and  Trust  Co.  511,  78  N.  E.  532,  116  Am.  St.  Rep. 

V.  Clair,  36  Hun   (N.  Y.)  362.  265. 

18  Fishburn  v.  Londershonsen,  50  ^^Ray  v.  Anderson,  119  Ga.  962, 
Ore.  363,  92  Pac.  1060,  4  L.  R.  A.  47  S.  E.  205;  BoHne  v.  Wilson,  75 
(N.  S.)  1234,  15  Ann.  Cas.  975.  Kan.  829,  89  Pac.  Rep.  678. 

19  Owens  V.  Storm,  78  N.  J.  L.  ^spjabersham  v.  Lahman,  63  Ga. 
154,  72  Atl.  441.  380. 

20  Owens  v.  Storms,  78  N.  J.  L.  24  Moore  v.  Maple,  25  III.  341. 
154,  72  Atl.  441;  Chaffee  v.  Sjai^e  25  Spence  v.  Robinson.  35  W.  Va. 
(Okl.),  148  Pac.  686.  313,  13  S.  E.  1,004. 

21  Bank  of  British  N.  A.  v.  Bar-  26  n.  L  L.,  Sees.  16,  37,  51,  59, 
ling,  46  Fed.  356;  Keyser  v.  Shep-  191. 


§§  227fif-227ii  who  may  sue  or  be  sued.  295 

Delivery  to  enable  the  transferee  to  sue  is  enough  to  constitute 
him  a  proper  plaintiff.^'^ 

The  right  to  sue  cannot  be  rebutted  by  proof  that  he  has  no 
beneficial  interest,  or  by  anything  else  but  proof  of  bad  faith.^ 
Thus,  if  it  were  shown  that  a  party  suing  upon  such  an  instru- 
ment has  no  interest  in  it  and  is  proceeding  against  the  desire  of 
the  party  beneficially  interested,  his  conduct  would  be  in  bad  faith 
and  he  could  not  recover.^ 

§  227ff.  Acceptor.  An  acceptor  for  honor  of  the  drawer  or 
indorser  may  sue  them  upon  the  bill  itself.^® 

If  an  acceptor  or  maker  for  accommodation  pays  the  bill,  he 
cannot  sue  the  drawer  or  indorser  upon  the  bill,  because,  ac- 
cording to  its  terms,  he  is  liable  to  them.  But  he  may  sue  the 
accommodation  party  not  upon  the  bill  but  for  money  paid  at 
his  request.^^ 

§  227gg.  Drawee.  The  drawee  of  a  bill  of  exchange  may 
sue  the  drawer  and  indorser  before  the  bill  has  been  dishonored 
if  he  receives  the  same  by  indorsement.^^ 

§  227hh.  Payee.  A  payee  or  indorsee  may  strike  out  his 
own  and  subsequent  indorsements  and  sue  in  his  own  name,^  as 
he  may  maintain  an  action  for  an  instrument  payable  to  his  order 
without  indorsing  it  as  this  is  the  same  as  making  the  instru- 
ment payable  to  the  payee.^ 

A  negotiable  instrument  payable  to  a  fictitious  payee  is  gen- 
erally treated  as  payable  to  bearer  and  an  action  may  be  brought 
in  the  name  of  any  person,^  so  also  an  instrument  made  payable 
to  a  person  by  a  wrong  name  may  be  proceeded  upon  by  such 
person  in  his  right  name.^*  And  a  payee  may  sue  although  he 
is  only  a  part  owner  of  the  instrument.^'^ 

§  227ii.  Drawer.  A  drawer  of  a  bill  of  exchange  may  sue 
the  acceptor  if  he  has  had  to  pay  the  bill.^*     But  the  drawer 

2^Brigham    v.    Marean,    7    Pick.  33  Qwen  &  Co.  v.  Storms  &  Co., 

(Mass.)    40;    French  v.  Jarvis,  29  —  N.  J.  —   72  Atl.  441. 

Conn.  347.  34  purgin  v.  Bartol,  64  Me.  473; 

2S  Keenan  v.  Blue,  240  111.  177,  88  Davis  v.  Baker,  71  Ga.  33. 

N.  E.  553.  35  Smith  v.  Clapp,  15  Pet.  125,  10 

29  Towne  v.  Mason,  128  Mass.  517.  L.  Ed.  684. 

30  Parsons.  36  Porter  v.  Kapiolane,  18  Hawaii 

31  Bell    V.    Norwood,    7   La.    95;  299:  Neil  v.  Dillon,  3  Mo.  59. 
Stark  V.  Alford,  49  Tex.  260.  37  Lundberg   v.    N.    W.    Elevator 

32  Swope  V.  Ross,  40  Pa.  180,  80  Co.,  42  Minn.  37,  43  N.  W.  185. 
Am.  Dec.  567.  38  Thurman    v.    Van    Brunt,    19 

Barb.  410. 


296  NEGOTIABLE    INSTRUMENTS.  §  227jj 

cannot  sue  the  acceptor  on  a  refusal  to  accept,  for  in  such  case 
the  proceeding  must  be  special  on  the  contract  to  accept.  And 
in  general  a  drawer  of  a  bill  of  exchange  which  is  payable  to 
his  own  order,  or  which  has  been  taken  up  by  him,  may  main- 
tain an  action  thereon  against  the  acceptor  without  an  indorse- 
ment or  after  striking  out  the  payee  or  any  subsequent  indorse- 
ment.^® 

§  227jj.  Agent.  Where  a  negotiable  instrument  is  made  to 
an  agent  or  a  private  corporation  or  association  with  the  addi- 
tion of  any  agency  or  office,  he  may  sue  upon  it  in  his  own 
name.  The  addition  being  merely  descriptio  personae^^  Thus 
an  agent  may  sue  in  his  own  name  upon  a  negotiable  instrument 
indorsed  in  blank.^* 

Indorsement  of  a  negotiable  instrument  to  an  agent  transfers 
title  thereto  as  to  all  parties  except  his  principal,  and  the  agent 
may  maintain  an  action  thereon  in  his  own  name,^  but  when 
an  express  contract  is  made  with  an  agent  by  a  third  person,  the 
agent  may  maintain  an  action  upon  it,  though  he  may  be  known 
to  act  as  agent  and  though  his  principal  may  not  be  entitled  to  a 
like  action  on  the  contract.^^ 

When  a  negotiable  instrument  is  payable  to  a  certain  person 
by  name,  but  describing  him  as  agent  of  another  person,  as  "Jo^" 
Wilson,  agent  for  William  Jackson,"  either  the  agent  or  prin- 
cipal may  sue ;  but  there  are  decisions  to  the  contrary ;  and  proof 
that  the  party  suing  is  the  mere  agent  of  the  holder,  having 
neither  title  nor  possession,  but  having  before  action  brought, 
returned  the  instrument  to  his  principal,  will  defeat  the  action 
though  the  agent  sued  in  his  own  name  by  order  of  the  prin- 
cipal.'*^ 

In  case  of  a  pledgee,  the  indorsement  and  delivery  of  a  nego- 
tiable instrument  passes  the  legal  title  to  the  holder  with  power 
to  collect  by  suit  or  otherwise,  subject  to  the  rights  of  the  in- 
dorser  as  to  the  application  of  proceeds.^^  The  payee  named 
in  a  negotiable  instrument,  or  the  holder  of  such  instrument, 
may  bring  suit  on  it  in  his  own  name,  although  he  holds  such 
instrument  as  trustee  for  another  and  is  expressly  named  in  his 

^'^  Cooper   V.   Jones,    79  Ga.   379,  Z7  Am.  Dec.  602 ;  Poorman  v.  Mills, 

4  S.  E.  916;  Pilkington  v.  Woods,  10  35  Cal.  118,  95  Am.  Dec.  90. 

Ind.  432.  43  Poor  v.  Guilford,  10  N.  Y.  273, 

40  Johnson   v.   Catlin,  27  Vt.  87,  61  Am.  Dec.  749. 

62  Am.  Dec.  622.  44  Whitford  v.  Burchmyer,  1  Gill 

4iPearce    v.    Austin,    4    Whart.  (Md.)  127,  39  Am.  Dec.  640. 

(Pa.)  489,  34  Am.  Dec.  523.  45  Lamberton  v.  Windon,  12  Minn. 

42  Chase  y.  Burnham,  13  Vt.  447,  232,  90  Am.  Dec.  301, 


§§  227kk-22711  who  may  sue  or  be  sued.  297 

representative   capacity  as   receiver,  assignee   in  bankruptcy  or 
insolvency  or  as  guardian."*® 

§227kk.  Public  officials.  A  negotiable  instrument  made 
payable  to  a  corporate  officer  or  agent  may  be  proceeded  upon 
by  the  corporation  as  plaintiff;*''  and  where  a  bill  or  note  is  made 
payable  or  is  indorsed  to  a  certain  person,  designated  by  his 
official  title,  suit  may  be  brought  in  his  name,  or  it  may  be 
brought  in  the  name  of  the  principal  whom  he  officially  repre- 
sents, when  the  principal  is  named  ■,'*^  and  if  the  principal  be  not 
named,  evidence  is  admissible  to  show  who  the  principal  is.*" 

The  government,  federal,  state  or  county,  may  bring  suit  in 
its  own  name  on  negotiable  instruments  belonging  to  it  although 
it  is  made  payable  to  one  of  its  officers.'*® 

When  an  instrument  is  made  payable  to  a  treasurer  or  cashier 
without  the  name  of  the  corporation,  and  the  corporation  sues 
upon  the  instrument,  it  should  be  averred  that  it  was  made  pay- 
able to  the  corporation  by  the  name  of  the  official,  and  then  the 
production  and  possession  of  the  instrument  by  the  corporation 
is  sufficient  prima  facie  evidence  for  maintaining  the  suit.*** 

Where  the  negotiable  instrument  is  made  payable  to  desig- 
nated officer  without  naming  him,  the  action  should  be  brought 
in  the  name  of  the  holder  of  the  office  at  the  time  the  suit  is 
brought.*^^ 

It  is  a  general  rule  that  public  officers  can  not  proceed  in  their 
individual  capacity  on  a  negotiable  instrument  made  payable  to 
them  in  their  representative  capacity.^^ 

§  22711.  Holder  of  instrument  for  collection.  The  holder  of 
a  negotiable  instrument,  transferred  for  collection,  may  sue  on 
the  same  in  his  own  name  ;^*  one  who  is  the  holder  of  a  nego- 
tiable instrument  under  a  restrictive  indorsement  "for  collection," 
or  "without  recourse  and  without  warranty  of  any  character," 
or  as  the  pledgee  of  a  note  held  as  collateral,  in  each  instance  is 

4«Rice  V.   Rice,  106  Ala.  636,  17  4  L.  Ed.  362;  Rogers  v.  Gibson,  15 

So.  628;   Collier  v.   Barnes,  64  Ga.  Ind.  218. 

484;  Wheelock  v.  Wheelock,  5  Vt.  ^*  Southern  Life  Ins.  etc.  Co.  v. 

433.  Gray,  3  Fla.  262. 

'*^  Friedllne  v. "  Carthage  College,  ^*  Tainter  v.  Winter,  33  Me.  348. 

23  111.  App.  494;  Morristown  Look-  ^^  State  v.  Torinus,  26  Minn.  1,  49 

out  Bank  v.  Aull,  93  Tenn.  645,  27  N.   W.  259,  37  A.  R.  395;   Oconta 

S.  W.  1014,  42  Am.  St.  Rep.  934.  County  v.  Hall,  42  Wis.  59. 

48  Young  V.  Murray,  3  Ga.  App.  ^4  Qrr  v.  Lacy,  18  F.  Cas.  10,  589, 
204.  59  S.  E.  717.  4  McLean  243 ;  Meyer  v.  Foster,  147 

49  Pratt  V.  Topeka,  12  Kan.  570.         Cal.    166,    81    Pac.   40;    Conference 
SODugan  v.  U.  S.,  3  Wheat.  170,      Evangelical  Assn.  v.  Plaggc,  177  111. 

431,  53  N.  E.  76. 


298  NEGOTIABLE    INSTRUMENTS.  §    227mm 

presumed  to  be  the  owner  and  holder  thereof  and  may  sue  on 
the  same  f'^  and  the  authority  to  collect  is  not  revoked  by  the 
death  of  the  owner.^® 

Under  the  Negotiable  Instruments  Law,  the  indorsee  for  col- 
lection may  sue  by  the  express  provision  that  a  restrictive  in- 
dorsement confers  upon  the  indorsee  the  right  to  bring  any  action 
that  the  indorser  could  bring.®'^ 

Some  jurisdictions  maintained  that,  before  the  adoption  of  the 
Negotiable  Instruments  Law,  a  holder  for  collection  was  not 
the  real  party  in  interest  and  was  not  entitled  to  sue .** 

§  227mm.  Who  may  sue — Miscellaneous.  A  restrictive  in- 
dorsement confers  upon  the  indorsee  the  right  to  bring  any  action 
thereon  that  the  indorser  could  bring.  The  Negotiable  Instru- 
ments Law  provides  as  follows: 

"A  restrictive  indorsement  confers  upon  the  indorsee  the  right 
*  *  *  /o  bring  any  action  thereon  that  the  indorser  could  bring. "^^ 

And  it  has  been  decided  that  an  indorsee  of  a  negotiable  in- 
strument who  takes  it  under  a  qualified  indorsement  as  "with- 
out recourse"  may  sue  thereon  in  his  own  name ;  and  the  holder 
of  a  negotiable  instrument  may  maintain  an  action  on  it  in  his 
own  name  although  it  is  not  payable  to  him  nor  assigned  or  in- 
dorsed to  him,  unless  his  ownership  is  overcome  by  proof.*® 

Where  the  holder  of  a  bill  which  had  been  indorsed  in  blank 
dies,  and  his  executor,  not  wishing  his  own  name  to  appear, 
procured  another  to  bring  action  in  his,  the  other  person's  name 
against  the  acceptor,  but  did  not  deliver  the  bill  until  after  the 
suit  was  filed,  the  court  said  that  the  plaintiff  was  neither  in 
actual  nor  constructive  possession  and  could  not  maintain  the 
action.*^ 

When  an  instrument  made  to  raise  money  is  made  payable  to 
a  certain  bank  which  never  had  any  interest  in  it,  and  is  then 
discounted  by  another  party,  the  latter  may  proceed  upon  it  as 
payable  to  him  by  the  name  of  the  bank.*^ 

A  person  for  whom  a  note  is  intended  may  sue  on  it  even 
though  there  is  a  mistake  in  the  name,  as  well  as  when  the  name 
is  merely  fictitious  and  intended  to  be  such.*' 

55  Mersick  v.  Alderman,  77  Conn.  ®<*  Callahan  v.  Louisville  Dry 
634,  60  Atl.  109.                                         Goods  Co.,  140  Ky.  712,  131  S.  W. 

56  Moore  v.  Hall,  48  Mich.  143,  11      995. 

N.  W.  844.  «i  Emmett  v.  Tottenham,  8  Exch. 

57  Smith   V.    Bayer,   46  Ore.    143,      884. 

79  Pac.  497,  114  A.  S.  R.  858.  *^'^'E\\\o\.i  v.  Abbot.  12  N.  H.  549. 

58  Rich  V.  Starbuck,  51  Ind.  87;  «3  Porter  v.  Kapielani,  18  Hawaii 
Andrews  v.  McDaniel,  68  N.  C.  385.      299. 

59Neg.  Inst.  Law,  §  Z7,  sub.  2. 


§  227mm  who  may  sue  or  be  suejd.  299 

When  a  negotiable  instrument  is  specially  indorsed  to  an- 
other, he  can  not  strike  out  his  name  and  insert  that  of  another, 
and  thus  give  the  latter  a  right  to  maintain  a  suit  ;*"*  for  if  an  in- 
strument be  indorsed  specially  to  a  particular  person  without  fur- 
ther transfer,  no  one  but  such  person  or  his  representative  can 
sue  on  the  same;  but  one  who  is  the  holder  of  an  instrument 
under  an  indorsement  in  blank  may  fill  it  in  his  own  name  before 
bringing  suit,  or  at  the  trial  or  after  the  trial  under  certain  con- 
ditions ;®^  and  a  holder  may  always  strike  out  a  special  indorse- 
ment when  there  are  blank  indorsements  preceding  it  and  bring 
suit  under  any  indorsement  in  blank.®" 

As  a  general  rule  a  prior  party  on  a  negotiable  instrument 
cannot  proceed  against  a  subsequent  party.  However,  in  case 
a  plaintiff  had  originally  indorsed  an  instrument  to  a  defendant 
without  recourse  or  without  consideration,  and  the  latter  had 
indorsed  back  to  him  for  value,  the  plaintiff  may  maintain  his 
action  and  it  would  not  be  objectionable  on  the  ground  of  cir- 
cuity of  action.*"' 

When  an  anomalous  indorser  under  Section  64  of  the  Nego- 
tiable Instruments  Law  pays  an  instrument,  he  has  an  action 
against  the  maker,  but  such  action  is  not  on  the  note  as  it  has 
been  paid  and  extinguished.®^ 

An  action  at  law  can  not  be  maintained  upon  a  negotiable  in- 
strument made  by  several  persons  and  payable  to  one  of  their 
number,  but  if  indorsed  to  a  third  party  he  may  maintain  an  ac- 
tion upon  it.®* 

The  holder  of  the  legal  title  to  a  negotiable  instrument  may 
sue  alone  on  an  instrument  in  which  there  are  other  persons  in- 
terested with  him. 

A  proceeding  on  a  negotiable  instrument  transferred  pending 
suit  thereon  can  not  be  maintained  even  though  it  was  agreed 
at  time  of  transfer  that  action  should  be  continued  in  the  name 
of  the  plaintiff  and  though  the  note  being  indorsed  in  blank  was 
transferred  by  delivery  only  f^  if  the  plaintiff  for  a  valuable  con- 
sideration paid  him  by  a  third  person  and  while  suit  is  still  pend- 
ing agrees  to  transfer  on  demand,  the  note  and  any  judgment 
thereon,  but  no  demand  is  made  before  judgment,  the  plaintiff 

64  Grimes  v.  Piersol,  25  Ind.  246.  ®»  Pitcher   v.    Barrows,    17    Pick. 

«5Whittier    v.    Hayden,    9    Allen  (Mass.)  361,  28  Am.  Dec.  306. 
408.  '■*  Curtis  V.  Sprague,  51  Cal.  239; 

®®Wetherell  v.  Ela,  42  N.  H.  295.  Rosemond  v.  Graham,  54  Minn.  323, 

S''  Bishop   V.   Hayward,   4   T.   R.  56  N.  W.  38,  40  Am.  St.  Rep.  336. 
470.  "^^  Curtis  V.  Bernis,  26  Conn.  1,  68 

«8  Quimby  v.  Varnum,  190  Mass.  Am.  Dec.  377 ;  Cooper  v.  Poston,  1 

211,  76  N.  E.  671.  Duv.  (Ky.)  92,  85  Am.  Dec.  610. 


300  NEGOTIABLE    INSTRUMENTS.  §  227nn 

"till  retains  the  legal  title  and  may  maintain  the  suit  in  his  own 
name  ;''*  so  when  the  point  is  raised  the  plaintiff  must  show  that 
he  had  title  when  suit  was  commenced,  as  an  action  can  not  be 
maintained  by  a  title  acquired  after  suitJ^ 

It  is  a  general  rule  under  statutes  that  an  assignee  of  non- 
negotiable  instruments  may  sue  in  his  own  name.'"'* 

In  partnership  cases  all  the  partners  must  join  in  the  suit 
when  the  bill  or  note  is  made  payable  to  or  indorsed  specially 
to  a  firm.  If  one  party  conducts  business  under  the  name  of  a 
firm,  he  cannot  recover  on  an  instrument  indorsed  to  the  firm  un- 
less he  shows  that  he  alone  composed  the  nominal  firm.  If 
negotiable  paper  be  indorsed  in  blank  to  a  firm,  either  partner 
may  fill  it  up  in  his  own  name  and  sue  even  though  one  of  the 
partners  be  dead.  While  a  partner  cannot  sue  a  firm  of  which 
he  is  a  member,  upon  a  negotiable  instrument  payable  by  it 
to  himself,  a  firm  may  indorse  to  one  member  who  may  sue 
upon  the  instrument. 

§  227nn.  Parties  to  actions — Defendants.  In  equity  and 
under  the  statutes,  all  persons  who  have  or  claim  an  interest 
in  the  subject  matter  of  the  action  or  who  are  necessary  parties 
to  a  complete  determination  of  the  proceedings  are  proper 
parties.'^'* 

It  is  a  general  rule  by  statute  that  makers  and  indorsers  may 
be  joined  as  defendants,''"  and  under  Section  57  of  the  Nego- 
tiable Instruments  Law  it  has  been  held  that  the  holder  in  due 
course  has  an  election  to  sue  any  one  or  all  the  makers  and  in- 
dorsers thereon.'^''  The  better  rule  is  that  sureties  may  be  joined 
but  not  a  guarantor  for,  independently  of  statutes,  the  maker  and 
guarantor  should  not  be  joined,  as  the  contract  of  guaranty  is 
not  a  primary  obligation  to  pay  but  is  an  undertaking  that  the 
debtor  shall  pay.  The  guarantor  is  not  a  promisor  with  the 
maker  as  is  the  case  with  the  surety .'^^ 

''2  Camp  V.  First  National  Bank         ''6  Burdette  v.  Bartlett,  95  U.  S. 

Df  Ocalo,  44  Fla.  497,  33  So.  241,  103  637,  25  L.  Ed.  534;  Hamil  v.  Ward, 

A.  S.  R.  173.  14  Colo.  277,  23  P.  330;  Hoffecker 

73  Burch  V.  Daniel,  109  Ga.  256,  v.  Moon,  21  D.  C.  263. 

34  S.  E.  310.  77  Bank   of    California   v.   Union 

74  Smyth  V.  Strader,  4  How.  404,  Packing  Co.,  60  Wash.  456,  111  Pac. 
11  L.  Ed.  1031 ;  Mussetman  v.  Mac-  573.  See  contra,  Hough  v.  State 
Elhenny,  23  Ind.  4,  85  Am.  Dec.  445 ;  Bank  of  New  Smyrna,  61  Fla.  290, 
Lowrey  v.  Danforth,  95  Mo.  App.  55  S.  462. 

441,  69  S.  W.  39;  Thorn  v.  Myers,  78  Mowery  v.  Mast,  9  Neb.  445,  4 

36  S.  C.  L.  210.  N.  W.  69. 

75  Sullivan  v.  Sullivan  Mfg.  Co., 
14  S.  C.  494. 


WHO  MAY  SUE  OR  BE  SUED.  301 

Joint  indorsers  may  be  sued  jointly.  The  Negotiable  Instru- 
ments Law  provides  that  joint  indorsers  who  indorse  are  deemed 
to  do  so  jointly  and  severally,  and,  consequently,  they  may  be 
sued  jointly,  or  one  of  them  may  be  sued  alone."* 

The  general  rule  is  that  on  a  joint  and  several  note  a  suit 
may  be  had  against  any  one  of  such  makers  severally  or  against 
them  all  jointly  f^  and  while  as  a  general  rule  all  the  joint  mak- 
ers are  necessary  parties,  yet  where  a  joint  maker  is  a  non- 
resident and  has  no  property  in  the  state,  or  is  without  jurisdic- 
tion of  the  court,  he  is  not  a  necessary  party  defendant.^^ 

It  is  a  general  rule  by  statute  that  the  personal  representative 
of  a  deceased  joint  party  may  be  sued  jointly  with  the  sur- 
vivors.®* 

In  some  jurisdictions  a  defendant  when  sued  on  a  negotiable 
instrument  which  he  has  paid  or  which  has  been  assigned  after 
maturity,  may  give  notice  to  the  assignor  to  defend  in  a  suit 
by  the  holder  where  a  privity  exists  between  the  plaintiff  and 
the  person  to  whom  notice  is  given.*' 

A  maker  may  be  sued  in  a  fictitious  name  used  by  him  or  by 
his  real  name.  And  when  the  wrong  name  of  payee  is  used, 
such  payee  is  not  a  necessary  party  upon  a  proceeding  by  the 
real  owner.** 

By  statute  in  some  jurisdictions,  the  holder  of  a  negotiable 
promissory  note  may  maintain  separate  actions  and  recover  sep- 
arate judgments,  against  each  party  liable  thereon.  The  recovery 
of  a  judgment  by  such  holder,  against  an  indorser  on  such  in- 
strument, is  no  bar  to  a  subsequent  action  thereon  against  the 
maker.*^  Such  statutes  usually  provide  that  persons  severally 
and  immediately  liable  upon  the  same  instrument  may,  all  or 
any  of  them,  be  included  in  the  same  action,  at  the  option  of  the 
plaintiff.  Often  in  such  jurisdictions  the  statutes  further  pro- 
vide that  the  holder  may  institute  one  suit  against  the  whole  or 
any  number  of  the  parties  liable  to  such  holder,  but  shall  not. 
at  the  same  term  of  court,  institute  more  than  one  suit  on  such 
instrument,  provided,  however,  that  no  judgment  shall  be  ren- 
dered in   such   suit  against  any  maker  of  a  promissory  note, 

''^Hodgens  v.  Jenings,  148  App.  334;   Goodwin   v.   Burton,   57   Fed. 

Div.  879,  133  N.  Y.  S.  584.  Civ.  App.  586,  118  S.  W.  587. 

80  Chase  v.   Evoy,   58   Cal.   348;  s^Pruitt  v.   Jones.   14  Fed.   Civ. 
Stevens  v.  Caten,  152  111.  56,  37  N.  App.  84,  36  S.  W.  502. 

E.  1,023.  84Vigan  v.  Mandel,  167  Ind.  586, 

81  Dennett  v.   Chick,  2  Me.   191,  79  N.   E.  899,   119  A.   S.   R.   515; 
11  Am.  Dec.  59.  Tuggle  v.  Cave  Spring  Bank,  8  Ga. 

82  Bostwick  V.   McEvoy,   62   Cal.  App.  291,  68  S.  E.  1070. 

496;  Davis  v.  Wildinson,  2  N.  C.         85  Morrison   et  al.  v.   Fishel,  64 

Ind.  177, 


302  NEGOTIABLE  INSTRUMENTS. 

drawer,  or  acceptor  of  a  bill,  unless  suit  is  brought  in  the  county 
where  one  or  more  of  such  makers,  drawers,  or  acceptors  reside 
at  the  time  such  suit  is  begun. 

Many  jurisdictions  have  enacted  statutes  permitting  actions 
and  judgments  given  jointly  against  all  the  parties  to  a  nego- 
tiable instrument,  whether  makers,  drawers,  indorsers,  or  ac- 
ceptors, or  against  any  one,  or  any  intermediate  number  of 
them.^' 

An  action  to  enforce  a  joint  instrument  must  be  brought 
against  all  the  joint  parties.**" 

88  Lowell  V.   Bickford,  201   Mass.  ^7  Sharpe  v.  Baker,  —  Ind.  App. 

543.  88  N.  E.  1 ;  Hoffecker  v.  Moon,  — ,  99  N.  E.  44. 
21  D.  C.  263;  Young  v.  Warner,  6 
App.  D.  C.  433. 


PART  II. 

PLEADINGS,  EVIDENCE  AND  TRIAL  PROCEDURE  AS 
TO  BILLS,  NOTES  AND  CHECKS. 


CHAPTER  XXII. 

PLEADINGS— IN  GENERAL. 

§  228.  Meaning  of  term.  §  230.  The  complaint  or  declaration. 

229.  Classes   and   order   of  plead-         231.  Pleadings  after  complaint  or 
ings.  declaration. 

§  228.  Meaning  of  term.  The  mutual  formal  allegations  of 
the  parties  in  court,  in  affirmance  or  denial  of  the  cause  of  action, 
are  called  the  pleadings.^  Thus,  if  a  party  desires  to  collect  a 
note,  bill  or  check  by  suit,  his  attorney  prepares  for  him  a  state- 
ment of  his  case  in  writing.  The  attorney  of  the  party  proceeded 
against  prepares  a  statement  of  the  defense  relied  on.  These 
two  statements  would  constitute  the  pleadings  in  the  case.  Their 
object  is  to  apprise  the  court  of  the  exact  point  or  points  con- 
cerning which  its  judgment  is  desired.  In  order  to  secure  this 
object  numerous  technical  rules  have  been  from  time  to  time 
adopted,  tending  to  certainty,  clearness  and  brevity,  in  the  state- 
ment of  the  real  material  issue. 

§  229.  Classes  and  order  of  pleadings.  The  questions,  pre- 
sented to  the  court  in  an  action  on  a  bill,  note  or  check,  or,  in 
fact,  in  any  action  at  law,  may  be  grouped  in  three  classes : 
( 1 )  Has  the  court  to  which  the  process  has  been  returned  author- 
ity to  hear  and  determine  the  points  in  controversy?  (2)  Has 
the  action  itself  been  properly  instituted?  (3)  Upon  the  merits 
of  the  controversy  which  of  the  parties  is  entitled  to  a  judgment, 
and  for  what  amount  shall  such  judgment  be  rendered?  Plead- 
ings on  a  bill,  note  or  check  may,  therefore,  be  grouped  into  three 
corresponding  classes:  (1)  Pleadings  which  raise  the  question, 
whether  the  court  has  the  requisite  authority,  called  pleadings 
to  the  jurisdiction.  (2)  Pleadings  which  raise  the  question, 
whether  the  action  has  been  properly  instituted,  called  pleadings 

1  Bowman  v.  McLaughlin,  45  States,  151  U.  S.  164,  38  L.  Ed.  112; 
Miss.   461,   489;   Tucker   v.   United      Desmoyer  v.  Hereux,  1  Minn.  17. 

303 


304  NEGOTIABLE    INSTRUMENTS.  §§230-231 

in  abatement.  (3)  Pleadings  which  raise  the  question  whether, 
on  the  merits  of  the  controversy,  the  plaintiff  or  defendant  should 
have  judgment,  and  which  embrace  all  other  pleadings  than  those 
previously  named.  These  three  classes  of  questions  must  be 
raised,  when  raised  at  all,  in  the  foregoing  order. 

§  230.  The  complaint  or  declaration.  The  plaintiff  begins 
his  suit  on  the  bill,  note  or  check  by  filing  in  the  proper  court  a 
statement  in  writing  showing  the  facts  upon  which  he  bases  his 
claim  for  redress.  This  is  called  a  declaration,  complaint,  peti- 
tion or  bill. 

The  first  in  order  then  of  those  pleadings,  which  raise  the 
question  whether  on  the  merits  of  the  controversy  the  plaintiff 
or  defendant  should  have  judgment,  is  the  complaint,  declaration, 
petition  or  bill.  As  above  stated,  this  is  the  plaintiff's  statement 
of  his  cause  of  action.  It  must  contain,  in  legal  form  and  with  all 
the  necessary  technical  averments,  a  clear  and  concise  description 
of  the  facts  of  which  he  complains,  of  the  damage  which  he  has 
sustained,  and  of  the  remedy  for  which  he  seeks.^ 

The  caption  specifies  the  state,  county,  court  and  term,  the 
name  of  the  parties  and  of  the  action.  Then  follows  a  full  and 
formal  description  of  the  cause  of  action,  which  forms  the  main 
body  of  the  complaint  or  declaration,  and,  of  course,  varies  ac- 
cording to  the  circumstances  of  each  case.  The  conclusion  states 
the  damages  as  laid  in  the  praecipe  and  writ.  The  declaration 
thus  framed  is  signed  by  the  plaintiff's  attorney,  and  filed  in  the 
clerk's  ofl5ce.  The  time  within  which  pleadings  must  be  filed  is 
regulated  by  certain  rules  which  the  courts  are  authorized  to  es- 
tablish ;  and  which  become  the  law  of  the  court  establishing  them. 

§231.     Pleadings  after  complaint  or  declaration.     To  the 

complaint  or  declaration  on  the  note,  bill  or  check  the  defendant 
may  demur,  denying  that  the  facts  alleged  concerning  the  bill, 
note  or  check  constitute  a  cause  of  action ;  or  he  may  plead  in 
bar,^  either  by  traverse,"*  or  by  confession  and  avoidance.*^  Upon 

2  As  to  form  and  essentials  of  4  DJci^inson  v.  Gray  (Ky.),  9  S. 
complaint,  see,  Beggs  v.  Arnotte,  W.  281,  282.  As  to  sufficiency  of 
80  Ala.  179;  Hardee  v.  Lovette,  83  answers  denying  ownership  of 
Ga.  203,  9  S.  E.  680;  Baldwin  v.  plaintiff,  see  note  66  L.  R.  A.  513; 
Humphrey,  75  Ind.  153;  Adams  v.  and  as  to  right  to  plead  incon- 
Kerns,  11  Ind.  346;  Parry  v.  Hen-  sistent  defenses,  see  note  48  L.  R. 
derson,  6  Blackf.  72.    As  to  amend-  A.  194. 

ments    to    pleadings,    see    note  51          ^  Staten  v.  Hammer,  121  la.  499, 

Am.  St.  Rep.  426.  96  N.  W.  964;  Le  Lissa  v.   Fuller 

3  Norton  v.  Winter,  1  Oreg.  47,  Coal  etc.  Co.,  59  Kan.  319,  52  Pac. 
48,  62  Am.  Dec.  297.  886. 


§  231  PLEADINGS — IN  GENERAL.  305 

a  traverse  or  demurrer,  issue  is  immediately  joined;  but  to  a 
confession  and  avoidance  the  plaintiff  may  reply  by  traverse,  or 
demurrer,  or  a  new  confession  and  avoidance,  until,  by  final 
traverse  or  demurrer  issue  is  at  last  attained. 


CHAPTER  XXIII. 


FORMS  OF  COMMON  LAW  PLEADING. 


§  232.  Forms  of  common  law  plead-       §  238.  Indorsee      against      indorser 


ing — In  general. 

DECLARATIONS — NOTE,  BILL  AND 
CHECK. 

233.  Payee  against  maker. 

234.  Indorsee  against  maker. 

235.  Indorsee    against     payee    or 

other  indorsers. 

236.  Declarations — Bills      of      ex- 

change— Drawer  against  ac- 
ceptor. 

237.  Payee     against     drawer     for 

non-acceptance. 


for  non-acceptance. 

ANSWERS — NOTE,  BILL  AND  CHECK. 

239.  Plea. 

240.  Plea  and  affidavit  of  merits. 

241.  Affidavit  denying  execution  of 

instrument. 

242.  Plea  of  payment  by  services. 

243.  Averment  of  set-off. 

244.  Statute  of  limitations. 

245.  Averment  of  arbitration  and 

award. 


§  232.     Forms  of  common  law  pleading — In  general.     The 

following  are  the  most  usual  common  law  forms  of  declarations 
and  answers  on  promissory  notes,  bill  of  exchange  and  bank 
checks.  Should  any  other  forms  be  desired  they  can  be  formu- 
lated by  reference  to  those  forms  herein  set  out. 

§  233.  Declaration  on  promissory  note  by  payee  against 
maker. 

In    the Court   of County. 

To  the -Term,  A.  D.  19 

A.  B. 
vs. 

C.  D. 

A.  B.,  plaintiff,  by  his  attorney,  complains  of  C.  D.,  the  de- 
fendant, in  a  plea  of  trespass  on  the  case  upon  promises: 

For  that,  whereas,  the  defendant  on 

at ,  made  his  promissory  note  in  writing, 

delivered  the  same  to  the  plaintiff  and  thereby  then  and  there 

promised  to  pay  to  the  plaintiff,  or  order, 

dollars, months  after  date  thereof;  (recite 

according  to  the  terms  of  the  note),  which  period  hath  now 
elapsed.  And  being  so  indebted  the  defendant  in  consideration 
thereof  then  and  there  promised  the  plaintiff  to  pay  him  the  said 
sum  of  money,  at  his  request. 

Yet  the  defendant,  though  requested,  has  not  paid  the  same, 
nor  any  part  thereof,  to  the  plaintiff,  but  neglects  and  refuses 
so  to  do. 

306 


§§  234-235  COMMON  law  pleading.  307 

To  the  damage  of  the  plaintiff  of dol- 
lars, and  therefore  he  brings  suit. 

Donald  S.  Morris, 

Attorney  for  Plaintiff. 

(Attach  in  some  jurisdictions  a  copy  of  the  instrument  sued 
con.) 

§  234.  Indorsee  against  maker.  (Caption  and  commence- 
ment same  as  §  233.) 

For  that,  whereas,  the  defendant,  heretofore,  to-wit,  on 

at ,  made  his  promissory 

note  in  writing  and  thereby  promised  to  pay  to  one  E F 

or  order, dollars  in 

months  after  date,  which  period  has  now 

elapsed;  and  the  said  E F then  and  there  indorsed  the 

said  note  to  the  plaintiff,  whereof  the  defendant  then  and  there 
had  notice,  and  by  reason  and  by  force  of  the  statute  in  such 
case  made  and  provided,  the  said  defendant  became  liable  to  pay 
the  said  plaintiff  the  said  sum  of  money  in  said  note  specified, 
according  to  the  tenor  and  effect  of  the  said  note  and  of  the 
said  endorsement  so  thereon  made.  And  being  so  indebted,  the 
defendant,  in  consideration  thereof,  then  and  there  promised  the 
plaintiff  to  pay  him  the  said  sum  of  money,  at  his  request. 

Yet  the  defendant,  though  requested,  has  not  paid  the  same, 
nor  any  part  thereof,  to  this  plaintiff,  but  neglects  and  refuses 
so  to  do. 

To  the  damage  of  the  plaintiff  of dol- 
lars, and  therefore  he  brings  suit. 

Donald  S.  Morris, 

Attorney  for  Plaintiff. 

(Attach  in  some  jurisdictions  copy  of  instrument  and  indorse- 
ment.) 

§  235.  Indorsee  against  payee  or  other  indorsers.  (Caption 
and  commencement  same  as  §  233.) 

For  that,  whereas,  heretofore,  to-wit,  on 

at ,  one  E F made  his  promissory 

note  in  writing  and  thereby  promised  to  pay  to  the  defendant. 

C.  D.,  or  order dollars 

months  after  the  date  thereof,  which  period  has  now  elapsed. 
And    the    defendant,  C.  D.,  then    and    there  indorsed    the  said 

note  to  the  said  plaintiff ;  and  the  said  E F did  not  pay 

the  amount  of  said  note,  although  the  same  was  duly  presented 
to  him,  of  all  which  the  defendant  then  and  there  had  notice. 
And  being  so  indebted,  the  defendant,  in  consideration  thereof, 


308  NEGOTIABLE    INSTRUMENTS.  §§  236-237 

then  and  there  promised  the  plaintiff  to  pay  him  the  said  sum  of 
money,  at  his  request. 

Yet  the  defendant,  though  requested,  has  not  paid  the  same, 
nor  any  part  thereof,  to  the  plaintiff,  but  neglects  and  refuses  so 
to  do. 

To  the  damage  of  the  plaintiff  of dol- 
lars, and  therefore  he  brings  suit. 

Donald  S.  Morris, 

Attorney  for  Plaintiff. 

(Attach  in  some  jurisdictions  copy  of  instrument  and  indorse- 
ments.) 

§  236.  Declaration  on  bill  of  exchange  by  drawer  against 
acceptor.     (Caption  and  commencement  same  as  §  233.) 

For  that,  whereas,  the  plaintiff,  on at 

made  his  bill  of  exchange  in  writing  and 

directed  the  same  to  the  defendant  and  thereby  required  the  de- 
fendant to  pay  him,  the  plaintiff, dollars 

months  after  date  (or  after  sight)  thereof, 

which  period  has  now  elapsed ;  and  the  defendant  then  and  there 
accepted  the  said  bill  and  promised  the  plaintiff  to  pay  the  same 
according  to  the  tenor  and  effect  thereof  and  of  the  acceptance 
thereof. 

Yet  the  defendant,  though  requested,  has  not  paid  the  same, 
nor  any  part  thereof,  to  the  plaintiff,  but  neglects  and  refuses 
so  to  do. 

To  the  damage  of  the  plaintiff  of dol- 
lars, and  therefore  he  brings  suit. 

Donald  S.  Morris, 

Attorney  for  Plaintiff. 

(Attach  in  some  jurisdictions  copy  of  instrument.) 

§  237.  Payee  against  drawer  for  non-acceptance.  (Caption 
and  commencement  same  as  §  233.) 

For  that,  whereas,  the  defendant,  heretofore,  to-wit,  on 

at made  his  bill  of  ex- 
change in  writing  and  directed  the  same  to  one  E F and 

thereby  required  the  said  E F to  pay  to  the  plaintiff,  or 

order,   dollars,   

months  after  date  thereof,  which  period  has  now  elapsed ;  and 
then  and  there  delivered  the  said  bill  to  the  plaintiff;  and  the 

same  was  then  and  there  presented  to  the  said  E F for 

acceptance,  and  said  E F then  and  there  refused  to  ac- 
cept the  same;  of  all  which  the  defendant  had  due  notice. 


§§238-239  COMMON  law  pleading.  309 

Yet  the  defendant,  though  requested,  has  not  paid  the  same, 
nor  any  part  thereof,  to  the  plaintiff,  but  neglects  and  refuses 
so  to  do. 

To  the  damage  of  the  plaintiff  of dol- 
lars, and  therefore  he  brings  suit. 

Donald  S.  Morris, 

Attorney  for  Plaintiff. 
(Attach  in  some  jurisdictions  copy  of  instrument.) 

§  238.  Indorsee  against  indorser  for  non-acceptance.  (Cap- 
tion and  commencement  same  as  §233.) 

For  that,  whereas,  one  E F ,  heretofore,  to-wit,  on 

at ,  made  his  bill 

of  exchange  in  writing  and  directed  the  same  to  one  G H 

and  thereby  required  the  said  G H to  pay  to  the  said 

E F ,  or  order dollars 

months  after  date  thereof,  which  period  has  now 

elapsed;  and  the  said  E F then  and  there  indorsed  the 

said  bill  to  the  defendant,  who  then  and  there  indorsed  and  de- 
livered the  same  to  the  plaintiff,  when  the  same  was  then  and 

there  presented  to  the  said  G H for  acceptance,  and  the 

said  G H then  and  there  refused  to  accept  the  same; 

of  all  of  which  the  defendant  then  and  there  had  due  notice. 

Yet  the  defendant,  though  requested,  has  not  paid  the  same, 
nor  any  part  thereof,  to  the  plaintiff,  but  neglects  and  refuses 
so  to  do. 

To  the  damage  of  the  plaintiff  of dol- 
lars, and  therefore  he  brings  suit. 

Donald  S.  Morris, 

Attorney  for  Plaintiff. 

(Attach  in  some  jurisdictions  copy  of  instrument.) 

§  239.     Plea — Answers — Note,  Bill  and  Check. 

In    the Court    of County. 

To  the Term,  A.  D.  19 

State  of- 


County  of    ' 
A.  B. 

vs. 
C.  D. 

The  defendant,  by  J S ,  his  attorney,  comes  and  de- 
fends and  says  that  he  did  not  promise  as  in  the  plaintiff's 
declaration  alleged. 

And  of  this  he  puts  himself  upon  the  country. 

By  J__-_  S-_.-, 
Attorney  for  Defendant. 


310  NEGOTIABLE    INSTRUMENTS.  §§  240-242 

§  240.     Plea    and   affidavit   of   merits.      (Same    caption    as 
§239.) 

The  defendant,  by  J S ,  his  attorney,  comes  and  de- 
fends and  says  that  he  did  not  promise  as  in  the  plaintiff's  dec- 
laration alleged. 
And  of  this  he  puts  himself  upon  the  country. 

By  J__-_  S__-_, 
Attorney  for  Defendant. 

In    the Court   of County. 

State 
County 
A.  B. 

vs. 
C.  D. 

C D ,  being  duly  sworn,  says  that  he  is  the  defendant 

named  in  the  above  entitled  suit,  and  that  he  verily  believes  he 
has  a  good  defense  to  said  suit  upon  the  merits  to  the  whole  of 
the  plaintiff's  demand. 

C D 

Subscribed  and  sworn  to  before  me,  this 

day  of  __ ,  A.  D.,  19 


of-     \ 


(Official  character.) 

§  241.     Affidavit  denying  execution  of  instrument.     (Same 
caption  as  §  239.) 

C D on  oath  deposes  and  says  that  he  is  the  defendant 

in  the  above  entitled  cause  and  that  he  did  not  make  and  de- 
liver the  instrument  in  writing  in  the  said  declaration  mentioned, 
in  manner  and  form  as  the  plaintiff  as  above  in  that  behalf  al- 
leged. 

And  further  affiant  sayeth  not. 

C D 

Subscribed  and  sworn  to  before  me,  this 

day  of ,  A.  D.,  19 


(Official  character.) 

§242.  Plea  of  payment  by  services.  (Same  caption  as 
§239.) 

The  defendant,  by  J S ,  his  attorney,  comes  and  de- 
fends and  says, 

That,  after  the  said  promissory  note  became  payable,  and  be- 
fore this  action  was  commenced,  to-wit,  on , 

the  plaintiff  agreed  to  receive  and  the  defendant  agreed  to  ren- 


§§243-245  COMMON  law  pleading.  311 

der  to  the  said  plaintiff  his  services  as 

to  the  amount  of  said  note,  and  that  the  defendant  afterwards, 
according  to  said  agreement,  rendered  such  services  to  the  plain- 
tiff to  the  full  amount  due  and  payable  on  said  note. 
And  of  this  he  puts  himself  upon  the  country. 

By  J..__  S— -, 
Attorney  for  Defendant 

§  243.     Averment  of  set-off.    (Same  caption  as  §  239.) 
The  defendant,  by  J S ,  his  attorney,  comes  and  de- 
fends and  says  that  at  the  commencement  of  this  suit,  to-wit,  on 

the - day  of ,  A.  D.  1922_ 

he,  the  plaintiff,  was,  and  still  is,  indebted  to  the  defendant  in 

the  sum  of dollars. 

And  of  this  he  putS  himself  upon  the  country. 

By  J_—  S— ., 
Attorney  for  Defendant, 

§  244.     Statute  of  limitations.    (Same  caption  as  §  239.) 

The  defendant,  by  J S ,  his  attorney,  comes  and  de- 
fends and  says, 

That  the  supposed  cause  of  action  in  the  declaration  mentioned 
was  for  articles  charged  in  a  store  account,  and  that  the  same  did 

not  accrue  to  the  plaintiff  at  any  time  within 

years  next  before  the  commencement  of  this  suit. 

And  of  this  he  puts  himself  upon  the  country. 

By  J____  S_— , 
Attorney  for  Defendant. 

§  245.     Averment  of  arbitration  and  award.     (Same  caption 
as  §239.) 

The  defendant,  by  J S ,  his  attorney,  comes  and  de- 
fends and  says. 

That  on the  plaintiff  and  defendant 

mutually  submitted  the  demand  set  forth  in  the  plaintiff's  dec- 
laration to  the  arbitration  of and 

,  which  submission  was  never  revoked ;  and  that  on 

'. at ,  the  said 

and made  and  pub- 
lished their  award  by  which  they  declared  the  plaintiff  entitled 
to  One  Hundred  ($100.00)  Dollars,  which  has  been  paid  him. 

And  of  this  he  puts  himself  upon  the  country. 

By  J_-__  S_-_-, 
Attorney  for  Defendant. 


CHAPTER  XXIV. 

FORMS  OF  CODE  PLEADING. 


§246.  Forms   of  code   pleading— In      § 
general. 

COMPLAINTS — PROMISSORY    NOTE. 

247.  Complaint      on      promissory 

note  by  payee  against 
maker. 

248.  Same— For  interest  due. 

249.  Same — Note     providing     for 

attorney's  fee. 

250.  Same— Whole     amount     due 

on  failure  to  pay  part. 

251.  Same— Payable    after     sight, 

demand  or  notice. 

252.  Same — Excuse    for    not    set- 

ting out  copy  of  note. 

253.  Same— Lost  note. 

254.  Complaint      on      promissory 

note  by  executor  of  payee 
against  maker. 

255.  Complaint      on      promissory 

note  —  Indorsee  against 
maker. 

256.  Same — Assignee   by    delivery 

against  maker  and  as- 
signor. 

257.  Same  —  Indorsee        against 

maker  and  indorsers. 

258.  Same — Indorsee    against    in- 

dorser — Payable  in  an- 
other state — Negotiable  by 
foreign  statute. 

COMPLAINTS — BILLS    OF    EXCHANGE. 

259.  Complaint     on     bill     of     ex- 

change —  Payee  against 
drawer  on   non-acceptance. 

260.  Same — Payee    against    accep- 

tor on  non-payment. 

261.  Same — Drawer     against     ac- 

ceptor on  non-payment. 

262.  Same  —  Indorsee         against 

drawer   on   non-acceptance. 

263.  Same — Indorsee    against    ac- 
ceptor on  non-payment. 

264.  Same — Indorsee    against    ac- 

ceptor— Payable  at  particu- 
lar place. 

312 


265.  Same   —   Indorsee       against 

drawer,  indorsers  and  ac- 
ceptor on  inland  bill  of  ex- 
change. 

266.  Same  —  Indorsee        against 

drawer  when  payable  at  a 
certain  place. 

267.  Same  —  Indorsee        against 

drawer  —  No  funds  in 
drawer's  hands — Failure  to 
notify  drawer. 

268.  Same  —  Indorsee        against 

drawer — Excuse  for  non- 
presentment — No  effects. 

269.  Same  —  Indorsee        against 

drawer — Demand  and  no- 
tice waived. 

270.  Same — Indorsee    against    in- 

dorser  —  Non-payment  by 
acceptor. 

COMPLAINTS — BANK   CHECK. 

271.  Complaint    on    bank    check — 

Payee  against  drawer. 

272.  Same — Payee  against  drawee. 

273.  Same  —  Drawer     against 

drawee. 

274.  Same — Indorsee    against    in- 

dorsee 

ANSWERS — NOTE,   BILL   AND    CHECK. 

275.  Answer     to     complaint     on 

promissory  note,  bill  of  ex- 
change or  check — General 
denial. 

276.  Same — Denial    of    execution 

of  instrument. 

277.  Same — Want     of    considera- 

tion. 

278.  Same — Partial  want  of  con- 

sideration. 

279.  Same — Without        considera- 

tion as  to  indorsee. 

280.  Same — Illegal  consideration. 

281.  Same — Failure   of  considera- 

tion. 

282.  Same — False  representations. 


§§  246-247  CODE  pleading.  313 

283.  Same— Payment.  285.  Same— That    acceptance    was 

284.  Same — Alteration.  for  accommodation. 

§  246.  Forms  of  code  pleading— In  general.  The  following 
are  the  most  common  code  forms  of  complaints  and  answers  on 
promissory  notes,  bills  of  exchange  and  bank  checks.  Should 
any  other  forms  be  desired  they  can  be  formulated  by  reference 
to  those  forms  herein  set  out : 

§  247.  Complaint  on  promissory  note  by  payee  against 
maker. 


u 
Q 
<! 


« 

o 

M 

m 


State  of- 


-  County. 


ss. 


In  the  Superior  Court. 
January  Term,  19 


Complaint. 


The  plaintiff  complains  of  the  defendant,  and  alleges: 
That  the  defendant,  by  his  note,  a  copy  of  which   is 
%  filed  herewith,  and  made  a  part  of  this  complaint,  promised 

^  to  pay  the  plaintiff  Two  Hundred  Dollars. 

That  said  note  is  now  due  and  unpaid. 
Wherefore,   the    plaintifif    demands  judgment  for  Two 
Hundred  Dollars. 

Donald  S.  Morris, 


Attorney  for  Plaintiif. 


Indianapolis,  Indiana. 

n 

December  30,  19— 

f. 

M 

One  day  after  date,  I  promise  to  pay  to  J S 

Oh 

or  order  Two  Hundred  Dollars. 

O 

o 

Value  received. 

M S 

314  NEGOTIABLE    INSTRUMENTS.  §§  248-250 

§  248.  Complaint  on  promissory  note  by  payee  against 
maker — For  interest  due. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  promissory  note,  a  copy  of  which 

is  filed  herewith,  and  made  a  part  of  this  complaint,  promised  to 

pay  the  plaintiff dollars, 

years  after  date,  with per  cent  per  annum 

interest,  payable  annually. 

That  the  first  annual  installment  of  said  interest  is  now  due 
and  unpaid. 

Wherefore,  plaintiff  demands  judgment  for 

dollars. 

(Copy  of  note.)  (Signature  same  as  in  §  247.) 

§  249.     Same — Note  providing  for  attorney's  fee. 

(Caption  and  commencement  same  as  §  247.) 

That  on  the day  of , 

19 ,  defendant,  by  his  promissory  note,  a  copy  of  which  is 

filed  herewith,  and  made  a  part  of  this  complaint,  promised  to 

pay  the  plaintiff, months  after  date,  the 

sum  of dollars  and 

per  cent  attorney's  fee  (or  a  reasonable  attorney's  fee),  for  col- 
lecting the  same.  (That  a  reasonable  fee  for  plaintiff's  attorney 
in  this  action  is dollars.) 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  note.)  (Signature  same  as  in  §  247.) 

§  250.     Same — Whole  amount  due  on  failure  to  pay  part. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  promissory  note,  a  copy  of  which 

is  filed  herewith,  and  made  a  part  of  this  complaint,  promised  to 

pay   the   plaintiff dollars,    

^ years  after  date,  with per  cent  per  annum 

interest,  payable  annually,  the  whole  sum  of  principal  and  in- 
terest to  become  due  and  payable  upon  failure  to  pay  any  of  said 
installments  of  interest,  or  parts  thereof. 

That  the  defendant  has  failed  to  pay  the  second  installment 

of  said  interest,  which  fell  due  on  the day 

of ,   19 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  note.)  (Signature  same  as  in  §  247.) 


§§   251-253  CODE  PLEADING.  315 

§  251.     Same — Payable  after  sight,  demand  or  notice. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of — — , 

19 ,  the  defendant,  by  his  promissory  note,  a  copy  of  which  is 

filed  herewith,  and  made  a  part  of  this  complaint,  promised  to  pay 

the  plaintiff dollars,   days 

after  sight  (or, days  after  demand),  (or 

days  after  notice). 

That  on  the day  of — ,  19 , 

said  note  was  duly  presented  to  defendant,  with  notice  that  pay- 
ment would  be  required  according  to  its  terms. 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  note.)  (Signature  same  as  in  §  247.) 

§  252.     Same — Excuse  for  not  setting  out  copy  of  note. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  promissory  note,  promised  to  pay 

the  plaintiff,  six  months  after  date dollars, 

with per  cent  per  annum  interest  from  date  until 

paid,  waiving  valuation  and  appraisement  laws. 

That  plaintiff  is  unable  to  set  out  a  copy  of  said  note,  or  give 
a  fuller  description  thereof,  for  the  reason  that  the  same  is  wrong- 
fully in  the  possession  of  the  defendant,  who  refuses  to  deliver  it 
to  the  plaintiff,  although  requested  so  to  do  (or,  is  in  the  hands  of 
A.  B.,  who  refuses  to  surrender  the  same  to  the  plaintiff,  or  give 
him  a  copy  thereof),  (or,  has  been  destroyed  without  the  fault 
of  plaintiff). 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  plaintiff  demands  judgment  for 

dollars. 

(Signature  same  as  in  §247.) 

§  253.     Same — Lost  note. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  promissory  note,  promised  to  pay 

the  plaintiff,  six  months  after  date, dollars, 

with per  cent  per  annum  interest  from  date  until 

paid,  waiving  valuation  and  appraisement  laws. 

That  he  is  unable  to  set  out  a  copy  of  said  note  or  to  file  an  ex- 
hibit of  the  same  herewith,  for  the  reason  that  said  note  is  lost 
and  the  plaintiff  is  unable  to  find  the  same  and  does  not  now  know 
where  it  is ;  that  said  note  was  lost  after  the  maturity  thereof ; 
that  the  plaintiff  never  assigned,  indorsed,  or  otherwise  trans- 


316  NEGOTIABLE    INSTRUMENTS.  §§  254-256 

ferred  said  note,  but  always  has  been,  and  still  is  the  owner  there- 
of ;  that  said  note  is  due  and  unpaid. 

Wherefore,  the  plaintiff  demands  judgment  for 

dollars. 

(Signature  same  as  in  §247.) 

§  254.  Complaint  on  promissory  note  by  executor  of  payee 
against  maker. 

(Caption.) 

The  plaintiff  complains  of  the  defendant,  and  alleges : 

That  on  the day  of , 

19 ,  defendant,  by  his  promissory  note,  a  copy  of  which  is 

filed  herewith,  and  made  a  part  of  this  complaint,  promised  to 

pay  C.  D. dollars,  on  or  before  the 

day  of ,  19 

That  on  the day  of , 

19 ,  in  the  county  of ,  State  of , 

C.  D.  died,  testate,  and  by  his  last  will  and  testament  appointed 
the  plaintiff  the  executor  thereof. 

That  on  the day  of , 

19 ,  the  plaintiff  duly  qualified  and  received  his  letters  as  such 

executor. 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  note.)  (Signature  same  as  in  §  247.) 

§  255.  Complaint  on  promissory  note — Indorsee  against 
maker. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  promissory  note,  a  copy  of  which 

is  filed  herewith,  and  made  a  part  of  this  complaint,  promised 
to  pay  A B ,  or  order, dollars. 

That  the  said  A B indorsed  the  same  to  the  plaintiff. 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  note  and  indorsement.) 

(Signature  same  as  in  §247.) 

§  256.  Same — Assignee  by  delivery  against  maker  and 
assignor. 

(Caption  and  commencement.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  promissory  note,  a  copy  of  which 

is  filed  herewith,  and  made  a  part  of  this  complaint,  promised  to 

pay  the  defendant, — , 

dollars. 


§§257-258  CODE  pleading.  317 

That  defendant, ,  assigned  and  deliv- 
ered said  note  to  the  plaintiff   without   indorsement,   and   said 

is  made  a  defendant,  to  answer  as  to  said 

assignment. 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  note.)  (Signature  same  as  in  §247.)     ,.■ 

§  257.     Same — Indorsee  against  maker  and  indorsers.         ^ 

(Caption  and  commencement.) 

That  on  the day  of , 

19 ,  the  defendant,  A B ,  by  his  promissory  note,  a 

copy  of  which  is  filed  herewith,  and  made  a  part  of  this  com- 
plaint, promised  to  pay  the  defendant,  C D ,  or  order, 

dollars,  at  the  First  National  Bank  of  In- 
dianapolis, Indiana. 

That  the  defendant,  C D ,  indorsed  said  note  to  the 

defendant,  E F ,  who  indorsed  the  same  to  the  plaintiff, 

copies  of  which  indorsements  are  filed  herewith,  and  made  parts 
of  this  complaint. 

That  the  plaintiff  presented  said  note  for  payment  at  its  ma- 
turity', and  payment  was  refused,  of  which  all  the  defendants 
then  had  due  notice. 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  the  plaintiff  demands  judgment  for . 

dollars. 

(Copy  of  note  and  indorsements.) 

(Signature  same  as  in  §247.) 

§  258.  Same — Indorsee  against  indorser — Payable  in  an- 
other state — Negotiable  by  foreign  statute. 

(Caption  and  commencement.) 

That  on  the , — day  of , 

19 ,  at  Buffalo,  New  York,  A B ,  by  his  promissory 

note,  a  copy  of  which  is  filed  herewith,  and  made  a  part  of  this 

complaint,  promised  to  pay  C D ,  or  order, 

dollars, months  after  date,  at 

the  First  National  Bank  of  Buffalo,  New  York. 

That  the  defendant,  C D ,  indorsed  said  note  to  the 

plaintiff  before  maturity. 

That  on  the day  of , 

19 ,  (or  at  the  maturity  thereof),  said  note  was  duly  pre- 
sented at  said  bank,  and  payment  demanded,  which  was  refused, 
of  which  the  defendant,  on  said  day,  had  notice. 

That,  by  an  act  of  the  legislature  of  the.  said  State  of  New 
York,  a  copy  of  which  is  filed  herewith,  and  made  a  part  of  this 


318  NEGOTIABLE   INSTRUMENTS.  §§  259-260 

complaint,  and  which  was  at  the  time  said  note  was  executed 
and  ever  since  has  been  in  force,  said  note  was  and  is  negotiable 
as  an  inland  bill  of  exchange. 

That  said  note  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  note  and  indorsement.) 

(Signature  same  as  in  §  247.) 

(Copy  of  act  of  legislature.) 

COMPLAINTS— BILLS  OF  EXCHANGE. 

§  259.  Complaint  on  bill  of  exchange — Payee  against 
drawer  on  non-acceptance. 

(Caption  same  as  §247.) 

The  plaintiff  complains  of  the  defendant,  and  alleges : 

That  on  the day  of , 

19 ,  the  defendant,  by  his  bill  of  exchange,  a  copy  of  which 

is  filed  herewith,  and  made  a  part  hereof,  directed  to  D 

G ,  requested  the  said  D G to  pay  the  plaintiff,  or 

order, dollars, 

months  after  date,  and  the  same  was,  on  the 

day  of ,  19 ,  at , 

presented  to  said  D G ,  and  acceptance  thereof  de- 
manded, which  was  refused.  (If  a  foreign  bill,  add:  and  said 
bill  of  exchange  was  then  and  there  protested  for  non-accept- 
ance), of  which  defendant  had  due  notice,  but  did  not  pay  the 
same. 

That  there  is  now  due  and  unpaid  thereon  the  sum  of 

dollars,  for  which  plaintiff  demands  judgment. 

(Signature  same  as  in  §247.) 


$120.00  Chicago,  III.,  December  1, 19 

Thirty  days  after  date 

Pay  to  the  order  of  J.  S _ 

One  Hundred  and  Twenty Dollars 

Value  received,  and  charge  the  same  to  the  account  of 
To  D.  G.  M.  S. 

Jamestown,  N.  Y. 


§  260.     Same — Payee  against  acceptor  on  non-payment. 
(Caption  and  commencement  same  as  §  247.) 

That  on ,  at ,  E 

F ,  by  his  bill  of  exchange,  a  copy  of  which  is  filed  here- 


§§  261-262  CODE  PLEADING.  319 

with,  and  made  a  part  hereof,  requested  the  defendant  to  pay 

plaintiff dollars, 

days  after  date. 

That  on  the day  of , 

19 ,  the  defendant  accepted  the  same. 

That  on  the day  of , 

19 ,  the  plaintiff  presented  said  bill  to  the  defendant  for  pay- 
ment, which  was  refused. 

That  the  same  is  now  due  and  wholly  unpaid. 

Wherefore,  etc. 

(Copy  of  bill.)  (Signature  same  as  in  §  247.) 

§  261.     Same — Drawer  against  acceptor  on  non-payment. 

(Caption  and  commencement  same  as  §  247.) 

That  on  the day  of , 

19 ,  plaintiff,  by  his  bill  of  exchange,  a  copy  of  which  is  filed 

herewith,  and  made  a  part  hereof,  requested  the  defendant  to 

pay  E F , ,  dollars 

days  after  date. 

That  the  defendant,  on  the day  of 

,  19 ,  accepted  said  bill. 

That  he  did  not  pay  the  same  when  due,  although  payment 
was  demanded  at  the  maturity  thereof. 

That  said  bill  was  returned  to  the  plaintiff,  and  he  has  been 
compelled  to  pay  the  same  to  the  said  E F 

That  the  same  is  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill.)  (Signature  same  as  in  §247.) 

§  262.     Same — Indorsee  against  drawer  on  non-acceptance. 

(Caption  and  commencement  same  as  §247.) 

That  on ,  at ,  the 

defendant,  by  his  bill  of  exchange,  a  copy  of  which  is  filed  here- 
with, and  made  part  of  this  complaint,  requested  G H to 

pay  E F , dollars 

months  after  date. 

That  E F ,  on ,  assigned  the 

same  to  plaintiff  by  indorsement. 

That  plaintiff,  on ,  presented  said  bill  to 

G H ,  who  refused  to  accept  the  same,  of  which  the  de- 
fendant, at  the  time,  had  due  notice. 

That  the  same  is  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill  and  indorsement.) 

(Signature  same  as  in  §247.) 


320  NEGOTIABLE   INSTRUMENTS.  §§  263-2G5 

§  263.     Same — Indorsee  against  acceptor  on  non-payment. 

(Caption  and  commencement  same  as  §  247.) 

That  on ,  19 ,  at , 

E.  F.,  by  his  bill  of  exchange,  a  copy  of  which  is  filed  herewith, 
and  made  a  part  hereof,  requested  the  defendant  to  pay  G.  H., 

or  order, dollars, days  after 

sight. 

That  the  defendant,  on  the day  of 

,  19 ,  accepted  said  bill. 

That  the  said  G.  H.  indorsed  the  same  to  plaintiff. 

That  on  the day  of , 

19 ,  plaintifif  presented  said  bill  to  the  defendant  for  pay- 
ment, which  was  refused. 

That  the  same  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill  and  indorsement.)   (Signature  same  as  in  §247.) 

§  264.  Same — Indorsee  against  acceptor — Payable  at  par- 
ticular place. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  E.  F.,  by  his  bill  of  exchange,  a  copy  of  which  is  filed 

herewith,  and  made  a  part  hereof,  requested  the  defendant  to 

pay  E F dollars, 

days  after  date. 

That  the  defendant,  on  the day  of 

,  19 ,  accepted  the  same,  payable  at  the  First 

National  Bank  of  South  Bend,  California,  and  not  elsewhere. 

That  the  said  E.  F.  indorsed  said  bill  of  exchange  to  the 
plaintifif. 

That  the  same  was,  on  the day  of 

,  19 ,  (or,  on  the  day  of  its  maturity),  pre- 
sented for  payment  at  the  said  First  National  Bank  of  South 
Bend,  California,  and  payment  refused. 

That  said  bill  was  then  and  there  protested  for  non-payment, 
of  all  which  the  defendant  then  and  there  had  due  notice. 

That  the  same  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill.)  (Signature  same  as  in  §247.) 

§  265.  Same — Indorsee  against  drawer,  indorsers  and  ac- 
ceptor on  inland  bill  of  exchange. 

(Caption  and  commencement.) 

That  on  the day  of , 

19 ,  the  defendant,  C.  D.,  by  his  bill  of  exchange,  a  copy  of 


§§  266-267  CODE  pleading.  321 

which  is  filed  herewith,  and  made  a  part  hereof,  requested  the 

defendant,  E.  F.,  to  pay  the  defendant,  G.  H.,  or  order, 

dollars, ^^days  after  date. 

That  on  the day  of , 

19 ,  the  said  E.  F.  accepted  the  same. 

That  the  defendant,  G.  H.,  by  indorsement  in  writing,  a  copy 
of  which  is  filed  herewith,  and  made  part  hereof,  assigned  said 
bill  of  exchange  to  the  plaintiff. 

That  on  the  day  of  the  maturity  of  said  bill,  the  same  was 
presented  to  the  defendant,  E.  F.,  for  payment,  which  was  re- 
fused, of  all  which  the  defendants  then  had  notice. 

That  the  said  bill  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill  and  indorsement.)     (Signature  same  as  in  §  247.) 

§  266.  Same — Indorsee  against  drawer  when  payable  at  a 
certain  place. 

(Caption  and  commencement  same  as  §  247.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  bill  of  exchange,  a  copy  of  which 

is  filed  herewith,  and  made  a  part  hereof,  requested  E.  F.  to  pay 

G.  H. dollars, days 

after  date,  payable  at  Indianapolis,  Indiana. 

That  the  said  G.  H.  indorsed  the  same  to  the  plaintiff. 

That  on  the day  of , 

19 ,  (or  on  the  day  of  its  maturity),  said  bill  was  presented 

(at  the  said  National  Bank  of  Indianapolis,  Indiana),  and  pay- 
ment demanded,  which  was  refused,  of  which  the  defendant  then 
and  there  had  notice. 

That  said  bill  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill  and  indorsement.)     (Signature  same  as  in  §  247.) 

§267.  Same — Indorsee  against  drawer  —  No  funds  in 
drawee's  hands — Failure  to  notify  drawer. 

(Caption  and  commencement  same  as  §247.) 

That  the  defendant,  on  the day  of . 

19 ,  by  his  bill  of  exchange,  of  which  a  copy  is  herewith  filed, 

and  made  a  part  hereof,  requested  E.  F.  to  pay  the  defendant,  or 

order, dollars, days 

after  date. 

That  defendant  indorsed   said  bill   to   the  plaintiff. 

That  the  same  was,  on  the day  of 

,  19 ,  presented  to  said  E  F.  for  ac- 
ceptance, which  was  refused. 


322  NEGOTIABLE   INSTRUMENTS.  §§  268-269 

That  at  the  time  when  said  bill  was  drawn,  and  from  thence 
until  payment  thereof  was  refused,  the  defendant  had  no  moneys 
or  effects  in  the  hands  of  the  said  E.  F.,  nor  did  he  expect  to 
have,  or  that  said  bill  would  be  accepted  or  paid  on  presentment. 

That  defendant  has  sustained  no  damage  by  a  failure  to  give 
notice  of  the  refusal  to  accept  or  pay  said  bill. 

That  the  same  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill  and  indorsement.)     (Signature  same  as  in  §  247.) 

§  268.  Same — Indorsee  against  drawbar — Excuse  for  non- 
presentment — No  effects. 

(Caption  and  commencement  same  as  §247.) 

That  the  defendant,  on  the day  of 

,  19 ,  by  his  bill  of  exchange,  of  which 

a  copy  is  herewith  filed  and  made  a  part  hereof,  requested  E.  F. 

to  pay  the  defendant,  or  order, dollars, 

days  after  date. 

The  defendant  indorsed  said  bill  to  the  plaintiff. 

That  said  bill  was  not  presented  for  acceptance  or  payment, 
for  the  reason  that  the  defendant  had  no  effects  in  the  hands  of 
said  E.  P.,  either  at  the  time  of  drawing  said  bill  or  at  any  time 
thereafter. 

That  said  bill  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill  and  indorsement.)     (Signature  same  as  in  §  247.) 

§  269.  Same — Indorsee  against  drawer — Demand  and  notice 
waived. 

(Caption  and  commencement  same  as  §247.) 

That  the  defendant,  on  the day  of 

,  19 ,  by  his  bill  of  exchange,  a  copy  of 

which  is  herewith  filed  and  made  a  part  hereof,  requested  E.  F. 

to  pay  the  defendant,  or  order, dollars, 

days  after  date. 

That  defendant  indorsed  said  bill  to  the  plaintiff. 

That  the  defendant  (drawee  or  indorser),  before  presentment 
for  acceptance  (or,  before  the  bill  became  due),  waived  the  pre- 
sentation of  the  same  for  acceptance  (or,  payment),  and  notice 
of  non-acceptance  (or,  non-payment)  thereof. 

That  said  bill  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  bill  and  indorsement) .     (Signature  same  as  in  §  247.) 


§§  270-271  CODE  PLEADING,  323 

§  270.  Same — Indorsee  against  indorser — Non-payment  by 
acceptor. 

(Caption  and  commencement.) 

That  on  the day  of , 

19 ,  one  G.  H.,  by  his  bill  of  exchange,  a  copy  of  which  is 

filed  herewith,  and  made  a  part  of  this  complaint,  requested  I.  J. 

to  pay  C.  D.,  or  order, dollars,  two  months 

after  date. 

That  the  said  C.  D.,  by  his  indorsement  thereon,  a  copy  of 
which  is  filed  herewith,  and  made  a  part  hereof,  assigned  said  bill 
to  the  plaintiff. 

That  on  the day  of , 

19 ,  the  said  drawee  accepted  said  bill. 

That  on  the day  of , 

19 ,  (or,  at  its  maturity),  the  same  was  duly  presented  for 

payment  and  refused  (if  a  foreign  bill,  add:  and  said  bill  was 
thereupon  duly  protested),  of  all  which  the  defendant  then  had 
due  notice,  but  did  not  pay  the  same. 

That  said  bill  is  now  due  and  unpaid. 

Wherefore,  plaintiff  demands  judgment  for 

dollars. 

(Copy  of  bill  and  indorsement.)     (Signature  same  as  in  §  247.) 

COMPLAINTS— BANK  CHECK. 

§  271.     Complaint  on  bank  check — Payee  against  drawer. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  the  defendant,  by  his  check,  a  copy  of  which  is  filed 

herewith,  and  made  a    part    of    this    complaint,    requested    the 

Bank  to  pay  to  plaintiff,  or  bearer 

dollars,  and  delivered  the  same  to  plaintiff. 

That  plaintiff,  on  the day  of 

,  19 ,  presented  said  check  to  said  bank,  and 

demanded  payment,  which  was  refused,  of  which  the  defendant, 

on  the day  of ,   19 , 

had  notice. 

That  said  check  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  check.)  (Signature  same  as  in  §  247.) 

Detroit,  Mich.,  December  1,  19 

THE  A.  B.  BANK. 

Pay  to  the  order  of  J.  S $200.00 

Two    Hundred Dollars 

M.  S. 


324  NEGOTIABLE    INSTRUMENTS.       ^  ^%  272-274 

§  272.     Same — Payee  against  drawee. 

(Caption  and  commencement  same  as  §  247.) 

That  on  the day  of , 

19 ,  one  M.  S.,  by  his  check,  a  copy  of  which  is  filed  herewith, 

and  made  a  part  of  this  complaint,  requested  the  defendant  to 
pay  the  plaintiff  the  sum  of dollars. 

That  on  the . day  of , 

19 ,  plaintifif  presented  the  same  to  the  defendant,  and  de- 
manded payment  thereof,  which  was  refused. 

That  said  check  is  now  due  and  unpaid. 

Wherefore,  etc. 

(Copy  of  check.)  Signature  same  as  in  §247.) 

§  273.     Same — Drawer  against  drawee. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  plaintifT  had  on  deposit  in  the  defendant's  bank 

dollars. 

That  on  the day  of , 

19 ,  he  drew  his  check  on  the  defendant,  requesting  it  to 

pay  C.  D.,  or  bearer, dollars. 

That  C.  D.  indorsed  the  said  check  to  E.  F.,  who  indorsed  the 
same  to  G.  H. 

That  on  the day  of , 

19 ,  the  said  G.  H.  presented  said  check  to  the  defendant 

for  payment,  which  was  refused,  whereby  plaintiff  was  com- 
pelled to  pay  the  same,  to  his  damage dol- 
lars, for  which  he  demands  judgment. 

(Signature  same  as  in  §247.) 

§  274,     Same — Indorsee  against  indorser. 

(Caption  and  commencement  same  as  §247.) 

That  on  the day  of , 

19 ,  A.  B.,  by  his  check,  a  copy  of  which  is  filed  herewith, 

and  made  a  part  of  this  complaint,  requested  the  National  Bank 

of  Indianapolis,  Indiana,  to  pay  the  defendant,  or  order, 

dollars. 

That  on  the day  of , 

19 ,  the  defendant,  by  his  indorsement  thereon,  a  copy  of 

which  is  filed  herewith,  and  made  a  part  hereof,  assigned  said 
check  to  the  plaintiff. 

That  on  the day  of , 

19 ,  the  plaintiff  presented  the  same  to  said  bank  for  pay- 
ment, which  was  refused,  of  which  the  defendant  then  had  notice. 


§§  275-278  CODE  pleading.  325 

That  said  check  is  now  due  and  unpaid. 
(Copy  of  check  and  indorsement.) 
Wherefore,  etc. 

(Signature  same  as  in  §247.) 

ANSWER— NOTE,  BILL  AND  CHECK. 

§  275.     Answer  to  complaint  on  promissory  note,  bill  of  ex- 
change or  check — General  denial. 

(Caption  and  commencement  same  as  §  247.) 
The  defendant,    for  answer  to  plaintiff's   complaint,  alleges: 
that  he  denies  each  and  every  allegation  thereof. 

H.  Nathan  Swaim, 

Attorney  for  Defendant. 

§  276.     Same — Denial  of  execution  of  instrument. 

(Caption  and  commencement  same  as  §247.) 
The  defendant,  for  answer  to  plaintifif "s  complaint,  alleges : 
That  he  did  not  execute  the  note  (bill  of  exchange)    (check) 
sued  on  in  this  action. 

Wherefore,  he  demands  judgment  for  costs. 

(Jurat.)  (Signature  same  as  in  §  275.) 

§  277.     Same— Want  of  consideration. 
(Caption  and  commencement  same  as  §247.) 
That  the  note  (bill  of  exchange),  (writing  sued  on)  was  given 
without  any  consideration. 

Wherefore,  defendant  demands  judgment. 

(Signature  same  as  in  §275.) 

§  278.     Same — Partial  want  of  consideration. 

(Caption  and  comment  same  as  §  247.) 

The  defendant,  in  answer  to  all  of  the  amount  sued  on  in  ex- 
cess of dollars,  alleges: 

That  the  note  sued  on  as  to  such  excess  was  given  without  any 
consideration  therefor. 

Wherefore,  etc. 

(Signature  same  as  in  §275.) 

§  279.     Same— Without  consideration  as  to  indorsee. 

(Caption  and  commencement  same  as  §  247.) 

That  the  note  sued  on  herein  was  given  without  any  considera- 
tion, and  the  plaintiff  took  the  same  after  it  fell  due  (or,  with 
knowledge  that  the  same  was  given  without  consideration). 

Wherefore,  etc. 

(Signature  same  as  m  §275.) 


326  NEGOTIABLE    INSTRUMENTS.  §§280-281 

§  280.     Same — Illegal  consideration. 

(Caption  and  commencement  same  as  §247.) 

That  the  consideration  for  the  note  sued  on  was  illegal,  in  this : 
(state  the  facts  showing  its  illegality,  e.  g.)  That  the  defendant 
was,  at  the  time  of  executing  the  note,  charged  with  the  crime  of 

(state  what)  and  had  been  indicted  therefor 

in  the Circuit  Court;  and  plaintiff,  to  in- 
duce defendant  to  execute  said  note,  represented  that  he  could 
suppress  and  prevent  said  prosecution ;  and,  in  consideration  of 
plaintiff's  promise  to  suppress  said  prosecution,  and  cause  the 
same  to  be  dismissed,  and  for  no  other  consideration,  defendant 
executed  to  him  said  note. 

(Or,  that  at  the  time  this  note  was  given,  a  suit  by  the  de- 
fendant against   the  plaintiff   for  divorce  was   pending   in   the 

Circuit  Court  and  the  same  was  given  in 

consideration  of  the  promise  that  plaintiff  would  not  appear  and 
defend  said  action,  and  for  no  other  consideration.) 

Wherefore,  defendant  says  that  the  consideration  for  said  note 
was  illegal  and  void,  and  he  demands  judgment. 

(Signature  same  as  in  §  275.) 

§  281.     Same — Failure  of  consideration. 

(Caption  and  commencement  same  as  §247.) 

That  the  note  sued  on  was  given  in  consideration  of  the  promise 
of  plaintiff  that  he  would  sell  and  deliver  to  defendant  goods  and 
merchandise  from  the  store  of  the  plaintiff,  then  in  business  at 

,  as  the  same  might,  from  time  to  time,  be 

ordered  by  defendant  during  the  year ,  not  exceeding 

the  r.mount  of  said  note. 

That  thereafter  defendant,  during  the  year ,  ordered 

goods  from  plaintiff  to  the  amount  of  said  note ;  but  plaintiff 
failed  and  refused  to  deliver  the  same,  or  any  part  of  them. 

(Or,  if  there  is  only  a  partial  failure,  say:  For  answer  to  all 
of  said  note  in  excess  of dollars,  the  defend- 
ant says  that:  (allege  facts,  as  above,  to*)     That  on  the 

day  of ,  19 ,  on  defend- 
ant's order,  plaintiff  delivered  to  defendant  goods  to  the  amount 
of dollars. 

That  defendant  thereafter,  during  said  year,  gave  orders  to 
plaintiff,  at  various  times,  for  goods  amounting  in  the  aggregate 

to dollars,  the  balance  of  the  amount  of  said 

note ;  but  plaintiff  failed  and  refused  to  deliver  the  same,  or  any 
part  of  them,  and  defendant  has  received  no  more  than  said 
amount  of dollars. 


§§  282-284  CODE  pleading.  327 

And  this  was  the  only  consideration  for  said  note. 

Wherefore,  defendant  says  the  consideration  of  said  note  has 
failed  (to  the  extent  of dollars),  and  he  de- 
mands judgment. 

(Signature  same  as  in  §275.) 

§  282.     False  representations. 

(Caption  and  commencement  same  as  §247.) 

That  the  note  sued  on  was  given  by  defendant  in  consideration 
of  the  sale,  by  plaintiff  to  defendant,  of  a  certain  horse. 

That  to  induce  defendant  to  purchase  said  horse  and  execute 
said  note,  plaintiff  falsely  and  fraudulently  represented  to  de- 
fendant (set  out  the  representations,  e.  g.)  that  said  horse  was 
sound,  and  quiet  in  harness,  and  was  only years  old. 

That  said  representations  were  false,  and  known  to  be  so  by 
plaintiff  at  the  time. 

That  said  horse  was  not  sound;  but  was  (state  how  diseased), 
and  would  not  work  in  harness,  and  was years  old. 

That  defendant  was  ignorant  of  the  fact,  and  believed  and  re- 
lied upon  said  representations,  and  was  thereby  induced  to  pur- 
chase said  horse  and  execute  the  note  sued  on. 

That  on  the day  of , 

19 ,  defendant    first    discovered    that    said    representations 

were  false,  and  he  thereupon  (or,  on  the 

day  of ,  19 ,)   tendered  said  horse  to 

plaintiff  and  demanded  said  note ;  but  plaintiff  refused  to  accept 
the  horse  or  deliver  the  note. 

That  said  horse,  if  he  had  been  as  represented  by  plaintiff, 

would  have  been  of  the  value  of dollars;  but 

he  was,  in  fact,  of  the  value  of  not  exceeding 

dollars,  and,  for  defendant's  use,  was  wholly  worthless. 

Wherefore,  defendant  demands  judgment. 

(Signature  same  as  in  §275.) 

§  283.     Same — Payment. 

(Caption  and  commencement  same  as  in  §  247.) 
That  he  fully  paid  the  note  (bill  of  exchange)   (check)  sued 
on  before  the  bringing  of  this  action. 

(Signature  same  as  in  §275.) 

§  284.     Same — Alteration. 

(Caption  and  commencement  same  as  §  247.) 

The  defendant, ,  for  separate  answer  to 

plaintiff's  complaint,  admits  that  he  signed  a  note  payable  to 
plaintiff,  but  alleges  that  he  signed  and  executed  the  same,  to- 
gether with  the  defendant, ,  and  thereafter, 


328  NEGOTIABLE   INSTRUMENTS.  §  285 

without  the  knowledge  or  consent  of  this  defendant,  the  plaintiff 
materially  altered  and  changed  said  note,  in  this:  (state  in  what 
the  alteration  consists,  e.  g.,  he  procured  the  same  to  be  signed 

by  one )    (or,  raised  said  note  from  the  sum 

of dollars,  the  amount  for  which  it  was 

given,  to dollars)    (or,  erased  therefrom  the 

name  of ,  who  signed  the  same,  as  a  joint 

maker,  with  this  defendant)  without  the  knowledge  or  consent  of 
this  defendant. 

(Signature  same  as  in  §275.) 

§  285.     Same — That  acceptance  was  for  accommodation. 

(Caption  and  commencement  same  as  in  §  247.) 

The  defendant,  for  answer  to  plaintiff's  complaint,  alleges : 

That  he  accepted  the  bill  mentioned  in  the  complaint  for  the 

accommodation  of (plaintiff),  and  that 

there  was  no  consideration  for  the  acceptance  or  payment  of  said 
bill  by  defendant. 

(If  the  action  is  by  an  indorsee,  say:  That  plaintiff  received 
said  bill  after  maturity  without  consideration,  and  with  full 
knowledge  that  defendant  accepted  the  same  without  considera- 
tion.) 

Wherefore,  defendant  demands  judgment  for  costs. 

(Signature  same  as  in  §275.) 


CHAPTER  XXV. 

EVIDENCE— IN  GENERAL. 

§  286.  In  general.  §  289.  Competency  of  parties  to  ne- 

287.  Presumptions  in  general.  gotiable      instruments      as 

288.  Burden  of  proof  in  general.  witnesses. 

290.  Declarations  antl  admissions. 

§  286.  In  general.  An  action  on  a  promissory  note  or  bill 
of  exchange  is  an  action  upon  a  contract  and  the  rules  and  prin- 
ciples of  evidence  applying  to  an  action  upon  a  contract  apply 
generally  to  an  action  on  a  promissory  note  or  a  bill  of  exchange. 
The  general  rules  apply  as  to  presumptions,  burden  of  proof, 
parol  evidence^  and  witnesses.  There  are,  however,  some  excep- 
tions to  the  general  rules  and  where  these  occur  they  will  be 
pointed  out. 

§  287.  Presumptions  in  general.  It  is  presumed  that  nego- 
tiable paper  was  regularly  issued  for  a  valuable  consideration, 
and  that  the  payee  or  the  one  who  has  purchased  it  before  ma- 
turity is  a  bona  Me  holder  and  entitled  to  recover  the  full 
amount.**  But  if  the  defendant  can  show  that  the  note  was  orig- 
inally obtained  by  duress,  secured  through  fraud,  or  that  it  was 
lost  or  stolen,  the  burden  is  changed  and  the  presumption  then 
arises  that  the  guilty  person  will  part  with  the  instrument  for 
the  purpose  of  enabling  some  third  party  to  recover  for  his  bene- 
fit.^ There  is  also  a  presumption  that  an  indorsement,  made  by  a 
payee  or  indorsee  without  date,  was  before  maturity  and  that  the 
holder  acquired  the  note  or  bill  before  maturity,  and  in  the  ab- 
sence of  proof  the  indorsement  will  be  presumed  to  have  been  at 
the  time  of  execution  of  the  note,^  and  at  the  place  where  the 
instrument  is  dated;  and  a  bill  of  exchange  is  presumed  to  have 
been  accepted  before  maturity  and  within  a  reasonable  time  aftef 
its  date.  The  holder  of  a  note  payable  to  bearer  is  presumed  to 
be  the  owner.     The  drawee  of  a  check  is  presumed  to  know  the 

1  As    to   parol    evidence    to   vary  W.  819;  Beer  v.  Clifton,  111  Cal.  51, 

contract  of  party  to  negotiable  pa-  43  Pac.  411. 
per,  see  note  8  U.  S.  L.  Ed.  316.  2  Pritchett    v.    Sheridan,   29   Ind. 

la  Swift  v.  Smith,  102  U.  S.  442,  App.  81,  63  N.  E.  865. 
26   L.   Ed.    193 ;    Wayland   Univer-  3  Collins  v.  Gilbert,  94  U.  S.  753, 

sity  v.  Boorman,  56  Wis.  657,  14  N.  24  L.   Ed.   170;   Bradford   v.   Pres- 

cott,  85  Me.  482,  27  Atl.  461. 

329 


330  NEGOTIABLE  INSTRUMENTS.  §§  288-289 

signature  of  the  drawers.*  When  a  party  draws  a  check  on  a 
bank  which  is  paid,  it  is  not  presumed  to  have  been  made  for  the 
payment  of  a  debt  to  the  bank  but  that  it  was  drawn  against 
funds  of  the  drawer.  Payment  of  a  note  is  presumed  from  its 
possession  by  the  maker.^  The  execution  and  dehvery  of  a  note 
raises  the  presumption  of  a  settlement  of  accounts  previous  to  its 
date.  Where  several  persons  sign  a  note  they  are  presumed  to 
be  equally  liable. 

The  instrument,  v^hen  its  execution  is  not  denied,  is  prima 
facie  evidence  of  the  debt.  If  the  plaintiff  produces  the  paper, 
proves  the  signature  and  indorsements,  he  may  usually  recover, 
unless  the  defendant  is  able  to  overthrow  the  presumptions  by 
satisfactory  proof. 

These  presumptions  are  merely  prima  facie  and  are  not  abso- 
lute or  conclusive  and  must  be  received  with  caution,  sometimes 
being  entitled  to  considerable  weight  and  sometimes  to  very  lit- 
tle; generally  their  chief  importance  is  to  determine  the  burden 
or  order  of  proof. 

§  288.  Burden  of  proof  in  general.  There  are  five  material 
allegations  which  as  a  general  rule  the  plaintiff  must  prove  in 
order  to  win  his  case  unless  the  same  are  admitted.  These  are, 
first,  the  existence  of  the  instrument,  as  described  in  the  declara- 
tion or  complaint ;  second,  that  the  defendant  was  a  party  to  it ; 
third,  the  nature  of  the  defendant's  contract ;  fourth,  the  plaint- 
iff's interest  in  and  right  of  action  upon  the  instrument ;  fifth,  the 
breach  of  the  contract  by  the  defendant.'* 

§  289.  Competency  of  parties  to  negotiable  instruments  as 
witnesses.  In  some  jurisdictions  the  testimony  of  parties  to 
negotiable  instruments  in  actions  upon  them  between  other  par- 
ties is  as  a  general  rule  admissible  or  not,  like  the  testimony  of 
any  other  witnesses,  depending  upon  whether  such  witnesses 
are  interested  or  are  not  interested  in  the  event  of  the  suit. 

Thus  in  an  action  against  one  of  several  makers  of  a  note,  an- 
other maker  of  the  same  note  is  a  competent  witness  for  the 
plaintiff  as  he  stands  indifferent.®  The  maker  may  testify  for  the 
plaintiff,  in  an  action  by  the  indorsee  against  the  indorser.'^     If 

4  White  V.  Continental  Nat'l  5a  ^s  to  burden  of  proof  as  to 
Bank,  64  N.  Y.  316,  21  Am.  R.  612;  bona  fide  ownership,  see  note  11 
United    States    Bank    v.    Bank    of      Am.  St.  Rep.  323. 

Georgia,  10  Wheat.   (U.  S.)   333,  6  «  Hillebrant  v.  Ashworth,  18  Tex. 

L.  Ed.  334.  307. 

5  Love  V.  Dilley,  64  Md.  238,   1  ''  Adams  v.  Moore,  9  Port.  406. 
Atl.  59;  Emerson  v.  Mills,  83  Tex. 

385,  18  S.  W,  805. 


§  290  EVIDENCE  IN  GENERAL.  331 

the  indorsee  proceeds  against  the  drawer,  the  payee  is  competent 
to  testify  as  to  the  consideration  for  the  indorsement.^ 

As  a  general  rule  the  payee  after  having  indorsed  the  note,  is 
competent  to  prove  any  matters  arising  after  the  making  of  the 
note,  which  may  affect  the  right  of  the  holder  to  recover  against 
the  maker.** 

The  payee  of  a  note  who  has  indorsed  it  without  recourse,  is 
also  a  competent  witness  to  prove  its  execution  by  the  maker. *** 

In  a  proceeding  against  the  acceptor,  the  drawer  may  testify 
for  either  party.  And  in  an  action  by  the  indorsee  against  the 
drawer  or  acceptor,  an  indorser  is  in  general  a  competent  witness 
for  either  party.  The  testimony  of  an  indorser  standing  indif- 
ferent is  admissible  to  prove  payment ;  time  of  negotiation  by  in- 
dorsement;  alteration  of  date  by  fraud;  want  of  interest  in  the 
indorsee ;  usury ;  and  the  fact  of  his  own  indorsement." 

In  several  of  the  states  all  the  parties  liable  on  a  bill  or  note 
may  be  sued  in  one  action,  in  which  case,  however,  the  parties 
are  respectively  entitled  to  the  testimony  of  any  other  parties 
defendant  in  the  suit,  in  the  same  manner  as  if  they  had  been 
sued  in  several  actions. 

§  290.  Declarations  and  admissions.  Declarations  and  ad- 
missions made  by  the  owner  of  the  note  against  his  interest  and 
before  he  has  parted  with  title  are  admissible  against  him.  But 
if  he  has  parted  with  title  and  possession  and  is  no  longer  in- 
terested in  the  instrument,  then  his  declarations  cannot  be  used 
as  against  a  bona  fide  holder,  who  has  purchased  for  value,  be- 
fore maturity  and  without  notice.-*^ 

8  State  Bank  v.  Seawell,  18  Ala.  "  Knights  v.  Putnam,  20  Mass. 

616.  184. 

^Curtis    V.    Marrs,    29    111.     (19  i*  As    to   effect   of    admission    to 

Peck)   508.  change  burden   of   proof,   see  note 

10  Davis  V.  Sawtelle,  30  Me.   (17  61  L.  R.  A.  535. 
Shep.)  389. 


CHAPTER  XXVI. 


EVIDENCE  AS  TO  PARTICULAR  CHARACTERISTICS. 


291. 

As  to  time. 

§302. 

As  to  transfer. 

292. 

As  to  date. 

303. 

As  to  conditions. 

293. 

As  to  amount  payable. 

304. 

As  to  mistake. 

294. 

As  to  place  of  payment. 

305. 

As  to  fraud  and  duress. 

295. 

As  to  mode  of  payment. 

306. 

As  to  usury. 

296. 

As  to  interest. 

307. 

As  to  payment  and  discharge. 

297. 

As  to  consideration. 

308. 

As    to   presentment    and    de- 

298. 

As  to  parties. 

mand. 

299. 

As  to  ambiguous  or  omitted 

309. 

As  to  protest  and  notice. 

stipulations. 

310. 

Bills  and  notes  as  evidences. 

300. 

As  to  execution  and  delivery. 

311. 

As    to    meaning    of    certai© 

301. 

As  to  acceptance  of  bills. 

terms. 

§291.  As  to  time.  Parol  evidence  is  admissible  to  show 
the  intention  of  the  parties  when  the  time  of  payment  is  ambigu- 
ous.^ If  an  agreement  is  made  subsequent  to  the  execution  of  the 
instrument  whereby  an  extension  of  time  is  agreed  upon,  parol 
evidence  is  admissible  to  establish  such  fact.^  A  renewal  by  ad- 
vanced payment^  or  the  giving  of  a  renewal  note,"*  is  proof  of  an 
extension  of  time.  Where  an  extension  of  time  for  a  definite 
period  has  been  indorsed  upon  an  instrument  pursuant  to  agree- 
ments, a  consideration  is  to  be  presumed.^  If  an  agreement  is 
entered  into  at  the  same  time  as  the  execution  of  the  bill  or  note, 
modifying,  enlarging  or  extending  the  time  of  payment,  parol 
evidence  will  not  be  admitted  to  show  such  agreement.*  But  if 
the  instrument  either  by  fraud,  mistake  or  accident  does  not 
contain  the  true  conditions  or  stipulations  of  the  contract  the 


iMcGhee  v.  Alexander,  104  Ala. 
116,  16  So.  148;  Des  Moines  Co.  v. 
Hinkley,  62  Iowa  637,  17  N.  W. 
915;  Union  Bank  v.  Meeker,  4  La. 
Ann.  189,  50  Am.  Dec.  559. 

2  Pierce  v.  Goldsberry,  31  Ind. 
52 ;  Ferguson  v.  Hill,  3  Stewart  485, 
21  Am.  Dec.  641 ;  Merchants'  Bank 
of  Port  Townsend  v.  Bussell,  16 
Wash.  546,  48  Pac.  242;  Bank  of 
Horton  v.  Brooks,  64  Kans.  285,  62 
Pac.  675. 

3  Mariners    Bank    v.    Abbott,    28 


Me.  280;  Lime  Rock  Bank  v.  Mal- 
lett,  34  Me.  547,  56  Am.  Dec.  673. 

4  Williams  v.  Wright,  69  Ga.  759; 
First  Nat'l  Bank  of  Hastings  v.  La- 
ment, 5  N.  D.  393,  67  N.  W.  145. 

^  St.  Joe  &  Mineral  Farm  Con- 
sol.  Min.  Co.  v.  First  Nat'l  Bank, 
10  Colo.  App.  339,  50  Pa.  1055. 

®  Foglesong  v.  Wickard,  75  Ind. 
258;  Clark  v.  Allen,  132  Pa.  St.  40, 
18  Atl.  1071;  Hall  v.  First  Natl. 
Bank,  173  Mass.  16,  53  N.  E.  154, 
44  L.  R.  A.  319. 


332 


§  292  EVIDENCE — PARTICULAR    CHARACTERISTICS.  333 

time  of  payment  may,  in  such  case,  be  prolonged  by  parol  evi- 
denced 

*   The  following  provisions  as  to  time  are  found  in  the  Negotiable 
Instruments  Law : 

"In  determining  what  is  a  'reasonable  time,'  or  an  'unreason- 
able time'  regard  is  to  be  had  to  the  nature  of  the  instrument,  the 
usage  of  trade  or  business  (if  any)  with  respect  to  such  instru- 
ments, and  the  facts  of  the  particular  case."^ 

"Where  the  day,  or  the  last  day,  for  doing  any  act  herein  re- 
quired or  permitted  to  be  done  falls  on  Sunday  or  on  a  holiday, 
the  act  may  be  done  on  the  next  succeeding  secular  or  business 
day."^ 

§  292.  As  to  date.  A  presumption  arises  that  the  date  upon 
a  negotiable  instrument  is  the  time  when  the  instrument  was  exe- 
cuted in  case  there  is  no  evidence  to  the  contrary.^®  The  Ne- 
gotiable Instruments  Law  provides : 

"Where  the  instrument  or  an  acceptance  or  any  indorsement 
thereon  is  dated,  such  date  is  deemed  prima  facie  to  be  the  true 
date  of  the  making,  drawing,  acceptance  or  iiidorsement,  as  the 
case  may  be."^^^ 

A  presumption  likewise  arises  that  the  instrument  was  made 
at  the  place  where  it  is  dated  and  that  the  maker  resides  at  that 
place.**  A  presumption  arises  that  the  payee  or  holder  in  pur- 
suance of  his  implied  power  to  do  so  filled  in  the  space  by  placing 
therein  the  date  of  the  execution  of  the  instrument**  And  if  the 
note  circulates  further  with  the  date  remaining  blank  the  pre- 
sumption arises  that  the  indorsee  is  authorized  to  fill  in  the  true 
date.*^  But  the  maker  may  fill  in  the  blank  date  after  the  indorse- 
ment without  discharging  the  indorser.  In  all  the  preceding  cases 
parol  evidence  is  admissible  to  show  that  the  note  was  executed 
differently.     In  case  a  note  is  secured  and  the  note  described  in 

''Wallace    v.    Richards,    16    Utah  lOa  ^gg   i^gt.  Law,  §  11. 

52,   50  Pac.   804;    Campbell   v.    Up-  n  Rudolph    v.    Breener,    96    Ala. 

shaw.   7    Humph.    (Tenn.)    185,    46  189,  11  So.  314;  Bronte  v.  Leslie,  30 

Am.  Dec.  75.  111.   App.   288 ;   Hall   v.    Harris,    16 

SNeg.    Ins.    Law,    §    193,    where  Ind.  180. 

all  cases  directly  or  indirectly  bear-  ^^  Overton  v.   Matthews,  35  Ark. 

ing    upon    or    citing    the    Law    are  146,  37  Am.  Rep.  9.    Contra,  Inglish 

grouped.  V.  Breuneman,  9  Ark.  122,  47  Am. 

y  Neg.    Ins.    Law,    §    194,    where  Dec.  735 ;  Emmons  v.  Carpenter,  55 

all  cases  directly  or  indirectly  bear-  Ind.  329. 

ing    upon    or   citing   the    Law    are  ^3  jjepler    v.    Mt.    Carmell    Sav. 

grouped.  Bank,  97  Pa.  St.  420,  39  Am.  Rep. 

lOKnisely   v.    Sampson,    100    111.  813. 
573;  Elyton  Co.  v.  Hood,  121  Ala. 
373,  25  So.  745. 


334  NEGOTIABLE   INSTRUMENTS.  §293 

the  security  contains  a  different  date  than  that  of  the  note  itself, 
parol  evidence  is  admissible  to  identify  the  note  and  the  security 
and  to  show  that  they  were  delivered  together  and  that  they 
formed  one  transaction.** 
The  Negotiable  Instruments  Law  further  provides: 
"Except  where  an  indorsement  bears  date  after  the  maturity  of 
the  instrument  every  negotiation  is  deemed  prima  facie  to  have 
been  effected  before  the  instrument  was  overdue."^'*'^ 

§  293.  As  to  amount  payable.  The  general  rule  of  evidence 
is  that  a  note  which  calls  for  an  amount  certain  and  definite  can- 
not be  varied  as  to  the  amount  payable  by  means  of  parol  evi- 
dence. But  in  case  the  note  was  given  in  settlement  of  mutual 
accounts  parol  evidence  is  admissible  to  show  that  the  amount 
expressed  in  the  note  was  greater  than  the  amount  due,  by  com- 
putation subsequently  made  by  the  party  receiving  the  note  on 
the  basis  of  the  original  accounts  showing  a  less  amount  due.-^*^ 
Where  a  note  is  given  for  purchase  money  and  includes  illegal 
attorney's  fees  parol  evidence  is  admissible  to  show  that  the  note 
included  such  illegal  fees.*^  In  case  of  a  written  contract  to  give 
a  note  for  a  certain  amount  and  the  note  is  made  for  a  larger 
amount,  parol  evidence  is  allowed  to  show  an  oral  agreement  to 
insert  the  larger  amount.*'' 

Where  the  amount  of  a  bill  or  note  expressed  in  the  marginal 
figures  is  inconsistent  with  that  expressed  in  the  body  of  the 
note  parol  evidence  is  inadmissible  to  show  that  the  instrument 
was  negotiated  for  the  amount  expressed  in  figures.*®  So  also 
parol  evidence  is  not  admissible  to  show  that  a  note  given  abso- 
lutely to  the  payee  was  to  be  held  by  him  merely  as  security  for 
an  amount  to  be  found  due  upon  an  accounting.*®  Where  the 
note  provides  for  attorney's  fees,  without  stating  any  amount, 
the  value  of  the  attorney's  services  may  be  proved  though  not 
averred  within  the  limits  of  the  amount  claimed.***  In  case  the 
attorney  of  the  holder  of  the  note  agreed  to  take  one-fourth  of 
the  attorney's  fees  such  fact  is  admissible  and  limits  the  amount 
necessary  to  be  paid  by  the  maker.**    If  the  amount  of  the  attor- 

14  Brown  v.  Holyoke,  53  Me.  9.  ^^  Poorman  v.  Mills  &  Co.,  39  Cal. 
See  also,   Ohio  Life  Ins.   &   Trust      345,  2  Am.  Rep.  451. 

Co.  V.  Winn,  4  Md.  Ch.  253.  *»  Ives  v.  Farmers  Bank,  2  Allen 

i-ia  Neg.  Inst.  Law,  §  45.  236 ;  Wilson  v.  Wilson,  26  Ore.  251, 

15  Law  V.  Freeman,  117  Ind.  341,      38  Pac.  185. 

20  N.  E.  242.  20  Harney   v.    Baldwin,    124    Ind. 

i«  Macomb  v.  Wilkinson,  83  Mich.  59,  26  N.  E.  222 ;  Starnes  v.  Scho- 

486,  47  N.  W.  336.  field,  5  Ind.  App.  4.  31  N.  E.  480. 

17  Davidson    v.    Bodley,    27    La.  21  Harvy  v.  Baldwin,  supra. 

Ann.  149. 


§§  294-295      EVIDENCE — PARTICULAR   CHARACTERISTICS.  335 

ney's  fee  is  not  expressed  in  the  body  of  the  note  evidence  is  ad- 
missible to  show  the  amount  of  a  reasonable  fee.^ 

§  294.  As  to  place  of  payment.  It  is  presumed  unless  there 
is  evidence  to  the  contrary,  that  a  note  or  bill  of  exchange  is  to 
be  paid  or  accepted  at  the  place  where  dated.**  But  parol  evi- 
dence is  admissible  to  make  certain  the  designation  of  the  place 
of  payment.*"*  If  a  note  is  made  in  one  state  and  dated  in  an- 
other the  presumption  is  that  it  is  payable  at  the  place  where 
dated  and  that  it  is  to  be  governed  by  the  laws  of  that  place.*'^ 
If  no  special  place  or  locality  is  set  out  the  presumption  is  that 
it  is  payable  at  the  place  of  business  of  the  maker  or  payee.'* 
If  the  note  does  not  state  a  place  of  payment  it  is  deemed  pay- 
able anywhere  upon  demand  being  made  after  it  matures  and  it 
is  not  necessary  that  it  be  payable  at  the  office  of  the  maker.*'^ 
But  if  the  note  or  bill  is  made  payable  at  a  certain  place  desig- 
nated in  the  instrument  itself  it  is  to  be  presumed  payable  at  that 
place.*®  If  made  payable  at  a  bank  it  is  presumed  to  be  subject 
to  the  known  lawful  usages  and  customs  of  such  bank.*®  If  the 
place  of  payment  does  not  appear  upon  the  instrument  parol  evi- 
dence may  be  introduced  to  show  that  there  was  an  agreement  as 
to  the  place  of  payment.^"  If  the  place  of  payment  is  not  clearly 
set  out  in  the  bill  or  note  parol  evidence  is  admissible  to  make 
the  place  of  payment  clear  and  certain.^*  But  parol  evidence 
cannot  be  introduced  to  change  or  vary  the  terms  of  the  instru- 
ment or  to  show  that  a  bill  or  note  payable  generally  is  to  be 
paid  at  a  particular  bank.** 

§  295.  As  to  mode  of  payment.  If  the  mode  of  payment  is 
not  definitely  expressed  in  the  instrument  parol  evidence  may 
be  introduced  to  show  the  intention  of  the  parties  as  to  the  mode 
of  payment  in  dollars  or  any  other  kind  of  money  or  to  show  that 
the  mode  of  payment  was  omitted  by  mistake.**    Where  the  par- 

22  Glenn  v.  Porter,  12  Ind.  525.  28  A^t  y   American  Trust  &  Sav- 

23Biglow  V.    Burnham,   83   Iowa  ings   Bank,   159   111.   407,   42   N.   E. 

120,    49    N.    W.     104;    Bullard    v.  856;    Davis    v.    McAlpine,    10    Ind. 

Thompson,  35  Tex.  313.  137 ;  Way  v.  Butterworth,  106  Mass. 

24  Comstock  V.  Savage,  27  Conn.  75. 

184;  Lane  v.  Union  Natl.  Bank  of  29  Mills    v.    Bank    of    U.    S.,    11 

Massillon,  3  Ind.  App.  299,  29  N.  E.  Wheat.  431,  6  L.  Ed.  512;  Marrett 

613.  V.  Brackett,  60  Me.  524. 

25  Tillotson  V.  Tillotson,  34  Conn.  *®  McKee  v.  Boswell,  ZZ  Mo.  567. 
335.  *^  Comstock  v.  Savage,  27  Conn. 

2«  Equitable  Life  Ins.  Co.  v.  Glea-  184. 
son,  56  Iowa  47,  8  N.  W.  790 ;  Hart-  saAlden   v.    Barbour.  3   Ind.   44; 

ford  Bank  v.  Greene,  11  Iowa  476;  Faulkner  v.  Faulkner,  IZ  Mo.  327. 
Holtz  v.  Boppe,  37  N.  Y.  634.  33  Cook  v.   Lillo,   103   U.  S.  792, 

a^Engler  v.  Ellis,  16  Ind.  475.  26  L.  Ed.  460;  Williams  v.  Arnis. 


336  NEGOTIABLE   INSTRUMENTS.  §§  296-297 

ties  used  the  words  current  funds  intending  thereby  money, 
parol  evidence  is  admissible  to  show  such  intention.**  If  the  word 
currency  was  used  and  it  was  known  to  the  parties  at  the  time 
that  this  word  had  a  local  significance  different  from  its  usual 
meaning,  parol  evidence  will  be  admissible  to  show  that  they  con- 
tracted with  reference  to  this  meaning.^**  But  if  the  mode  of 
payment  is  sufficiently  designated  in  the  bill  or  note  parol  evi- 
dence will  not  be  admissible  to  show  a  different  mode  of  pay- 
ment.^® All  oral  agreements  or  stipulations  between  the  parties, 
as  to  the  mode  of  payment,  which  preceded  or  accompanied  the 
execution  of  the  instrument,  are  to  be  regarded  as  merged  in  it, 
and  the  latter  is  to  be  treated  as  the  exclusive  medium  of  ascer- 
taining the  agreement  to  which  the  parties  bound  themselves. 

§  296.  As  to  interest.  Parol  evidence  is  admissible  to  prove 
that  the  rate  of  interest  expressed  in  the  note  is  a  mistake^''  or  to 
show  an  agreement  as  to  an  increased  rate  of  interest  indorsed  on 
the  note  upon  a  consideration  granting  an  extension  of  time.^  If 
there  was  a  parol  agreement  upon  a  sufficient  consideration  to 
change  the  rate  of  interest  this  may  be  shown.^  If  the  principal 
of  a  note  has  been  paid  but  the  interest  still  remains  unpaid,  the 
note  may  be  used  as  evidence  in  an  action  to  recover  interest  on 
it."*®  A  stub  from  which  a  certificate  of  deposit  was  taken  con- 
taining a  memorandum  of  agreement  to  pay  interest  on  the  cer- 
tificate, is  admissible  in  evidence  to  show  such  agreement.** 

Where  the  declaration  describing  a  note  makes  no  mention  of 
interest  the  note  bearing  interest  is  inadmissible  and  is  consid- 
ered to  be  a  material  variance  with  the  pleading.^ 

§  297.  As  to  consideration.  A  presumption  arises  in  all  ne- 
gotiable instruments  as  to  a  consideration  being  given*'  and  the 
burden  of  proof  is  upon  the  maker  to  show  a  want  or  failure  of 
consideration.**    But  in  case  the  maker  was  insane  or  under  some 

30  Tex.  Zl ;   Calbreath   v.   Va.   Co.  40  Mensing  v.   Ayres,   2   Willson 

22    Gratt.     (Va.)    697;    Juskoe    v.  (Tex.  Cir.  Ct.  App.)  563. 

Proctor.  6  T.  B.  Mon.  (Ky.)  311.  4i  Thomson  v.  Beal,  48  Fed.  614. 

34  Haddock  v.  Woods,  46  Iowa  42  Beach  v.  Curie,  15  Mo.  105; 
433.  Sawyer  v.   Patterson,   11  Ala.  523; 

35  Pilmer     v.     Branch     of     Des  Gragg  v.  Frye,  32  Me.  283. 
Moines  State  Bank,  16  Iowa  321.  43  Halsted    v.    Lyon,    2    McLean 

38  Tucker  v.  Talbott,  15  Ind.  114;  226;  Louisville  E.  &  St.  L.  R.  Co.  v. 

Stein  V.  Fogarty   (Idaho),  43  Pac.  Caldwell,  98  Ind.  245;  Sollenberger 

681.  V.   Stephens,  46  Kans.  386,  26  Pac. 

37  Hathaway    v.    Brady,    23    Cal.  690;    Perley   v.    Parley,    144   Mass. 

121.  104.  10  N.  E.  726. 

38Bradshaw    v.    Combs,    102    111.  4433  Ala.  213,  3  So.  422;  Beeson 

428.  V.  Howard,  44  Ind.  413;  Armstrong 

39Huntv.  Hall,  37  Ala.  702.  v.  Davis,  41  Cal.  494. 


§    298  EVIDENCE — PARTICULAR  CHARACTERISTICS.  337 

legal  disability  at  the  time  of  the  execution  of  the  instrument  the 
holder  must  prove  consideration.^'^  The  instruments  themselves 
are  admissible  in  evidence  when  the  question  of  consideration  is 
raised  and  circumstantial  evidence  is  admissible  to  show  a  want 
of  consideration  or  usury.'*®  Parol  evidence  may  be  introduced 
to  explain^''  or  impeach  the  consideration  of  a  negotiable  instru- 
ment.'** But  parol  evidence  cannot  be  introduced  to  establish  a 
consideration  which  will  vary  the  terms  of  the  instrument.^* 

§  298.  As  to  parties.  The  instrument  is  presumed  to  cor- 
rectly exhibit  the  character  in  which  the  parties  signed  the  bill 
or  note.*^"  If  the  name  of  the  maker  and  payee  are  the  same 
they  will  be  presumed  to  be  different  persons  as  to  the  rights  of 
the  assignee.*^*  Where  the  maker  draws  an  instrument  payable  to 
his  own  order,  bearing  the  indorsement  of  another  person,  the  pre- 
sumption is  that  the  indorsement  was  for  the  maker's  accommoda- 
tion.'** Where  a  person  signs  an  instrument  and  adds  to  his  sig- 
nature any  words  as  executor,  guardian,  trustee,  receiver,  agent 
or  officer  it  will  be  presumed  that  he  signed  as  a  principal  and 
not  in  a  representative  capacity.'*^  But  this  presumption  may  be 
overcome  by  evidence  to  the  contrary.  Where  two  or  more  per- 
sons sign  a  note  as  maker  the  presumption  is  that  they  are  equally 
bound  as  such  and  that  the  debt  evidenced  by  the  note  was  cre- 
ated for  the  benefit  of  the  joint  m.akers  unless  a  different  show- 
ing could  be  made.'^  The  order  in  which  the  makers  sign  a  note 
does  not  in  and  of  itself  create  a  presumption  of  suretyship.'*' 
If  a  note  is  given  by  a  member  of  a  firm  as  a  partnership  note 
it  is  presumed  that  it  is  given  for  a  partnership  debt.'®     But  if 

45  Hosier  v.  Beard,  54  Ohio  St.  so  Brunswick  Balke-Collender  Co. 
398,  43  N.  E.  1040.                                     v.  Bautell,  45  Minn.  21,  47  N.  W. 

46  Nicholls  V.   Van   Valkenburgh,      261. 

15   Hun  230;   Vogt   v.    Butler,    105  5i  Cooper    v.    Poston,     1     Duval 

Mo.  479,  16  S.  W.  512;  Guenther  v.  (Ky.)  92.  85  Am.  Dec.  610. 

Amsden,   162   N.  Y.  601,   57  N.  E.  52  Hendrie  v.  Berkowitz,  Zl  Cal. 

1111.  113,  90  Am.   Dec.  251;  Overton  v. 

47  First  Natl.  Bank  v.  Nugent,  99  Hardin,  6  Cald.  (Tenn.)  375. 

Ind.    160;    Walker  v.   Sherman,   11  53  Carter  v.  Thomas,  3  Ind.  213; 

Mete.   170;   Post  v.   Brown,   55   111.  Germania    Bank    v.    Minchand,    62 

App.  355.  Minn.  459,  65  N.  W.  70,  30  L.  R.  A. 

48  Colt  V.  McConnell,  116  Ind.  186;  Wood  v.  Truax,  39  Mich.  628. 
249;  Daw  v.  Niles  (Cal.),  J3  Pac.  54  McClelland  v.  McClelland,  42 
1114.  Mo.  App.  32. 

49  Hubbard  v.  Marshall,  50  Wis.  55  Summerhill  v.  Tapp,  52  Ala. 
322,  6  N.  W.  497;  Langan  v.  Lan-  227;  McPherson  v.  Andes,  75  Mo. 
gan,  89  Cal.   186,  26  Pac.  764.     As  App.  204. 

to    admissibility   of   parol    evidence  56  Trader's   Bank  v.  Brodner,  43 

to  prove  relation  of  parties,  see  note      Barb.  (N.  Y.)  379. 
1  L.  R.  A.  817. 


338  NEGOTIABLE    INSTRUMENTS.  §  299 

the  note  given  by  one  member  of  the  partnership  appears  to  be 
given  for  an  individual  debt  it  is  presumed  that  the  firm  did  not 
consent  to  the  note  unless  it  can  be  affirmatively  shown  that  they 
did.®'^  Where  a  person  signs  a  note  under  a  representative  de- 
scription, parol  evidence  is  admissible  to  show  that  he  made  the 
note  in  a  representative  capacity;'^**  but  the  personal  liability  of 
persons  signing  with  such  description  cannot  be  disproved  by 
parol  evidence.'^^  Where  the  note  is  signed  by  one  member  of  a 
firm,  parol  evidence  is  admissible  to  show  that  the  note  repre- 
sents a  firm  obligation.®* 

A  note  payable  to  a  person  whose  name  is  used  as  a  firm  name 
is  presumed  to  be  given  to  him  individually  and  not  to  the  firm 
unless  it  can  be  shown  that  they  were  the  intended  payees.®*  If 
a  note  is  payable  to  a  person  designating  him  in  a  representative 
capacity,  the  presumption  is  that  it  was  payable  to  him  individu- 
ally.®^ If  a  note  is  payable  to  a  cashier,  parol  evidence  is  admissi- 
ble to  show  that  he  received  the  note  as  cashier  and  agent  for  a 
particular  bank.®*  Parol  evidence  is  also  admissible  to  show  that 
a  note  payable  to  a  person  designated  in  an  official  capacity  was 
received  by  him  in  an  official  capacity  for  a  corporation.®* 

§  299.  As  to  ambiguous  or  omitted  stipulations.  The  Nego- 
tiable Instruments  Law  provides,  as  follows,  as  to  ambiguous 
stipulations : 

"Where  the  language  of  the  instrument  is  ambiguous,  or  there 
are  omissions  therein,  the  following  rules  of  construction  apply: 
(1)  Where  the  sum  payable  is  expressed  in  words  and  also  in 
figures  and  there  is  a  discrepancy  between  the  two,  the  sum  de- 
noted by  the  words  is  the  sum  payable;  but  if  the  words  are  am- 
biguous or  uncertain,  reference  may  be  had  to  the  figures  to  fix 
the  amount;  (2)  where  the  instrument  provides  for  the  payment 
of  interest,  without  specifying  the  date  from  which  interest  is  to 
run,  the  interest  runs  from  the  date  of  the  instrument,  and  if 
the  instrument  is  undated,  from  the  issue  thereof;  (3)  where  the 
instrument  is  not  dated,  it  will  be  considered  to  be  dated  as  of 
the  time  it  zms  issued;  (4)  where  there  is  a  conflict  between  the 
zvritten  and  printed  prozisions  of  the  instrument,  the  written  pro- 
visions prevail;  (5)  where  the  instrument  is  so  ambiguous  that 

57  Allen   V.    Carey,    33    La.    Ann.  ®*>  Holmes  v.  Porter,  39  Me.  157. 

J455  ®i  Boyle  v.  Skinner,  19  Mo.  82. 

ssLaSalle    Nat.    Bank    v.    Tolu  62  Beach  v.  Peabody,   188  111.  75, 

Rock  &  Rye  Co.,  14  111.  App.  141 ;  58  N.  E.  679. 

Kraniger  v.  Peoples  Bldg.   Soc,  60  6*  Nave   v.   First   Natl.    Bank,   87 

Minn.  94,  61  N.  W.  904.  Ind.  204. 

5»  Prescott     V    Hixson,    22    Ind.  *■*  Southern  L.  Ins.  &  Trust  Co. 

App.  139,  53  N.  E.  391.  v.  Gray,  3  Fla.  262. 


§§  300-301      EVIDENCE — PARTICULAR   CHARACTERISTICS.  339 

there  is  doubt  zvhcther  it  is  a  bill  or  note,  the  holder  may  treat 
it  as  either  at  his  election;  (6)  where  a  signature  is  so  placed  up- 
on the  instrument  that  it  is  not  clear  in  what  capacity  the  person 
making  the  same  intended  to  sign,  he  is  to  be  deemed  an  in- 
dorser;  (7)  where  an  instrument  containing  the  words  'I  promise 
to  pay'  is  signed  by  tzi'O  or  more  persons  they  are  deemed  to  be 
jointly  and  severally  liable  thereon/'^   This  is  the  law  generally. 

And  the  Negotiable  Instruments  Law  provides  as  follows  as 
to  instruments  executed  before  its  passage  and  as  to  matters  not 
provided  for  in  the  act : 

"The  provisions  of  this  act  do  not  apply  to  negotiable  instru- 
ments made  and  delivered  prior  to  the  passage  hereof ."^^ 

"In  any  case  not  provided  for  in  this  act  the  rules  of  the  laiv 
merchant  shall  govern."^"^ 

§  300.  As  to  execution  and  delivery.  The  general  rule  of 
evidence  is  that  the  instrument  is  presumed  to  have  been  exe- 
cuted and  delivered  at  the  maker's  residence^^  and  at  the  time  in- 
dicated by  the  date  thereof.®"  The  possession  of  the  instrument 
by  the  holder  is  presumptive  evidence  of  delivery  -^^  and  the  hold- 
er must  prove  the  execution  of  the  instrument  7^  execution  may 
also  be  proved  by  circumstantial  evidence.'^^  The  fact  that  one 
person  signed  a  note  for  another  at  his  direction  in  his  presence 
may  be  shown  by  parol  evidence.''^  Parol  evidence  may  be  used 
to  show  that  a  note  in  the  hands  of  the  payee  was  not  intended 
to  be  delivered/'*  but  it  cannot  be  used  to  show  that  it  was  de- 
livered to  him  as  an  escrow.'^' 

§  301.  As  to  acceptance  of  bills.  The  presumptions  as  to 
the  acceptance  of  bills  of  exchange  is  that  the  acceptor  knows  the 
signature  of  the  drawer,''®  and  that  he  (the  acceptor)  has  sufficient 

*5  New.    Ins.    Law,    §    17,    where  27o,  25  So.  745 ;  Hopkins  v.  Miller, 

all  cases  directly  or  indirectly  bear-  17  N.  J.  Law  185. 

ing    upon    or    citing    the    Law    are  '^^  Pastcne    v.    Pardini,    135    Cal. 

grouped.  431,  67  Pac.  681. 

«»Neg.   Ins.   Law,   §    195,    where  ''i  McRae   v.    Handeshell,   88   111. 

all  cases  directly  or  indirectly  bear-  App.  428. 

ing    upon    or    citing    the    Law    are  '^^  Victor  v.   Swisky,  87  111.  App. 

grouped.  583. 

C^Neg.    Ins.    Law.   §    196,    where  73  Morton  v.  Alurray,  176  111.  54, 

all  cases  directly  or  indirectly  bear-  51  N.  E.  767. 

ing    upon    or    citing    the    Law    are  ''"*  Scaife  v.  Byrd,  39  Ark.  568. 

grocped.  75  Garner  v.  Fite,  93  Ala.  405.  9 

«8  McAuliff  V.  Reuter,  61  111.  App.  So.  367. 

32 ;  Strawberry  Point  Bank  v.  Lee,  ^c  U.   S.  v.  Bank  of  Georgia,   10 

117  Mich.  122,  75  N.  W.  444.  Wheat.   32,2,,  6  L.   Ed.   334;   White 

^9  Ely  Law  Co.  v.  Hood.  121  Ala.  v.    Continental    Natl.    Bank,  64    N. 

Y.  316,  21  Am.  Rep.  612. 


340  NEGOTIABLE   INSTRUMENTS.  §302 

funds  of  the  drawer  in  his  hands  with  which  to  meet  the  de- 
mand ;''''  however,  evidence  may  be  introduced  to  show  the  con- 
trary. If  the  acceptance  is  not  plain  and  clear  but  is  ambiguous 
the  same  may  be  explained  by  parol  evidence.''**  If  there  has 
been  an  oral  acceptance  of  a  bill  the  same  may  be  shown  by  parol 
evidence.'^'*  Where  a  person  who  has  accepted  a  bill  for  accom- 
modation sues  the  drawer  he  must  prove  both  the  acceptance  and 
the  payment  by  him.^"  But  the  fact  that  the  acceptance  was  for 
the  accommodation  of  the  drawer  cannot  be  shown  by  parol  evi- 
dence as  against  the  payee.** 

§  302.  As  to  transfer.  The  presumption  is  that  a  transferee 
or  holder  has  procured  the  instrument  in  good  faith  for  value 
and  without  notice  of  equities.**^  The  party  alleging  the  want  of 
good  faith,  value  or  notice  has  the  burden  of  proof  showing  the 
same.**  But  where  the  instrument  in  its  inception  was  obtained 
by  fraud  or  upon  an  illegal  consideration  the  burden  of  proof  is 
upon  the  holder  to  show  that  he  is  a  bona  Ude  purchaser.*'* 

The  indorsee  wdio  sues  upon  a  note  and  produces  the  instru- 
ment need  not  give  other  evidence  of  ownership  to  make  out  a 
prima  facie  case.*'  A  testator  has  been  held  to  be  the  owner  of 
an  instrument  where  the  payee's  day  book  showed  a  transfer  to 
the  deceased.*®  A  transfer  of  a  note  may  be  proven  by  the 
payee's  admission  without  proof  of  his  signature.*'' 

All  acts  w^hich  show  a  wilful  failure  of  inquiry  and  gross  neg- 
ligence in  purchasing  are  admissible  as  tending  to  show  bad  faith 
on  the  part  of  the  purchaser.** 

Evidence  is  admissible  to  show  that  an  indorsee  suing  upon  a 
note  had  notice  that  the  payee  usually  loaned  money  at  a  usuri- 

'"'  Turner    v.    Browder,    5    Bush.  83  Goodman  v.  Simonds,  20  How. 

216;  Trego  v.  Lowrey,  8  Neb.  238.  343.    15  L.    Ed.  934;   Credit    Co.   v. 

78  Gallagher  v.  Black,  44  Me.  99:  Home  Mach.  Co.,  54  Conn.  357,  8 
Laften  &  Rand  Powder  Co.  v.  Sin-  Atl.  472. 

sheimer,  48  Md.  411.  30  Am.   Rep.  84  Kniss  v.  Holbrook  (Ind.  App.). 

472.  40   N.    E.    1118;    Galbraith   v.    Mc- 

79  Pierce  v.  Kittridge,  115  Mass.  Laughlin,  91  Iowa  399,  59  N.  W. 
374.  338. 

80  Nichols  v.  Morgan,  9  La.  Ann.  85  Dawson  Town  &  Gas  Co.  v. 
534.  Woodhull,  67  Ind.  451.  14  C.  C.  A. 

81  Noevak  v.  Excelsior  Stone  Co.,  464. 

78  111.  307.  86  Macomb     v.      Wilkinson,      83 

82Leening  v.  Wise,  64  Cal.  410;  Mich.  486,  47  N.  W.  336. 

Forbes   v.    National   Forge   &    Iron  87  McKown    v.    Mathes,     19    La. 

Co.,   50   111.    App.    503;    Challiss   v.  (O.  S.)  542. 

Woodburn,   2    Kans,    App.   652,    43  88  Rowland  v.   Fowler,  47  Conn. 

Pac.  792.  347. 


§  303  EVIDENCE — PARTICULAR    CHARACTERISTICS.  341 

ous  rate.^  The  fact  that  the  purchaser  had  knowledge  of  the 
fraudulent  manner  in  which  similar  notes  were  procured  by  the 
payee  may  be  shown  by  evidence  as  tending  to  show  bad  faith  on 
the  part  of  the  purchaser.''*  If  the  note  was  merely  indorsed  for 
collection®*  or  as  collateral  security®^  or  for  any  particular  pur- 
pose the  same  may  be  shown  by  parol  evidence.**' 

§  303.  As  to  conditions.  If  the  conditions  are  written  on 
the  note,  either  at  the  bottom  or  on  the  margin,  before  delivery 
they  are  presumed  to  be  a  part  of  the  original  obligation .^'^  But 
if  these  conditions  are  in  the  form  of  a  memorandum  and  con- 
tradictory in  themselves  they  are  deemed  no  part  of  the  note.** 
If  the  conditions  on  the  note  are  executed  in  one  state  and  the 
note  is  payable  in  another  state  the  presumption  is  that  they  were 
expressed  with  reference  to  the  law  of  the  state  where  the  in- 
strument is  payable.*®  Where  an  instrument  for  the  payment  of 
money  was  delivered  pursuant  to  an  oral  agreement  that  it  should 
become  binding  only  upon  a  future  condition  or  contingency, 
parol  evidence  is  admissible  against  the  payee  or  holder  with  no- 
tice to  show  such  agreement.**  Where  a  bill  of  exchange  was 
drawn  for  the  purpose  of  canceling  the  drawer's  funds  on  condi- 
tion that  it  should  take  effect  only  in  case  of  an  attachment  such 
fact  may  be  shown  by  parol  evidence.*''  Parol  evidence  is  admissi- 
ble to  show  that  at  the  time  of  making  a  note,  it  was  orally  agreed 
that  it  should  be  payable  from  the  proceeds  of  a  mill  and  that  if 
there  were  no  proceeds  it  was  to  be  returned  and  destroyed.*^  An 
agreement  entered  into  at  the  time  the  note  was  executed,  to  the 
effect  that  the  note  should  be  returned  upon  a  certain  day  if  de- 
manded, may  be  shown  by  parol  evidence.**  But  the  general 
rule  is  that  parol  evidence  is  inadmissible  to  show  that  an  instru- 
ment, absolute  in  its  terms,  was  to  be  paid  only  on  a  condition  or 
contingency.*    Thus  parol, evidence  is  not  admissible  to  prove  an 

89Blackwell  v.   Wright,  27  Neb.  94  Way  v.  Batchelder,   129  Mass. 

269,  43  N.  W,  116,  20  Am.  St.  Rep.  301. 

662.  95  Farmers   Trust   Co.   v.    Schen- 

»o  Bowman    v.    Metzger,    27    Or.  nit,  83  111.  App.  267. 

23,  39  Pac.  3,  44  Pac.  1090.  »«  Smith   v.   Mussetter,  58  Minn. 

»i  Church  V.  Barlow,  9  Pick.  547.  159,  59  N.  W.  995. 

See  note  17  L.  R.  A.   (N.  S.)  838.  97  Stevens  v.  Parker,  7  Allen  361. 

92  Stack   V.    Beach,    74   Ind.    571,  98  Roberts  v.  Greig,  15  Colo.  App. 

39  Am.  Rep.  113.  378.  62  Pac.  574. 

92a  As  to  parol  evidence  to  explain  99  McFarland  v.   Sikes,  54  Conn, 

indorsement.     See  note  4  A.  L.  R.  250,  7  Atl.  408. 

764.  1  Brown  v.  Wiley,  20  How.  442, 

»3Edelen  v.  Worth,  69  Mo.  App.  15  L.  Ed.  965;  Kempshall  v.  Ved- 

124.  der,  79  111.  App.  368.     As  to   ad- 


342  NEGOTIABLE  INSTRUMENTS.  §§304-305 

oral  agreement  entered  into  contemporaneous  with  a  note,  pro- 
viding that  the  note  which  is  absolute  and  payable  at  a  time  cer- 
tain, was  not  to  be  paid  if  certain  land  was  not  paid  for;^  neither 
can  it  be  shown  that  a  parol  agreement  providing  that  a  note  was 
not  to  be  operative  or  collected  until  certain  other  securities  for 
the  same  debt  had  been  exhausted.^  But  if  the  conditions  of  the 
note  or  other  obligation  for  money  have  been  reduced  to  writ- 
ing contemporaneously  with  the  instrument,  such  writing  will  be 
admissible  as  evidence  as  being  part  of  the  same  contract.*  In 
an  action  by  the  indorsee  of  a  note,  which  is  negotiable  in  form, 
against  the  maker,  an  oral  agreement  between  the  maker  and 
payee  that  the  note  was  not  to  be  negotiated  cannot  be  shown.** 

§  304.  As  to  mistake.  The  burden  of  proving  that  there  is 
a  mistake  in  an  instrument  is  on  the  party  alleging  the  mistake,® 
but  this,  in  general,  can  only  be  proved  as  between  the  original 
parties,  or  those  having  notice. 

Parol  evidence  may  be  introduced  to  show  a  mistake  between 
the  parties  upon  an  instrument  in  settlement,  or  to  show  the 
amount  of  actual  indebtedness  upon  a  note  held  by  written  agree- 
ment as  collateral  security  for  the  balance  due  on  settlement.'^ 

§  305.  As  to  fraud  and  duress.  Parol  evidence  may  be  in- 
troduced in  a  proper  case  to  show  that  the  execution  or  indorse- 
ment of  a  note  was  obtained  through  fraud  or  misrepresenta- 
tions f  but  in  order  to  relieve  the  maker  it  must  be  clearly  estab- 
lished. The  defense  of  fraud  or  duress  can  be  established  by  a 
mere  preponderance  of  evidence.^  Any  evidence  which  will  tend 
in  any  manner  to  establish  a  defense  of  fraud  or  duress  is  ad- 
missible.** Fraud  in  obtaining  a  negotiable  instrument  may  be 
established  by  the  circumstantial  evidence  tending  to  prove  the 
same.-^*  Where  relief  is  sought  in  equity  for  alleged  fraud  or 
duress  in  procuring  a  negotiable  instrument  the  same  may  be 
shown  by  parol  evidence.*^    But  parol  evidence  is  not  admissible 

missibility  of  parol  evidence  of  con-  App.  166,  178  111.  182,  52  N.  E.  957; 

dition  to  vary  or  contradict,  see  note  Stout  v.  Judd,   10  Kans.  App.  579, 

3  L.  R.  A.  363.  63  Pac.  662. 

2  Gliddens  v.  Harrison,  59  Ala.  ^  Sherwood  v.  First  Natl.  Bank, 
481.  17  III.  App.  591;   Rossiter  v.  Lae- 

3  Fisher  v.  Briscoe,  10  Mont.  124,  ber,  18  Mont.  372,  45  Pac.  560. 

25  Pac.  30.  10  Maples  v.  Browne,  48  Pa.  St. 

4Gerrish  v.  Glines,  50  N.  H.  9;  458;  Behl  v.  Schuett,  104  Wis.  76, 

Munro  v.  King,  30  Col.  238.  80  N.  W.  73. 

s  McSherry    v.    Brooks,    46    Md.  n  Maxson  v.  Llewelyn,   122  Cal. 

103.  195,  54  Pac.  732. 

®  Sheby  v.  Brooks,  114 -Mich.  11.  12  pjt^maurice     v.     Mosier,     116 

''Thomas  v.  Thomas.  7  Wis.  476.  Ind.   563.    16   N.   E.    175,    19  N.   E. 

8  Blake    v.    State    Bank,    78    111.  180,  9  Am.  St.  Rep.  854. 


§§  306-308      EVIDENCE — PARTICULAR  CHARACTERISTICS.  343 

to  show  a  fraudulent  promise  to  surrender  a  note  or  bill."  Pay- 
ment may  be  proven  by  a  preponderance  of  evidence  and  any 
evidence  is  admissible  which  tends  to  corroborate  or  rebut  a  pre- 
sumption of  payment.  Parol  evidence  may  be  introduced  to  ex- 
plain or  contradict  a  receipt  of  payment.  Parol  evidence  can  be 
used  to  show  that  indorsements  on  a  note  were  for  one  and  the 
same  sum. 

§  306.  Usury.  It  is  not  necessary  to  establish  usury  by  di" 
rect  evidence,  but  facts  and  circumstances  which  will  tend  to 
establish  usury  may  be  proved.  The  burden  of  proving  usury  is 
upon  the  party  setting  it  up  as  a  defense  and  a  mere  prepon- 
derance of  the  evidence  will  establish  usury.  Parol  evidence  may 
be  admitted  to  show  an  agreement  for  usurious  interest,  and  to 
prove  that  it  was  paid. 

§  307.  As  to  payment  and  discharge.  The  possession  of  a 
note  by  the  payee  is  prima  facie  evidence  of  non-payment*"*  while 
the  possession  of  the  instrument  by  the  maker  creates  a  rebut- 
table presumption  of  payment.-^^  The  presumption  is  that  a  note 
or  other  instrument  has  been  paid  when  due.^* 

If  there  is  no  evidence  to  the  contrary  the  presumption  is  in 
some  jurisdictions  that  the  taking  of  a  negotiable  instrument  for 
a  debt  is  a  payment  of  the  debt.*''  The  presumption  as  to  a  check 
is  that  it  is  in  payment  of  money  due  rather  than  for  a  loan.*® 
Although  the  language  of  a  check  imports  full  payment,  it  is 
only  prima  facie,  and  not  conclusive  evidence  of  that  fact.*® 

The  person  having  possession  of  a  negotiable  instrument  is 
prima  facie  entitled  to  receive  payment,^®  and  anyone  alleging 
payment  to  a  person  who  is  not  in  possession  of  the  instrument 
must  also  show  that  this  person  was  authorized  to  receive  pay- 
ment.** 

§  308.  As  to  presentment  and  demand.  Parol  evidence  is 
admissible  to  prove  demand,^^  to  show  an  agreement  for  demand 
at  a  particular  place*^  and  to  show  a  waiver  of  demand.*^ 

^^3  Henderson  v.  Thomson,  52  Ga.  '^^  Yates    v.    Shepardson,  39  Wis. 

149.  173. 

14  Pastene  v.  Pardini,  135  Cal.  *®  Greer  v.  Laws,  56  Ark.  37,  18 
432,  67  Pac.  681 ;  Ritter  v.  Schenk,  S.  W.  1038. 

101  111.  387.  20Pau]man  v.  Claycomb,  75  Ind. 

15  Lipscomb  v.  Le  Lemos,  68  Ala.  64 ;  Whelan  v.  Reilly,  61  Mo.  565. 
592;   Callahan  v.  Bank  of  Ky.,  82  ^i  Hall   v.    Smith,   3   Kans.   App. 
Ky.  231.  685,    44    Pac.   908;    Loy   v.    Hovey 

i«  Richardson    v.    Cambridge,    2       (Neb.),  89  N.  W.  998. 
Allen  118,  79  Am.  Dec.  767.  -^  Hunt  v.  ^felbee.  7  N.  Y.  266. 

17  Bunker  v.   Barron,  79  Me.  62,  ^^  Meyer  v.  Hibsher,  47  N.  Y.  265. 

8  Atl.  253,  1  Am.  St.  Rep.  282.  ^*  Porter    v.    Kimball,    53    Barb. 

467. 


344  NEGOTIABLE    INSTRUMENTS.  §§  309-310 

A  note  payable  at  a  bank,  which  remains  there,  is  presumed  to 
have  been  presented  there  for  payment  when  due,^'*  and  the 
casKTer  of  the  bank  is  presumed  to  have  done  his  duty  to  be  at  the 
bank  to  receive  payment  during  business  hours  of  the  last  day  of 
payment.^® 

It  has  been  held  sufficient  evidence  of  demand  and  refusal  that 
no  funds  were  provided  to  meet  a  note  payable  at  a  bank  when 
properly  presented  when  due,  at  the  bank  within  banking  hours.*^ 

It  is  presumed  when  a  bill  of  exchange  is  drawn  that  it  is 
drawn  against  funds  sufficient  to  meet  it;  but  it  has  been  held 
that  where  there  are  no  funds  to  meet  it,  then  it  is  presumed  that 
the  drawer  knew  this  and  that  he  did  not  expect  it  to  be  paid,  and 
that  therefore  it  is  not  necessary  to  present  and  give  notice,  as  he 
could  not  be  injured  by  such  a  failure. 

The  burden  of  explaining  delay,  or  cause  of  failure  to  present 
when  due,  is  on  the  holder. 

§  309.  As  to  protest  and  notice.  The  question  of  notice  of 
dishonor  may  be  supplemented  or  explained  by  evidence  of  the 
notary  in  addition  to  his  certificate  of  protest.^^  Notice  of  pro- 
test, however,  may  be  proved  by  any  other  competent  evidence.*® 
In  case  of  a  foreign  bill  of  exchange  it  has  been  held  that  no  evi- 
dence can  be  given  of  the  protest  for  non-acceptance  without 
producing  the  protest  itself  or  showing  that  both  the  original  and 
the  books  are  lost.^"  The  certificate  of  protest  may  be  contra- 
dicted and  a  waiver  of  notice  may  be  shown  by  parol.^* 

§  310.  Bills  and  notes  as  evidences.  If  the  signature  to  the 
instrument  is  not  properly  denied  a  bill  or  note  is  admissible  in 
evidence  without  proof  of  the  signature.^*  A  note  ofifered  in  evi- 
dence as  being  one  secured  by  a  mortgage  or  deed  of  trust  may 
be  identified  by  parol  evidence.^^  When  the  action  is  upon  an 
old  note  which  has  been  renewed,  the  renewed  note  must  be  pro- 
duced in  court,  if  not  previously  delivered.^'*  A  suit  cannot  be 
maintained  upon  negotiable  instruments  which  have  been  exe- 
cuted in  lieu  of  outstanding  negotiable  notes  of  the  same  maker 

25  Dykman  v.  Northridge,  1  App.  31  Applegarth  v.  Abbott,  64  Cal. 
Div.  26,  36  N.  Y.  Supp.  962.  459,  2  Pac.  43. 

26  Folger  v.  Chase,  18  Pick.  3^  Richardson  v.  Comstock,  21 
(Mass.)  63.  Ark.    69;    Talbott   v.    Kennedy,   76 

27  Gillett     V.     Averill,     5     Denio  Ind.  282. 

(N.  Y.)  85.  33Kiser  v.  Carrollton  D.  G.  Co., 

28  Bliss  V.  Paine,  11  Mich.  92;  96  Ga.  76,  22  S.  E.  303;  Cutter  v. 
Wetherall  v.  Clagett,  28  Md.  465.  Steele,  93  Mich.  204,  53  N.  W.  521. 

29  Eddy  V.  Peterson,  22  111.  535.  34  Miller  v.  Woods,  21   Ohio  St. 

30  Ky.  Com.  Bank  v.  Barksdale,  485,  5  Am.  Rep.  71. 
36  Mo.  563. 


§311  EVIDENCE — PARTICULAR    CHARACTERISTICS.  345 

unless  these  outstanding  obligations  are  produced  and  surren- 
dered.^ At  the  hearing  of  a  suit  upon  any  negotiable  instru- 
ment the  instrument  must  be  produced  or  there  must  be  an  excuse 
for  its  non-production.*® 

§  311.  As  to  meaning  of  certain  terms.  As  to  the  meaning 
of  certain  terms  the  Negotiable  Instruments  Law  makes  the  fol- 
lowing provisions: 

"Action"  includes  counterclaim  and  set-off. 

"Bank"  includes  any  person  or  association  of  persons  carrying 
on  the  business  of  banking,  whether  incorporated  or  not. 

"Bill"  means  bill  of  exchange,  and  "note"  means  negotiable 
promissory  note. 

"Holder"  means  the  payee  or  indorsee  of  a  bill  or  note,  who 
is  in  possession  of  it,  or  the  bearer  thereof. 

"Instrument"  means  negotiable  instrument. 

"Issue"  means  the  first  delivery  of  the  instrument,  complete  in 
form,  to  a  person  who  takes  it  as  a  holder. 

"Person"  includes  a  body  of  persons,  whether  incorporated  or 
not. 

"Written"  includes  printed,  and  "writing"  includes  print.^"^ 

35  Garner  v.  Cohen,  99  Ga.  78,  24  3'  Neg.  Ins.  Law,  §  191,  where 
S.  E.  851.  all  cases  directly  or  indirectly  bear- 

36  O'Neil  V.  O'Neil,  123  111.  361,  ing  upon  or  citing  the  Law  are 
14  N.  E.  844.  grouped. 


CHAPTER  XXVII. 
TRIAL  PROCEDURE  ON  BILL,  NOTE  OR  CHECK. 

§  312.  Essentials  of  procedure.  §  318.  Evidence  of  plaintiff 

313.  Common  law  procedure.  319.  Evidence  of  defendant. 

314.  Code  procedure.  320.  The  argument. 

315.  Steps  in  a  jury  trial.  321.  The      charge,      verdict      and 

316.  Impaneling  the  jury.  judgment. 

317.  Opening  statements. 

§  312,  Essentials  of  procedure.  In  a  proceeding  on  a  note, 
bill  or  check,  the  following  steps  are  essential  whether  the  pro- 
cedure is  the  common  law  or  the  code  : 

(a)  An  application  to  the  courts  for  recovery  on  the  note, 
bill  or  check. 

(b)  The  process. 

(c)  Appearance  of  the  adverse  party, 

(d)  Readings, 
(ej     A  trial. 

(f)  A  decision. 

(g)  Its  enforcement.* 

§  313.  Common  law  procedure.  When  the  procedure  is  un- 
der common  law,  the  following  steps  appear: 

(a)  Suit  is  commenced  by  the  filing  of  a  praecipe  and  the 
issuing  of  an  original  writ. 

(b)  The  defendant  appears  either  in  person  or  by  attorney. 

(c)  The  pleadings  are  as  follows : 

(1)  The  plaintiff's  declaration  on  the  bill,  note  or  check, 

(2)  The  defendant's  plea,  or  when  he  wishes  to  raise  a 
question  of  law,  his  demurrer. 

(3)  The  plaintifif's  replication  to  the  plea. 

(4)  The  defendant's  rejoinder. 

(5)  The  plaintiff's  surrejoinder. 

(6)  The  defendant's  rebutter. 

(7)  The  plaintiff's  surrebutter. 

(d)  The  trial  is  usually  by  jury. 

(e)  The  decision  of  the  jury  is  called  a  verdict,  upon  which 
the  court  renders  a  judgment. 

(f)  The  judgment  is  enforced  by  means  of  an  execution.* 

1  Perry  on  Common  Law^  Plead-  ^  Perry  on  Common  Law  Plead- 

ing,   Chapt.    vii ;    Smith's    Elemen-      ing,    Chapt.    vii ;    Smith's    Elemen- 
tary Law.  tary  Law. 

346 


\ 


§§    314-316  TRIAL    PROCEDURE.  347 

§  314.  Code  procedure.^  When  the  procedure  is  under  a 
code,  the  following  steps  usually  occur : 

(a)  Suit  is  commenced  by  filing  a  complaint  or  petition  on 
the  bill,  note  or  check. 

(b)  The  writ  by  which  the  defendant  is  notified  that  a  suit 
has  been  filed  against  him  on  the  bill,  note  or  check  is  usually 
called  a  summons. 

(c)  The  defendant  may  appear  either  in  person  or  by  at- 
torney. 

(d)  The  only  pleadings  usually  allowed  are: 

(1)  The  complaint  or  petition  on  the  bill,  note  or  check. 

(2)  The  answer  or  demurrer  of  the  defendant  to  the  com- 
plaint or  petition. 

(3)  The  reply  of  the  plaintiff  to  the  answer  or  demurrer  to 
the  answer. 

(4)  The  demurrer  by  defendant  to  the  reply. 

(e)  The  trial  may  be  with  or  without  jury. 

(f)  The  court's  decision  may  take  the  form  of  a  judgment 
or  a  decree,  according  to  whether  the  action  is  of  a  legal  or  equi- 
table nature. 

(g)  If  the  action  is  legal  in  its  nature  the  judgment  is  en- 
forced by  execution ;  if  equitable,  by  contempt  of  court  proceed- 
ings. 

§  315.  Steps  in  a  jury  trial.  For  convenience  a  jury  trial 
may  be  divided  into  seven  different  steps  as  follows : 

(a)  Impaneling  the  jury. 

(b)  Opening  statements  on  behalf  of  plaintiff  and  defendant. 

(c)  Evidence  produced  on  behalf  of  plaintiff  and  defendant. 

(d)  Argument  on  behalf  of  plaintiff  and  defendant. 

(e)  Charge  by  the  court  to  the  jury. 

(f)  Verdict  of  jury. 

(g)  Judgment  rendered  by  the  court.'* 

§316,  Impaneling  the  jury.  The  first  step  in  the  trial  is 
the  impaneling  of  the  jury.  Almost  universally  in  the  states 
the  jury  consists  of  12  men."*  These  men  should  be  disinterested 
in  the  matter  in  litigation  and  should  be  entirely  impartial.'* 
Each  party  has  the  right  to  object  to  a  certain  person's  sitting 
as  a  juror  in  his  case,  and,  if  proper  reasons  for  the  objection 
are  given,  the  person  so  objected  to  cannot  sit  on  the  jury;  this 

3  Bliss  on  Code  Pleading,  Chapt.       2    Wis.    22 ;    Cooley's    Const.    Lim. 
X,  et  seq;  Smith's  Elementary  Law.       (5th  Ed.)  391. 

3a  Smith's  Elementary  Law.  ^  Ensign  v.  Harney,  IS  Neb.  330, 

4  Work  V.  State,  2  Ohio  St.  296,  48  Am.  Rep.  344;  Melson  v.  Dick^ 
59  Am.  Dec.  671 ;  Nerval  v.  Rice,      son,  63  Ga.  683,  36  Am.  Rep.  128. 


348  NEGOTIABLE   INSTRUMENTS.  §§317-318 

is  called  a  challenge  for  cause.®  It  is  customary  for  each  party 
to  be  allowed  to  challenge  from  two  to  five  persons  perempto- 
rily as  jurors  without  assigning  cause.'^  After  each  party  has 
made  his  challenges  or  had  an  opportunity  to  do  so,  those  men 
remaining  are  sworn  in  as  the  jury  to  try  the  case. 

§  317.  Opening  statements.  Ordinarily  as  the  second  step, 
each  party  gives  an  outline  of  what  he  proposes  to  prove  in  what 
is  known  as  an  opening  statement  of  the  case  to  the  jury.®  The 
plaintiff  makes  his  statement  first  and  then  the  defendant  makes 
his.» 

§318.  Evidence  of  plaintiff.  Following  this  is  the  produc- 
tion of  the  testimony.  In  a  proceeding  on  a  promissory  note, 
a  bill  of  exchange  or  bank  check  some  of  the  testimony  exists 
in  the  form  of  documents,  that  is,  in  the  form  of  written  instru- 
ments and  in  such  case  the  instruments  themselves  are  intro- 
duced. Upon  the  bill,  note  or  check  being  introduced  in  evi- 
dence the  following  six  presumptions  arise : 

(a)  A  presumption  of  consideration  or  that  a  consideration 
was  given  for  it  by  the  plaintiff.^® 

(b)  A  presumption  that  there  was  the  necessary  delivery.** 

(c)  A  presumption  that  all  the  terms  of  the  instrument  are 
stated  therein.*^ 

(d)  A  presumption  of  title  on  a  good  consideration  from  th^ 
fact  of  possession.*^ 

(e)  A  presumption  that  the  debt  is  unpaid;  and*"* 

0  Barrett    v.    Long,    3    House    of  Rep.  653,  30  L.  R.  A.  286;  Niblack 

Lords    Cases   395,   415;    Gilliam   v.  v.  Champeny,   10  S.  D.  165,  72  N. 

Brown,    43    Miss.    641 ;    Loeffler    v.  W.  402. 

Keokuk  etc.  Co.,  7  Mo.  App.  785.  ^^  McFarland  v.  Sikes,  54  Conn. 

7  Hayes  v.  Missouri,  120  U.  S.  68,  250,  7  Atl.  408,  1  Am.  St.  Rep.  Ill ; 

30  L.  Ed.  578;  O'Neil  v.  Lake  Su-  Schallehn  v.  Hubbard,  64  Kan.  601, 

perior  Iron  Co.,  61  Mich.  560,  35  N.  68  Pac.  61 ;   Woodford  v.  Dorwin, 

W.  162 ;  Gulf  etc.  Rv.  Co.  v.  Keith,  3  Vt.  82,  21  Am.  Dec.  573. 

74  Tex.  287,  11  S.  W.  1117.  12  Hill  v.  Shields,  81  N.  C.  250, 

SKley  V.  Healy,  127  N.  Y.  555.  28  31  Am.  Rep.  499;  Rice  v.  Ragland, 

N.    E.   593;   Vawter  v.   Hultz,    112  10   Humph.    (Tenn.)    545,    53   Am. 

Mo.  633,  20  S.  W.   689;   Elwell  v.  Dec.   IZI ;   Dwiggins  v.   Mercliants' 

Chamberlin,  31  N.  Y.  611.  Nat.  Bank  (Tex.  Civ.  App.),  27  S. 

» Elder    v.    Oliver,    30    Mo.    App.  W.  171. 

575;    Cortelyou   v.    Hiatt,   Zd   Neb.  ^3  Borgess   Invest.   Co.   v.   Vetts, 

584,  54  N.  W.  964 ;  Bates  v.  Forcht,  142  Vio.  560,  44  S.  W.  754,  64  Am. 

89  Mo.  121,  1  S.  W.  120.  St.  Rep.  567;  Middleton  v.  Griffith, 

10  Perot  V.   Cooper,   17  Colo.  80,  .57  N.  J.  L.  442,  31  Atl.  405,  51  Am. 

28  Pac.  391.  31  Am.  St.  Rep.  258;  St.  Rep.  617;  Smith  v.  Lawson,  18 

Germania     Bank    v.    Michand,    62  W.  Va.  212,  41  Am.  Rep.  688. 

Minn.  459,  65  N.  W.  70,  54  Am.  St.  ^^  Sampson  v.  Fox,  109  Ala.  662. 


§  318  tSlAL  PROCEDURE.  349 

(f)  If  the  indorsement  is  undated,  a  presumption  arises  that 
it  was  made  before  maturity.*^ 

These  are  well  established  principles.  But  proof  of  certain 
facts  becomes  necessary.  It  is  necessary  in  the  first  instance  to 
prove  the  signatures  of  all  parties  necessary  to  prove  plaintiff's 
title.-^*  This  is  usually  done  by  witnesses,  who  after  being  sworn 
to  testify  to  the  truth,  the  whole  truth,  and  nothing  but  the 
truth,  are  questioned  with  regard  to  what  they  know  as  to  the 
signatures  on  the  note,  bill  or  check.  The  party  producing  the 
witness,  or  his  attorney,  first  examines  the  witness,  bringing  out 
the  testimony  desired.  This  is  called  the  "direct  examination." 
The  opposite  party  may  then  cross-examine  the  witness,  asking 
him  questions  pertaining  to  the  matter  brought  out  on  the  direct 
examination.  There  is  then  usually  a  redirect  examination,  and 
usually  a  recross-examination  is  allowed. 

If  the  bill,  note  or  check  sued  upon  is  governed  by  the  law  of 
some  state  other  than  the  one  in  which  the  action  is  pending 
that  law  must  be  alleged  and  proved.  It  is  a  general  principle 
that  the  courts  of  a  state  or  country  cannot  take  judicial  notice 
of  the  laws  of  a  foreign  state  or  country ;  and  when  such  laws 
are  sought  to  be  appHed,  they  must  be  alleged  and  proved.-^'^ 
•When  relied  upon,  they  must  be  proved  as  facts,^^  otherwise  it 
will  be  presumed  that  they  are  the  same  as  the  laws  of  the  state 
in  which  suit  is  brought ;  or  what  is  the  same  in  effect,  when  the 
laws  of  the  foreign  country  are  not  put  in  proof  as  facts,  the 
court  will  apply  to  the  transaction  in  suit  the  laws  of  the  state 
in  which  suit  is  brought.-*^  Thus  the  law  as  to  the  rate  of  dam- 
ages will  be  presumed  to  be  the  same  where  the  bill  is  drawn  in 
one  country,  and  is  sued  on  in  another  ;^®  so  it  will  be  presumed 
where  the  law  of  the  place  where  suit  is  brought  authorizes  an 
indorsee  to  sue  before  exhausting  recourse  against  the  maker,** 

19  So.  896,  55  Am.   St.  Rep.  950;  377,  76  Am.  St.  Rep.  779.    Note  67 

Morehead   Banking  Co.  v.  Walker,  L.  R.  A.  33  et  seq. 

121  N.  C.  115,  28  S.  E.  253.  is  Owen  v.  Boyle,  15  Me.  147,  32 

1^  Snyder  v.  Riley,  6  Pa.  St.  164,  Am.    Dec.     143 ;    Nashua    Savings 

47    Am.    Dec.    452;    McDowell    v.  Bank   v.   Anglo-American   Co.,    189 

Goldsmith,  6  Md.  319,  61  Am.  Dec.  U.  S.  221,  47  L.  Ed.  782.    See  notes, 

305;   Smith  v.  Lawson,  18  W.  Va.  11  Am.  Dec.  779  and  113  Am.  St. 

212,  41  Am.  Rep.  688.  Rep.  868. 

16  Chafifee  v.  Taylor,  3  Allen  598;  i»  McBride  v.  The  Farmers  Bank, 

First    Nat.    Bank  of  Houghton  v.  26  N.  Y.  450;  Crake  v.  Crake,  18 

Robert,  41  Mich.  709.  Ind.  156. 

1^  Birmingham  Water  Works  Co.  2®  Kuenzi  v.  Elvers,  14  La.  Ann. 

V.  Hume,  121  Ala.  168,  77  Am.  St.  391. 

Rep.   43;   Murtey  v.   Allen,   71   Vt.  21  Beauer  v.   Briggs,   4  La.  467; 

Bernard  v.  Barry,  1  Gr.  388. 


350  ■  NEGOTIABLE   INSTRUMENTS.  §  318 

that  the  law  of  the  place  of  the  contract  is  the  same ;  and  so, 
where  by  the  law  of  the  place  where  suit  is  brought  a  party  sign- 
ing in  a  certain  way  is  regarded  as  an  indorser  the  foreign  law 
will  be  presumed  to  be  the  same.**  But  where  the  question  is 
one  relating  to  the  law  merchant,  which  is  of  general  applica- 
tion, as  for  instance,  the  number  of  days  of  grace,  it  will  be 
presumed  that  they  were  fixed  by  the  law  merchant — the  law 
merchant  being  regarded  as  part  of  the  common  law.** 

In  case  the  instrument  is  one  which  must  be  protested  in  order 
for  the  plaintiff  to  recover  then  the  fact  of  protest  must  be 
proved. 

In  a  proceeding  by  the  holder  against  the  drawer  or  indorser 
of  a  bill,  or  the  indorser  of  a  note,  the  obligation  of  the  defend- 
ant being  to  pay  in  the  event  the  party  primarily  liable  does  not, 
it  is  necessary  to  prove  the  default  of  such  party  unless  the  proof 
be  in  some  manner  waived  or  dispensed  with.**  One  who  re- 
ceives a  bill  or  note  is  understood  thereby  to  enter  into  an  agree- 
ment with  every  other  party,  who  would  be  entitled  to  bring  an 
action  on  paying  it,  that  he  will  present  it  in  proper  time  to  the 
drawee  for  acceptance,*'*  when  acceptance  is  necessary,  and  to 
the  acceptor  for  payment,  when  the  bill  has  matured;**'  and  to 
give  notice  in  a  reasonable  time,  and  without  delay,  to  every  such 
person,  of  a  failure  in  the  attempt  to  procure  a  proper  accept- 
ance or  payment.*^  Thus  in  an  action  by  the  payee  of  a  bill,  or 
the  indorsee  of  a  bill  or  note,  against  the  drawer  or  indorser,  it 
is  necessary  to  prove  a  presentment  to  the  drawee  for  payment. 

Presentment  for  payment  as  well  as  notice  of  dishonor  may 
be  proved  by  entries  in  the  books  of  a  deceased  notary,*^,  clerk*® 
messenger  of  a  bank,  or  other  person,  whose  duty  or  ordinary 
course  of  business  it  was  to  make  such  entries. 

In  an  action  against  the  drawer  or  indorser  of  a  foreign  bill 
(and  even  of  an  inland  bill,  if  a  protest  is  alleged)  the  plaintiff 
must  prove  dishonor,  a  protest  for  non-acceptance  or  non-pay- 

22  Dubois  V.  Mason,  127  Mass.  Z7.  68  N.  W.  677,  61  Am.  St.  Rep.  230, 

23  Reed  V.  Wilson,  12  Va.  29;  Lu-  35  L.  R.  A.  381 ;  Hamer  v.  Brain- 
cas  V.  Ladew,  28  Mo.  342.  erd,  7  Utah  245,  26  Pac.  299,   12 

24  Lockett  V.  Howze,  18  Ala.  613 ;  L.  R.  A.  434. 

Rushworth  v.  Moore,  Z6  N.  H.  188 ;  27  Aldine  Mfg.  Co.  v.  Warner,  96 
Crane  v.  Trudeau,  19  La.  Ann.  307 ;  Ga.  370,  23  S.  E.  404 ;  Stix  v.  Math- 
Mudd  V.  Harper,  1  Md.  110,  54  Am.  ews,  63  Mo.  371 J  Beale  v.  Par- 
Dec.  644.  rish,  20  N.  Y.  407,  75  Am.  Dec.  114. 

25Neg.   Inst.   Law.   §§  240,  241;  28  Homes  v.  Smith,  16  Me.  181; 

Schuchardt  v.  Hall,  36  Md.  590,  11  Bell  v.  Perkins   (Peck),  Tenn.  261, 

Am.  Rep.  514;   Sharpe  v.  Drew,  9  14  Am.  Dec.  745;  Wilmington  Bank 

Ind.  281.  V.  Cooper,  1  Harr.  (Del.)   10. 

20  Leonard   v.  Olson,  99  la.   162,  29  Gawtry  v.  Doane,  51  N.  Y.  84. 


§  319  TRIAL  PROCEDURE.  351 

ment.     This  is  done  by  introducing  the  statement  made  out  by 
the  notary.^" 

The  official  seal  of  the  notary  attached  to  the  certificate  of 
protest  is  everywhere  received  as  a  sufficient  prima  facie  proof 
of  its  authenticity.  The  courts  take  judicial  notice  of  the  seal, 
and  it  proves  itself  by  its  appearance  upon  the  certificate.  But 
it  may  be  controverted  as  false,  fictitious,  or  improperly  an- 
nexed.^* 

§319.  Evidence  of  defendant.  After  the  plaintiff  has  pro- 
duced the  testimony  necessary  to  establish  his  case,  the  defend- 
ant then  introduces  his  testimony.  This  testimony  in  defense 
on  a  bill,  note  or  check,  is  governed  by  the  rules  as  applied  to 
ordinary  contracts  between  the  purchaser  for  value  and  prior 
parties.  If  the  defense  is  a  real  defense  the  question  is  solely 
whether  the  defense  does  exist,  and  any  evidence  tending  to  prove 
such  fact  is  admissible.  If  the  real  defense  does  exist,  the  plain- 
tiff cannot  recover  against  one  who  has  that  defense.^^  Where 
it  is  a  question  of  a  personal  defense,  there  are  two  classes  of 
cases : 

1.  Where  the  defense  shows  lack  of  consideration,  or  release, 
or  payment  of  a  bill  or  note. 

2,  Where  the  defense  shows  fraud,  duress,  or  illegality  in  the 
inception  of  the  instrument. 

In  the  first  class  it  is  not  so  much  the  question  of  wrong 
doing  as  merely  a  question  of  lack  or  failure  of  consideration,  and 
where  there  is  a  lack  or  failure  of  consideration,  the  first  thing 
to  be  proved  by  the  defendant  is  that  the  plaintiff  had  notice  of 
the  fact  that  there  was  a  want  of  consideration  or  failure  of  con- 
sideration. He  does  not  prove  that  there  was  a  failure  of  con- 
sideration, but  notice  and  after  that  he  proves  the  facts  of  want 
or  failure  of  consideration.  In  the  other  cases,  that  is,  those  of 
fraud  or  illegality,  the  defendant  does  not  prove  notice  but 
proves  the  fraud  or  illegality,  itself.  And  when  the  fraud  or 
illegality  is  proved  the  presumption  of  notice  arises  without  any 
proof  of  notice  and  the  burden  of  proof  is  on  the  plaintiff  to 
prove  he  did  not  have  notice.^*    When  a  plea  of  tender  is  made 

so  Clough  V.  Holden,  115  Mo.  336,  32  As    to   real    and   personal    de- 

21  S.  W.  1071,  37  Am.  St.  Rep.  393 ;  fenses  see  supra,  Chapts.  13  and  14. 

Rosson  V.  Carroll,  90  Tenn.  90,  16  33  Alabama  Nat.  Bank  v.  Halsey, 

S.  W.  66,  12  L.  R.  A.  727 ;  Kellam  109  Ala.    196,   19   So.   522 ;   Wood- 

V.  McKoon,  31  Hun  (N.  Y.)  519.  ward  v.  Rodgers,  31  la.  342;  Capi- 

31  Pierce  v.  Indseth,  106  U.  S.  546,  to!  etc.  Co.  v.  Montpelier  etc.  Co., 

27  L.  Ed.  254;  Nichols  v.  Webb,  8  (Vt.  1905),  59  Atl.  827. 
Wheat.   326;    Bradley   v.   Northern 
Bank,  60  Ala,  258. 


352  NEGOTIABLE   INSTRUMENTS.  §§  320-321 

it  must  be  pleaded  with  a  profert  of  the  money.**  To  constitute 
a  legal  tender,  money  must  have  been  offered  and  the  offer  must 
have  been  absolute  and  unconditional. 

The  Negotiable  Instruments  Law  provides: 

"Every  holder  is  deemed  primn  facie  to  he  a  holder  in  due 
course ;  but  when  it  is  shoum  that  the  title  of  any  person  tvho  has 
negotiated  the  instrument  was  defective,  the  burden  is  on  the 
holder  to  prove  that  he  or  some  person  under  whom  he  claims 
acquired  the  title  as  holder  in  due  course.  But  the  last-men- 
tioned ride  does  not  apply  in  favor  of  a  party  who  became  bound 
on  the  instrument  prior  to  the  acquisition  of  such  defective 
title/'^'' 

§  320.  The  argument.  As  the  next  step  each  party  may  in 
person  or  by  his  attorney,  address  the  jury  and  the  court  in 
support  of  his  side  of  the  controversy.  Usually  the  plaintiff 
makes  the  first  address  and  in  it  he  points  out  the  evidence  he 
has  produced  which  shows  or  tends  to  show  why  he  should  re- 
cover on  the  bill,  note  or  check.  The  defendant  follows  the 
plaintiff  with  his  address  or  argument  showing  why  from  the 
evidence  there  should  not  be  recovery  by  the  plaintiff.  After 
this  the  plaintiff  has  the  right  to  close  the  discussion.** 

§  321.     The  charge,  verdict  and  judgment.    At  the  close  of 

the  argument,  the  judge  instructs  the  jury  on  the  law  of  the 
case,^*  after  which  the  jury  retire  and  decide  whether  the  plain- 
tiff or  defendant  is  entitled  to  a  verdict.  Upon  the  verdict  re- 
turned by  the  jury  the  court  renders  a  judgment. 

34  Caldwell  v.  Cassidy,  8  Cow.  34  Barb.  (N.  Y.)  198.  But  see  Kent 
271 ;  Adams  v.  Hackensack  Co.,  15      v.  Mason,  79  111.  540. 

Vroom  638.  36  Pottle    v.    Thomas,    12    Conn. 

34a  Neg.  Inst.  Law,  §  59.  565 ;  Wolf  v.  Troxell,  94  Mich.  573, 

35  Pate  V.  Aurora  First  Nat.  54  N.  W.  838 ;  Galloway  v.  Hicks, 
Bank,  63  Ind.  254 ;  Kenny  v.  Lynch,  26  Nebr.  531,  42  N.  W.  709. 

61  N.  Y.  654;  Slauson  v.  Englehart, 


PART  III. 

NEGOTIABLE  INSTRUMENTS  LAW 
ANNOTATED 

INTRODUCTION. 

The  Negotiable  Instruments  Law  is  the  name  given  to  the 
statute  which  contains  within  narrow  compass  all  the  funda- 
mental principles  and  essential  definitions  of  the  law  of  nego- 
tiable instruments  or  commercial  paper.  It  provides  one  stand- 
ard for  such  instruments  as  to  their  formal  requisites  of  negotia- 
bility; and  it  provides  a  uniform  rule  as  to  methods  of  their 
transfer,  as  to  the  rights  of  the  holder  and  as  to  the  liabilities  of 
the  parties.  It  is  the  result  of  a  concerted  effort  to  have  the 
legislatures  of  the  States  to  harmonize  and  make  uniform  the 
rules  and  principles  governing  the  use  of  such  instruments  in 
the  different  states  throughout  the  United  States  because  it  was 
realized  that  commercial  paper  does*  over  90%  of  the  work  of 
paying  for  and  effecting  the  exchange  of  interstate  commerce. 
Such  uniformity  could  not  be  secured  without  codification ;  so 
this  law  is  a  codification  of  existing  laws,  that  is,  a  codification 
of  laws  which  were  scattered  through  some  ten  thousand  reported 
cases,  and  hundreds  of  statutory  enactments.  In  other  words,  it 
is  a  codification  of  the  common  law  of  negotiable  instruments 
clearly  and  concisely  condensed  into  less  than  two  hundred  sec- 
tions and  contained  in  less  than  thirty-five  pages.  In  this  law 
the  disputed  points  and  variant  laws,  whose  discussion  occupies 
so  large  a  share  of  two  and  three  volumed  treatises  on  the  sub- 
ject, are  decided  and  harmonized.  The  law  is  in  the  main  de- 
claratory in  its  effect  but  makes  a  few  changes;  it  necessarily 
changes  the  law  in  some  jurisdictions  on  points  concerning  which 
a  conflict  of  laws  has  existed;  but  it  may  safely  be  said  that 
there  is  not  an  important  provision  in  the  act  which  is  not  sup- 
ported by  some  well  considered  decision  of  an  American  court 

353 


354  NEGOTIABLE   INSTRUMENTS. 

of  high  authority  or  by  some  American  statute  which  has  been 
tested  and  proved  by  experience. 

The  easiest  and  best  manner  to  have  had  such  an  uniform  law 
throughout  the  United  States  would  have  been  to  have  had  the 
Congress  of  the  United  States  to  have  enacted  it  as  a  Federal 
statute,  but  the  Supreme  Court  of  the  United  States  in  1868,  held 
that  contracts  (and,  in  consequence,  negotiable  instruments),  be- 
tween the  states,  did  not  constitute  interstate  commerce.  From 
this  decision  the  lawyers  have  concurred  in  the  view  that  a  Fed- 
eral law  regulating  negotiable  instruments,  or  commercial  paper 
would  be  unconstitutional.  Thus  it  became  necessary  in  order  to 
bring  about  uniformity  that  the  different  states  should  unite  on 
the  same  law  and  enact  it  separately. 

Most  of  the  continental  countries  have  codified  the  law  of 
negotiable  instruments.  The  French  code  was  enacted  about  a 
century  ago,  and  no  substantial  alteration  has  been  made  in  it 
by  subsequent  legislation.  The  German  General  Exchange  Law 
was  adopted  in  1849,  and  slightly  modified  in  1869.  Other  con- 
tinental codes  modeled  upon  one  or  the  other  of  the  above  codes 
(but  usually  in  later  years  modeled  on  the  German  code)  have 
been  adopted. 

In  the  common  law  countries  the  first  attempt  at  a  codifica- 
tion was  a  digest  of  the  laws  of  bills  of  exchange  by  Judge  Cham- 
bers, of  England,  published  in  1878,  after  a  review  by  him  of 
over  2,500  cases  then  reported  in  the  English  courts  dealing  with 
the  subject  of  bills  of  exchange.  In  1880,  the  Institute  of  Bank- 
ers and  the  Associated  Chambers  of  Commerce  instructed  Judge 
Chambers  to  prepare  a  bill  on  the  subject.  He  did  so,  putting 
into  a  few  words  the  results  of  the  decisions  of  the  courts  for 
three  hundred  years.  This  bill  was  introduced  in  Parliament 
and  adopted  practically  as  presented.  It  has  been  in  force  since 
that  time  and  is  known  as  the  ''English  Bill  of  Exchange  Act 
of  1882"  and  has  thus  operated  successfully  for  forty  years. 
It  has  been  adopted  by  practically  all  of  the  various  colonies  and 
dependencies  of  the  British  Empire. 

In  the  United  States  there  was,  prior  to  the  drafting  of  the 
Negotiable  Instruments  Law,  a  codification  of  the  law  in  some 
states  but  there  was  nothing  looking  toward  a  codification  for  all 
the  states  of  the  Union.  The  earliest  codification  for  an  in- 
dividual state,  in  a  strict  sense,  is  found  in  the  California  Code 
of  1872. 

The  history  of  the  act  looking  to  a  uniformity  of  laws  in  all 
the  states  dates  back  to  several  years  ago.  Then,  at  the  request 
of  the  American  Bar  Association  and  through  its  co-operation,  acts 


INTRODUCTION.  355 

were  passed  in  many  states  providing  for  the  appointment  by 
the  governor  of  "Commissions  for  the  Promotion  of  Uniformity 
of  Legislation  in  the  United  States."  It  was  provided  that  these 
should  meet  in  joint  conference,  frame  and  adopt  statutes  which 
they  would  recommend  to  their  respective  Legislatures  for  all 
of  the  states  and  thus  endeavor  to  eliminate  as  much  as  possible 
the  confusing  conflict  in  the  commonest  principles  and  provisions 
of  private  law.  At  a  conference  of  commissioners  from  nineteen 
states,  held  in  1895,  a  resolution  was  adopted  requesting  the 
committee  on  commercial  laws  to  procure  a  draft  of  a  bill-  relat- 
ing to  commercial  paper,  based  on  the  English  Bill  of  Exchange 
Act,  and  on  such  other  sources  of  information  as  the  committee 
might  deem  proper  to  consult  and  to  prepare  a  codification  of  the 
law  relating  to  bills  and  notes.  The  matter,  as  stated  by  Mr. 
John  J.  Crawford,  was  referred  to  a  sub-committee  consisting 
of  Lyman  D.  Brewster,  of  Connecticut ;  Henry  C.  Willcox,  of 
New  York,  and  Frank  Bergen,  of  New  Jersey ;  and  Mr.  Craw- 
ford was  employed  by  the  sub-committee  to  draw  the  proposed 
law.  In  drafting  this  law  when  the  decisions  of  the  state  courts 
were  conflicting  the  rules  of  the  Supreme  Court  of  the  United 
States  were  adopted  and  the  decisions  of  that  high  tribunal  were 
followed.  When  completed  the  draft  was  submitted  to  the  sub- 
committee who  printed  it  and  sent  copies  to  each  member  of  the 
conference,  and  also  -to  many  prominent  lawyers  and  law  pro- 
fessors and  to  several  English  judges  and  lawyers,  with  an  invi- 
tation for  suggestions  and  criticisms.  The  draft  was  submitted 
to  the  conference  which  met  at  Saratoga  in  August,  1896;  and 
the  commissioners  who  were  in  attendance,  being  twenty-seven  in 
all,  and  representing  fourteen  different  states,  in  a  session  of 
three  days  by  the  entire  conference  went  over  it  section  by  sec- 
tion, and  made  amendments  therein.  The  draft  as  thus  amended 
was  adopted  by  the  conference  and  recommended  for  general 
enactment  by  the  state  Legislatures.  It  also  met  with  the  ap- 
proval of  the  American  Bar  Association,  and  in  such  form  was 
unanimously  recommended  by  said  association  to  the  Legislatures 
of  the  several  states  and  territories  of  the  Union  for  adoption. 
The  law  Is  the  result  of  two  purposes ;  the  first  and  chief  pur- 
pose was  to  produce  uniformity  in  the  laws  of  the  different 
states  upon  this  important  subject,  so  that  the  citizens  of  each 
state  might  know  the  rules  which  would  be  applied  to  their  notes, 
checks  and  other  negotiable  paper  in  every  other  state  in  which 
the  law  was  enacted,  since  it  was  an  absolute  impossibility  for 
the  commercial  purchaser  in  any  state  to  know  all  the  details 
affecting  the  negotiability  of  paper  governed  by  the  laws  of  all 


356  NEGOTIABLE   INSTRUMENTS. 

the  Other  states.  The  second  purpose  was  to  preserve  the  law  as 
nearly  as  possible  as  it  then  existed.  And  it  may  be  said  prob- 
ably without  question  that  in  the  enactment  of  this  statute  no 
essential  feature  of  the  law  of  negotiable  instruments  as  there- 
tofore determined  has  been  eliminated.  While  the  bill  is  sim- 
ple and  intelligible  in  its  expression,  great  care  was  taken  to  pre- 
serve the  use  of  words  which  had  had  repeated  legal  construc- 
tions and  had  become  recognized  terms  in  the  law  merchant. 

New  York  was  the  first  state  to  enact  the  law.  The  law  is 
now  in  force  in  all  the  states  and  territories  of  the  Union  except 
Georgia.  The  bill  has  been  introduced  annually  in  the  Legisla- 
ture of  Georgia  for  years  but  has  failed  to  pass. 

Before  the  enactment  of  the  law  in  any  states  the  situation 
induced  by  conflicting  decisions  and  statutes  embarrassed  busi- 
ness and  interrupted  the  free  circulation  of  commercial  paper. 
What  was-  a  promissory  note  in  one  State  was  a  simple  contract 
in  another ;  what  was  an  indorsement  in  one  jurisdiction  was 
only  an  assignment  in  another ;  in  some  States  a  note  was  not 
negotiable  unless  the  words  "Value  received"  were  written  in 
the  body  of  the  note,  while  in  others  such  words  were  unneces- 
sary; some  jurisdictions  permitted  exchange  to  be  added  while 
others  held  that  such  addition  made  the  note  non-negotiable ;  days 
of  grace  were  permitted  in  one  State  and  not  in  another;  what 
was  a  contract  of  an  indorser  in  one  State  was  a  contract  of  a 
maker  in  another,  or  of  a  guarantor  or  maker  in  still  another, 
as  oral  proof  of  the  circumstances  attending  the  making  of  the 
contract  might  determine ;  and  there  were  other  similar  conflicts. 

So  long  as  trade  and  commerce  were  mainly  confined  to  trans- 
actions between  the  citizens  of  a  single  State  within  its  own 
borders,  the  State  regulations  operated  fairly  well  and  it  did 
not  matter  materially  that  the  laws  of  one  State  differed  from 
those  of  another  upon  these  subjects.  But  now  the  country  has 
outgrown  such  conditions  and  in  innumerable  cases  more  business 
is  done  by  the  people  or  corporations  of  a  State  with  the  people 
of  other  States  than  with  their  own,  and  commercial  paper  is 
almost  universally  the  medium  of  exchange  in  these  transactions. 
As  our  commercial  activity  is  ever  expanding  and  as  interstate 
commerce  has  assumed  such  vast  proportions,  the  necessity  be- 
comes imperative  that  the  commercial  currency  of  payment  shall 
be  uniform,  and  not  variable,  in  its  essential  characteristics. 
The  enactment  of  the  law  has  tended  to  facilitate  trade  between 
the  States,  and  make  the  transactions  of  business  less  complicated 
and  more  certain  and  sure,  as  whatever  legislation  tends  to 
sustain  credit  helps  commerce.    The  law  of  negotiable  instruments 


INTRODUCTION. 


357 


affects  all  classes  of  merchants  throughout  the  country  since,  as 
has  been  pointed  out,  negotiable  instruments  are  the  medmm  for 
the  payment  and  settlement  of  90%  of  all  trade  transactions. 

The  law  has  had  the  test  of  twenty-five  years'  experience  and 
the  testimony  is  all  one  way  as  to  its  efficiency.  It  should  be 
realized  that  a  statute,  which  has  been  adopted  after  due  delibera- 
tion by  so  many  legislative  bodies  and  adopted  by  the  Congress 
of  the  United  States,  must  exercise  a  beneficial  mfluence  on  all 
and  be  productive  of  good  results. 


THE  NEGOTIABLE  INSTRUMENTS  LAW. 


Below  is  given  a  list  of  the  States  and  Territories  where  the 
Negotiable  Instruments  Law  has  been  enacted : 

Alabama— Laws  1907,  Chap.  722,  in  effect  Jan.  1,  1908. 
Alaska — Laws  1913,  Chap.  64,  approved  April  28,  1913. 
Arizona— Rev.  Stat.  1901,  p.  852,  in  effect  Sept.  1,  1901. 
Arkansas— Acts  1913,  No.  81,  approved  Feb.  21,  1913. 
California— Laws  1917,  Chap.  751,  p.  1531,  in  effect  July  31,  1917. 
Colorado— Laws  1897,  Chap.  64,  approved  April  20,  1897. 
Connecticut — Laws  1897,  Chap.  74,  approved  April  5,  1897. 
Delaware — Laws  of  1911,  Chap.  191,  approved  April  4,  1911. 
District  of  Columbia— Laws  U.  S.  1899,  in  effect  April  3,  1899. 
Florida— Laws  1897,  Chap.  4524,  approved  June  1,  1897. 
Hawaii— Laws  1907,  Act  89,  in  effect  April  20,  1907. 
Idaho— Laws  1903,  p.  380,  in  effect  March  10,  1903. 
Illinois — Laws  1907,  p.  403,  approved  June  5,  1907. 
Indiana— Acts  1913,  Chap.  63,  in  effect  April  30,  1913. 
Iowa — Laws  1902,  Chap.  130,  approved  April  12,  1902. 
Kansas— Laws  1905,  Chap.  310,  in  effect  June  8,  1905. 
Kentucky — Laws  1904,  Chap.  102,  approved  March  24,  1904. 
Louisiana — Laws  1904,  Chap.  64,  approved  June  29,  1904. 
Maine — Laws  1917,  Chap.  257,  approved  April  7,  1917. 
Maryland— Laws   1898,   Chap.   119,  approved  March  29,    1898. 
Massachusetts — Laws  1898,  Chap.  533,  in  effect  Jan.  1,  1899. 
Michigan — Laws  1905,  Chap.  265,  approved  June  16,  1905. 
Minnesota — Laws  1913,  Chap.  272,  in  effect  July  1,  1913. 
Mississippi — Laws  1916,  Chap.  244,  p.  355,  in  effect  July  7,  1916. 
Missouri — Laws  1905,  p.  243,  approved  April  10,  1905,  in  effect 

June  16,  1905. 
Montana— Laws  1903,  Chap.  121,  in  effect  March  7,  1903. 
Nebraska— Laws  1905,  Chap.  83,  in  effect  August  1,  1905. 
Nevada— Laws  1907,  Chap.  62,  in  effect  May  1,  1907. 
New  Hampshire — Laws  1909,  in  effect  January  1,  1910. 
New  Jersey — Laws  1902,  Chap.  184,  p.  283,  approved  April  4, 

1902. 
New  Mexico — Laws  1907,  Chap.  83,  approved  March  21,  1907. 
New  York— Laws  1897,  Chap.  612,  became  a  law  May  19,  1897. 

358 


NEGOTIABLE    INSTRUiMENTS    LAW.  359 

North  Carolina— Laws  1899,  Chap.  7?>Z,  in  effect  March  8,  1899. 
North  Dakota — Laws  1899,  Chap.  113,  approved  March  7,  1899. 
Oliio— Laws  1902,  p.  162,  in  effect  January  1,  1903. 
Oklahoma— Laws  1909,  in  effect  June  10,  1909. 
Oregon — Laws  1899,  p.  18,  approved  February  16,  1899. 
Pennsylvania — Laws  1901,  No.  162,  in  effect  September  2,  1901. 
Philippine   Islands — Acts  of   Philippine   Commission    1911,   No. 

2031,  enacted  Feb.  3,  1911,  in  effect  90  days  after  publication. 
Rhode  Island— Laws  1899,  Chap.  674,  in  effect  July  1,  1899. 
South  Carolina— Acts  1914,  Act  396,  p.  668  (in  effect  March, 

1914?). 
South    Dakota — Compiled    Laws    1913,    Chap.    279,    approved 

March  4,  1913. 
Tennessee— Laws  1899,  Chap.  94,  in  effect  May  16,  1899. 
Texas — General  Laws  1919,  p.  190,  in  effect  June  17,  1919. 
Utah— Laws  1899,  Chap.  83,  in  effect  July  1,  1899. 
Vermont— Laws  of  1912,  Act  99,  in  effect  June  1,  1913. 
Virginia— Laws  1898,  Chap.  866,  approved  March  3,  1898. 
Washington— Laws  1899,  Chap.  149,  in  effect  March  22,  1899. 
West  Virginia — Laws  1907,  Chap.  81,  in  effect  January  1,  1908. 
Wisconsin— Laws  1899,  Chap.  356,  in  effect  May  15,  1899. 
Wyoming — Laws  1905,  Chap.  43,  in  effect  February  15,  1905. 


360 


NEGOTIABLE    INSTRUMENTS. 


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0^r-Hr-4T-H^^CMCMCM<NrjCMCMCM 


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■^Ti-tr^iOu-iu^u^Lrii-ni-OLOLni-oi-OLnLOio 
_i      I      1      I      1      I      I      I      I '      ■ 

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TABLE   OF    CORRESPONDING    SECTIONS. 


361 


^^ 
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t<    tN.    IN^    t^ 


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r<t^i^j^tN.t^r^oooooooooo 

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ro^t^OOCOQNQ-Hogroro^Ji:^ 

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55  ^  2^  5^  S^  fe  g^  S  S  S  8  S  S 


i-H  t\   CO   t^ 

C^  S^  'T'  ^ 

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r/irTsr^CNnNOOoOLO'— •C^'— lOOt^'^ONNO 
.i^l^S.^rT^Loeoir^voCoNONONOONONOvo 

'T^iTi^OOOi^CMrONOt^COONO'— lOlCMfO,^ 
Wl^^^bo^T^S^ioinLnioiONONONONONONi 


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.  NO  r-^  1^  i^  t^  t^  t-^  ti  ^i  '_::: 


t^ONOCNfor^NooooopN 


in  (M  T-H  NO  OJ  00 

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00  00  CO  00  00  00 

^  -^  Tf  '^  ^  ^ 

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roOOCNlONNOf^OJt^^^:^ 
'^--ONO'-iCMCMPOr^ 

t\  CO  00  00  00  00  vo 

rl-  '^  Tf  ^  Tt-  Tl-  Tj- 


t^rr)r^-ro^oC^l(^lONLnNO'^■^"^'^'^SC? 

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^OC^^'>^Ot^ON(Ng.  C2^"^OI>;00^0 


o 


roCNOONr^  COoOu^'— 'CM'— *'^Or^^S^^ 
^04u^i^O002^CM<^'^"^^l^^°°922} 


?,  ^:7^SSc^dN)or^r^cM^;:^co^ 


00 


(\i  (v^  Tt  Lo  vo  r^  t^  00 


362 


NEGOTIABLE    INSTRUMENTS. 


^§SJ^^!!$:ir2nir'P^v:?'r*cN 


"■^  ONCNJCNro-^mvOt^OO 


^■^Tj-votN»ooo<^'^TfioorN.ooa\OOr-J 


^rvi'^Tj-txiN»a\ooooio^CN),-HOot<po 

ooOPOT^lo^OwCOo^O^O 

'-''-''-'^^'-H'-'r-lr-lCN 


fO 


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TABLE  OF  CORRESPONDING  SECTIONS. 


363 


6 


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364 


NEGOTIABLE    INSTRUMENTS. 


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TABLE   OF    CORRESPONDING    SECTIONS. 


365 


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366 


NEGOTIABLE    INSTRUMENTS. 


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TABLE  OF    CORRESPONDING    SECTIONS.  367 


Uniform  Act 

Commission 

No. 

Wisconsin 

Wyoming 

1-23 

1675-1-1675-23 

3934-3956 

24-29 

1675-50-1675-55 

3957-3962 

30-50 

1676-1676-20 

3963-3984 

51-59 

1676-21-1676-29 

3985-3993 

60-69 

1677-1677-9 

3994-4003 

70-88 

1678-1678-18 

4004-4022 

89-118 

1678-19-1678-48 

4023-4352 

119-125 

1679-1679-6 

4353-4359 

126-131 

1680-1680e 

4360-4365 

132-142 

1680-f-1680p 

4366-4376 

143-151 

1681-1681-8 

4377-4385 

152-160 

1681-9-1681-17 

4386-4394 

161-170 

1681-18-1681-27 

4395-4404 

171-177 

1681-28-1681-34 

4405-4411 

178-183 

1681-35-1681-40 

4412-4417 

184-189 

1684-1684-5 

4418-4423 

190-196 

1675 

4424-4430 

368  NEGOTIABLE    INSTRUMENTS. 


THE  NEGOTIABLE  INSTRUMENTS  LAW. 


Article 

1.  Form    and    Interpretation    of    Negotiable    Instruments. 

(§§  1-23.) 

II.  Consideration.  (§§  24-49.) 

III.  Negotiation.  (§§30-50.) 

IV.  Rights  of  Holder.  (§§51-59.) 

V.  Liabilities  of  Parties.  (§§  60-69.) 

VI.  Presentment  for  Payment.   (§§70-88.) 

VII.  Notice  of  Dishonor.  (§§89-118.) 

VIII.  Discharge  of  Negotiable  Instruments.   (§§  119-125.) 
IX.  Bills  of  Exchange — Form  and  Interpretation.   (§§  126- 

131.) 

X.  Acceptance.  (§§132-142.) 

XI.  Presentment  for  Acceptance.    (§§  143-151.) 

XII.  Protest.  (§§152-160.) 

XIII.  Acceptance  for  Honor.   (§§  161-170.) 

XIV.  Payment  for  Honor.  (§§171-177.) 

XV.  Bills  in  a  Set.  (§§178-183.) 

XVI.  Promissory  Notes  and  Checks.   (§§  184-189.) 

XVII.  General  Provisions.  (§§  190-196.) 


ARTICLE  I. 


FORM  AND  INTERPRETATION. 


1.  Form     of     negotiable     instru- 

ment. 

2.  Certainty    as     to     sum ;     what 

constitutes. 

3.  When     promise     is     uncondi- 

tional. 

4.  Determinable       future       time ; 

what  constitutes. 

5.  Additional    provisions    not    af- 

fecting   negotiability. 

6.  Omissions ;      seal ;      particular 

money. 

7.  When  payable  on  demand. 

8.  When  payable  to  order. 

9.  When  payable  to  bearer. 

10.  Terms,  when  sufficient. 

11.  Date,  presumption  as  to. 

12.  Ante-dated  and  post-dated. 

13.  When  date  may  be  inserted. 


§  14.  Blanks,  when  may  be  filled. 

15.  Incomplete  instrument  not  de- 

livered. 

16.  Delivery ;     ,  when       effectual ; 

when  presumed. 

17.  Construction       where      instru- 

ment  is  ambiguous. 

18.  Liability  of  persons  signing  in 

trade  or  assumed  name. 

19.  Signature  by  agent;  authority; 

how  shown. 

20.  Liability   of  person   signing  as 

agent,   etc. 

21.  Signature  by   procuration;   ef- 

fect of. 

22.  Effect    of    indorsement   by    in- 

fant or  corporation. 

23.  Forged  signature ;  effect  of. 


Sections  1  to  23  above  are  the  sections  used  by  the  commissioners. 
See  table  of  corresponding  sections  of  the  Law  in  the  various  states 
and  territories  beginning  on  page  360. 


§  1  Form  of  negotiable  instrument.  An  mstrument  to  be 
negotiable  must  conform  to  the  following  requirements : 

1.  It  must  be  in  writing  and  signed  by  the  maker  or  drawer. 

2.  Must  contain  an  unconditional  promise  or  order  to  pay  a 
sum  certain  in  money. 

3.  Must  be  payable  on  demand,  or  at  a  fixed  or  determinable 
future  time. 

4.  Must  be  payable  to  order  or  to  bearer. 

5.  Where  the  instrument  is  addressed  to  a  drawee,  he  must 
be  named  or  otherwise  indicated  therein  with  reasonable  cer- 
tainty. *■  *^ 

See  text,  §40. 

Cross  sections:     191   "written,"  3,  2,  7,  126,  9,  4,  56,  184,  123,   137,  8, 
6,  131. 

The  Michigan  Act  says :    "Certain  sum"  instead  of  "sum  certain." 

369 


370  NEGOTIABLE    INSTRUMENTS.  §    1 

The  Arizona,  Idaho,  Iowa,  Kentucky,  North  Carolina  and  Wyoming 
acts  read:  "Must  be  payable  to  the  order  of  a  specified  person  or  to 
bearer,"  instead  of  as  in  sub-division  4  above. 

The  Wisconsin  act  (No.  1675-1)  adds:  "But  no  order  drawn  upon 
or  accepted  by  the  treasurer  of  any  county,  town,  city,  village  or  school 
district,  whether  drawn  by  any  officer  thereof  or  any  other  person,  and 
r.o  obligation  nor  instrument  made  by  any  such  corporation  or  any  officer 
thereof,  unless  expressly  authorized  by  law  to  be  made  negotiable,  shall 
be,  or  shall  be  deemed  to  be,  negotiable  according  to  the  custom  of  mer- 
chants, in  whatever  form  they  may  be  drawn  or  made.  Warehouse 
receipts,  bills  of  lading  and  railroad  receipts  upon  the  face  of  which  the 
words  'not  negotiable'  shall  not  be  plainly  written,  printed  or  stamped, 
shall  be  negotiable  as  provided  in  section  1676  of  the  Wisconsin  Statutes 
of  1878,  and  in  sections  4194  and  4425  of  these  statutes,  as  the  same  have 
been  construed  by  the  supreme  court." 

1.  Digest  of  some  of  the  decisions  in  which  this  section  is 
construed  arranged  alphabetically  by  states: 

Plaintifif  must  allege  the  negotiability  of  note  before  recovery  can  be 
had.    Whateley  v.  Muscogee  Bank  (Ala.),  12  So.  1018. 

Plaintiff  must  allege  note  payable  to  bearer  or  order  either  in  com- 
plaint or  replication  in  order  to  recover.  Oneonta  Trust  &  Banking 
Co.  v.  Box  (Ala.),  IZ  So.  759. 

When  negotiability  of  note  must  be  set  up.  Jones  v.  Martin  (Ala. 
App.),  74  So.  761. 

Certificates  of  deposit  are  negotiable  when  payable  upon  return  or 
surrender  properly  indorsed.    Johnson  v.  Blackman  (Ala.),  78  So.  891. 

Note  containing  provision  for  reimbursing  payee  is  non-negotiable. 
Sacred  Heart  Church  Building  Committee  v.  Manson,  —  Ala.  — ,  82  So. 
498. 

Estopped  to  deny  valid  delivery  when  notes  allowed  to  get  into  cir- 
culation.    Cannon  v.  Dillehay,  —  Ala.  App.  — ,  84  So.  549. 

Written  order  to  individual  requesting  payment  of  sum  certain  is  not 
negotiable  instrument.     Ex  parte  E.  C.  Payne  Lumber  Co.,  203  Ala.  668. 

Signature  on  note  by  mark.  Smith  v.  Vaughn,  —  Ala.  App. — ,  89 
So.  302. 

Instrument  payable  from  specific  fund  not  negotiable  if  fund  is  in- 
sufficient.   Rector  v.  Strauss,—  Ark.  — ,  203  S.  W.  1024. 

Stipulation  as  to  principal  and  interest  being  due  upon  default  does 
not  render  note  uncertain.    Arnett  v.  Clack,  —  Ariz.  — ,  198  P.  127. 

The  clause  "or  what  may  be  due  on  my  deposit  book"  makes  con- 
ditional the  direction  to  pav  A.  or  order  $300.00.  National  Sav.  Bank  v. 
Cable,  12,  Conn.  568,  48  Atl.  428. 

Note  not  made  payable  on  demand  or  fixed  date  is  not  negotiable 
Sanderson  v.  Clark,  —  Ida.  — .  194  P.  472. 

Effect  of  provision  "the  time  of  payment  may  be  extended  from  time 
to  time  by  any  one  or  more  of  us  without  even  the  knowledge  or  consent 
of  the  other  or  others  of  us"  upon  negotiability.  Wayne  County  Nat. 
Bank  v.  Cuok.  127  N.  E.  IIZ,  —  Ind.  App.  — . 

Agreement  of  payee  to  look  to  mortgage  security  for  payment  of  note 
noted  on  back  of  the  note  makes  it  non-negotiable.  Allison  v.  Hollen- 
beak,  138  Iowa  479,  114  N.  W.  1059. 

ATrw  For/^.— Bennett  v.  Kisler   (1917),  163  N.   Y.  Supp.  555. 


§    1  FORM  AND  INTERPRETATION.  371 

A  contingency  set  out  in  a  mortgage  does  not  affect  the  negotiability 
of  the  note,  but  if  the  same  were  made  a  part  of  the  note  it  would.  Des 
Moines  Sav.  Bank  v.  Arthur,  163  Iowa  205,  143  N.  W.  556,  Ann.  Cas. 
1916C,  498. 

A  note  providing  for  an  extension  of  time  pending  outcome  of  a 
suit,  but  not  exceeding  a  definite  period,  is  negotiable.  Jewett  Lumber 
Co.  V.  Martin  Conroy  Co.,  171  Iowa  513,  152  N.  W.  493. 

Certificates  of  deposit  are  negotiable  when  made  payable  to  order. 
Kushner  v.  Abbott,  156  Iowa  598,  137  N.  W.  913. 

A  provision  as  to  allowing  taxes  to  become  delinquent  and  making 
r.ote  due  at  an  earlier  date  in  a  mortgage  does  not  affect  the  negotiability 
of  the  note  and  would  not  if  placed  in  note  also,  it  being  a  definition  of 
default  of  payment  and  authority  to  foreclose.  Lundean  v.  Hamilton 
(Iowa),  159  N.  W.  163. 

Note  not  non-negotiable  for  uncertainty.  Commercial  Sav.  Bank  v. 
Schaffer,  —  la.  — ,  181  N.  W.  492. 

Waiver  of  presentment  and  notice  of  non-payment  or  extension  of 
time  as  affecting  negotiability.  Nat.  Bank  of  Webb  City,  Mo.  v. 
Dickinson,    102    Kan.   564. 

The  words  "to  order"  or  "to  bearer"  or  their  equivalent  must  be 
used  to  make  note  negotiable.  Wettlaufer  v.  Baxter,  137  Ky.  362,  125 
S.  W.  741,  26  L.  R.  A.  (N.  S.)  804. 

Street  improvement  bonds,  payable  to  bearer,  are  made  negotiable  by 
the  statute  under  which  issued.  Citizens'  Trust,  etc.,  Co.  v.  Hays,  167 
Ky.  560,  180  S.  W.  811. 

Necessary  requirement  for  a  negotiable  instrument.  Lynchburg  Shoe 
Co.  v.  Hensley,  —  Ky.  — ,  218  S.  W.  243. 

An  instrument  directing  the  payment  of  a  certain  sum  of  money  to  a 
given  person  and  reciting  that  it  is  "due  Oct.  1st"  is  a  bill  of  exchange 
payable  on  Oct.  1st.    Torpey  v.  Tebo,  184  Mass.  307,  68  N.  E.  223. 

Where  the  drawee  is  directed,  on  acceptance,  to  pay  to  the  order  of 
the  payee  a  sum  in  satisfaction  of  all  claims,  the  instrument  is  condi- 
tional and  non-negotiable  and  holds  neither  the  drawer  nor  drawee. 
Berenson  v.  London  &  Lancashire  Fire  Ins.  Co.,  201  Mass.  172,  87  N.  E. 
687. 

Default  of  payment  provisions  in  note  does  not  render  it  uncertain  as 
to  time.    Schmidt  v.  Pegg,  172  Mich.  159,  137  N.  W.  524. 

Note  restraining  title  of  goods  in  paj'ee  with  default  provision  is  not 
negotiable.  Polk  County  State  Bank  of  Crookston  v.  Walters,  —  Minn. 
— ,  176  N.  W.  496. 

Certificates  of  deposit  pavahle  to  order  of  payee  are  negotiable.  Dickey 
V  Adler,  143  Mo.  App.  326, 'l27  S.  W.  593. 

An  installment  note  is  not  rendered  non-negotiable  by  a  provision  for 
a  discount  if  paid  in  fifteen  days.  Farmers'  Loan  &  Trust  Co.  v.  Planck, 
98  Neb.  225,  152  N.  W.  390,  L.  R.  A.  1915E,  564. 

Check  payable  one  day  after  death  of  maker  is  valid  if  for  considera- 
tion.   Keeler  v.  Hiles  Estate,  —  Neb.  — ,  172  N.  W.  363. 

A  certificate  of  deposit  is  not  negotiable  which  is  payable  to  "A"  or 
his  assigns  on  return  of  this  certificate.  Zander  v.  N.  Y.  Security  & 
Trust  Co.,  39  Misc.  R.  98,  78  N.  Y.  Supp.  900,  affirmed  81  App.  Div.  635, 
81  N.  Y.  Supp.  1151,  affirmed  178  N.  Y.  208. 

Additional  words  in  a  draft  used  to  notify  payee  of  the  shipment  of 
certain  articles  by  certain  method  and  that  bill  of  lading  went  direct  do 
not  make  it  unconditional  and  non-negotiable.  Waddell  v.  Hanover  Nat. 
Bank,  48  Misc.  R.  578,  97  N.  Y.  S.  305. 


372  NEGOTIABLE    INSTRUMENTS.  §    1 

Any  equivalent  of  the  words  "order"  or  "bearer"  should  be  sufficient. 
Fulton  V.  Varney,  117  App.  Div.  572.  575.  102  N.  Y.  Supp.  608. 

A  note  to  be  paid  when  a  certain  contingency  happens  is  non-negotiable. 
Wray  v.  Miller.  120  N.  Y.  Supp.  787. 

Written  portion  of  note  controls  and  the  words  "not  transferable" 
render  non-negotiable  a  note  otherwise  negotiable.  Tanners*  Nat.  Bank 
V.  Lacs,  136  App.  Div.  92,  120  N.  Y.  Supp.  669. 

An  instrument  is  not  a  promissory  note  which  says,  "Four  months 
after  date  I  promise  to  pay"  a  fixed  sum  and  the  transferror  is  not  an 
indorser.  Hillborn  v.  Penn.  Cement  Co.,  145  A.  D.  442,  129  N.  Y.  Supp. 
957. 

A  note  is  non-negotiable  which  provides  that  "this  note  is  payable 
when  Post  Office  Department  accepts  my  building."  Devine  v.  Price,  152 
N.  Y.  Supp.  321. 

A  note  providing  for  the  same  becoming  due  and  payable  upon  the 
default  of  any  of  the  provisions  of  a  trust  agreement  was  held  to  contain 
an  absolute  obligation  to  pay  at  maturity,  there  being  no  evidence  that 
the  agreement  contained  any  postponement  of  the  maturity  of  the  note. 
Osborne  v.  M..  K.  &  T.  Ry.  Co.,  92  Misc.  Rep.  166.  155  N.  Y.  Supp.  236. 

Allegation  of  execution  of  note  for  value  received  is  not  sufficient; 
must  show  that  note  was  payable  to  order  or  bearer  to  be  negotiable. 
Martial  Armand  &  Co.  v.  Creighton,  167  N.  Y.  Supp.  333. 

Provisions  in  bonds  negotiable  in  form  limiting  liability  to  assets  in 
hands  of  a  trustee  do  not  render  the  bonds  or  their  coupons  non- 
negotiable.    Hibbs  v.  Brown,  190  N.  Y.  167,  82  N.  E.  1108. 

Certificate  of  deposit  providing  for  payment  on  return  properly  in- 
dorsed is  negotiable  instrument.  Nelson  v.  Citizens'  Bank,  180  N.  Y.  S. 
747. 

Note  payable  " after  date,  without  grace,"  is  negotiable  demand 

note.    Keister  v.  Wade,  182  N.  Y.  S.  119. 

A  note  showing  upon  its  face  that  it  is  for  purchase  of  timber  and 
that  the  title  to  the  timber  is  retained  as  security  as  shown  by  the  pro- 
visions of  deed  is  conditional  and  not  negotiable.  Pope  v.  Righter,  etc.. 
Lumber  Co.,  162  N.  C.  206,  78  S.  E.  65. 

Where  a  line  was  drawn  through  the  words  "to  the  order"  before 
Signature  and  the  line  was  afterwards  erased  the  note  was  non-negotiable 
and  proof  of  alteration  and  want  of  consideration  should  be  admitted 
against  a  holder  in  due  course.  Aamoth  v.  Hunter,  33  N.  D.  582,  157 
N.  W.  299. 

Municipal  warrants  may  be  transferred  by  delivery  or  assignment,  but 
are  non-negotiable.  Logan  County  Bank  v.  Farmers'  Nat.  Bank,  55  Okla. 
592,  155  Pac.  561. 

^The  rule  under  the  law  Merchant  that  a  provision  for  discount  if 
paid  in  fifteen  days  is  not  changed  by  Negotiable  Instruments  Law  in 
Oklahoma,  and  the  note  is  non-negotiable.  First  Nat.  Bank  v.  Watson 
(Okl.),  155  Pac.  1152. 

Provisions  in  mortgage  as  affecting  negotiability  of  note.  Westlakc 
v.  Cooper,  —  Okla.  —    171  Pac.  859. 

Provision  for  different  rates  of  interest  under  several  conditions 
affects  promise  to  pay.  Union  Nat.  Bank  of  Massillon,  Ohio  v.  Mayfield. 
—Okla.  — ,  174  Pac.  1034. 

Where  a  note  by  its  provisions  is  subject  to  terms  of  mortgage  which 
provides  different  modes  of  settlement  the  note  is  not  negotiable.  Hull 
V.  Angus,  60  Ore.  95,  118  Pac.  284. 


§    1  FORM  AND  INTERPRETATION.  373 

Mortgage  provisions  as  to  taxes  do  not  govern  negotiability  of  note. 
Page  V.  Ford,  65  Ore.  450,  131  Pac.  1013,  Ann.  Cas.  191SA,  1048,  45  L. 
R.  A.  (N.  S.)  247. 

Words  "due  if  ranch  is  sold  or  mortgaged"  do  not  render  non- 
negotiable.     Nickell  V.  Bradshaw,  —  Or.  — ,  183  P.  12. 

Statutes  making  notes  not  payable  to  order  or  bearer  are  repealed  by 
Negotiable  Instruments  Law.  Gilley  v.  Harrell,  118  Tenn.  115,  101  S.  W. 
424. 

Series  notes  do  not  become  non-negotiable  by  reason  of  default  pro- 
visions.   White  V.  Hatcher,  135  Tenn.  609,  188  S.  W.  61. 

The  Negotiable  Instruments  Law  repealed  former  conflicting  statutes. 
Dobbins  v.  Carroll,  137  Tenn.  133,  192  S.  W.  166. 

A  provision  for  discount  if  paid  within  a  specified  time  does  not 
affect  negotiability  of  note.  Farmers*  Loan  &  Trust  Co.  v.  Devear,  2 
Tenn.  C.  C.  A.  366. 

Contingencies  in  a  mortgage  securing  a  negotiable  note  do  not  change 
tile  negotiability  of  the  note.  Barker  v.  Sartori,  66  Wash.  260,  119  Pac. 
611. 

A  note  which  on  its  face  implies  that  the  maker  must  pay  taxes 
assessed  is  uncertain  in  amount  and  non-negotiable.  Bright  v.  Oflfield, 
81  Wash.  442,  143  Pac.  159. 

Mortgage  stipulations  as  to  insurance,  taxes  and  attorney's  fees  do  not 
affect  the  negotiability  of  the  note  secured.  Moore  &  Co.  v.  Burling,  93 
Wash.  217,  160  Pac.  420. 

Provision  in  a  note  for  payment  of  taxes  assessed  upon  same  is  non- 
negotiable.     Coolidge  V.  Saltmarsh  (Wash.),  165  Pac.  508. 

Note  where  and  when  presented  for  payment.  Hastings  v.  Gump,  — 
W.  Va.  —    108  S.  E.  600. 

Provisions  in  a  mortgage  securing  a  negotiable  note  for  certain  con- 
tingencies are  not  imported  to  the  note.  Thorp  v.  Mindeman,  123  Wis. 
149.  101  N.  W.  417,  68  L.  R.  A.  146,  107  Am.  St.  Rep.  1003. 

Contract  and  notes  given  for  purchase  money  should  be  construed 
together  to  determine  negotiability.  Bank  of  Evansville  v.  Kurth,  167 
Wis.  43,  166  N.  W.  658. 


la.  The  following  is  a  complete  list  of  the  cases  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Alabama. — Ex  parte  Bledsoe  (1913),  61  So.  813:  Sherrill  v.  Merch.  & 
Mech.  Tr.  &  Sav.  Bk.  (1916),  70  So.  723;  Whateley  v.  Muscogee  Bank 
(Ala.),  72  So.  1018;  Oneonta  Trust  &  Banking  Co.  v.  Box  (1917),  73 
So.  759;  Jones  v.  Martin  (Ala.  App.),  74  So.  761;  Johnson  v.  Blackman 
(1918),  78  So.  891;  Cannon  v.  Dillehay,  84  So.  549;  Ex  parte  E.  C. 
I'ayne  Lumber  Co.,  203  Ala.  665 ;  Sacred  Heart  Church  Building  Com- 
mittee v.  Manson,  82  So.  498;  Smith  v.  Vaughn,  89  So.  302. 

/iW^roMfl.— Slaughter  v.  Bk.  of  Bisbee  (1916),  154  Pac.  1040;  Arnett  v. 
Clack,  198  Pac.  127; 

Arkansas.— MoTgzn  v.  Center  (1918),  202  S.  W.  235:  Rector  v. 
Strauss,  203  S.  W.  1024. 

California.— Nawajo  Co.  Bk.  v.  Dolson  (1912).  126  Pac.  153;  Wetzel 
V.  Cole  (1917),  165  Pac.  692;  Chinn  v.  Penn  (1919),  175  Pac.  687. 


374  NEGOTIABLE    INSTRUMENTS.  §    1 

Colorado.— Normcin  v.  McCarthy  (1913),  138  Pac.  28;  Ayers  v.  Walker 
(1913),  54  Col.  571;  Johnson  v.  Engstone  (1916).  155  Pac.  1095;  Florence 
Oil  &  Refinmg  Co.  v.  Hiawatha  Gas,  Oil  &  Refining  Co.  (1913),  55  Col. 
App.  378. 

Connecticut.— Nat.  Sav.  Bk.  v.  Cable  (1901),  73  Conn.  568,  48  Atl.  428; 
St.  Paul's  Episcopal  Church  v.  Fields  (1909).  81  Conn.  670,  72  Atl.  145. 

F/onc/o.— Gamble  v.  Malsby  (1914),  64  So.  437. 

Idaho.— R'mker  v.  Lauer,  13  Ida.  163,  88  Pac.  1057;  Kimpton  v.  Stude- 
baker  Bros.  Co.  (1908),  14  Ida.  552,  94  Pac.  1039;  Union  Stock  Yards 
Nat.  Bk.  V.  Bolan  (1908),  14  Ida  87,  93  Pac.  508;  Home  Land  Co.  v.  Os- 
born   (1910),  19  Ida.  75,  112  Pac.  764. 

Illinois.— Stitzel  v.  Miller  (1910),  157  111.  App.  390;  Sanderson  v. 
Clark,  194  Pac.  472;  Peterson  v.  Emery  (1910),  154  111.  App.  294;  First 
Nat.  Bank  v.  Garland,  160  111.  App.  407;  Bcrtolet  v.  Stomer  (1911),  164 
111.  App.  605;  Laumn  v.  Harrington  (1915),  107  N.  E.  826,  267  111.  57. 

Indiana. — Essig  v.  Porter  (1916),  112  N.  E.  1005;  Bingham  v.  New 
Town  Bank  (1918),  118  N.  E.  318;  Millikan  v.  Security  Trust  Co.  (1918), 
118  N.  E.  568;  Wayne  Co.  Nat.  Bank  v.  Cook,  127  N.  E.  779. 

Iowa.— Allison  v.  HoUembeak  (1908),  138  Iowa  479,  114  N.  W.  1059; 
Des  Moines  Sav.  Bk.  v.  Arthur  (1913),  143  N.  W.  556;  Blumer  v. 
Schmidt  (1914),  146  N.  W.  751;  Jewett  Lumber  Co.  v.  Martin  Conroy 
Co.  (1915).  152  N.  W.  493;  Manhard  v.  First  Natl.  Bk.  (1917),  165  N. 
W.  185;  Quinn  v.  Bane  (1917),  164  N.  W.  788;  Kushner  v.  Abbott,  156 
Iowa  598,  137  N.  W.  913 ;  Commercial  Sav.  Bank  v.  Schafifer,  181  N.  W. 
492. 

Kansas.— The  Holliday  St.  Bk.  v.  Hoffman  (1911),  85  Kans.  71,  115 
Pac.  239;  The  Rossville  State  Bk.  v.  Heslet  (1911),  84  Kans.  315,  113 
Pac.  1052;  Brown  v.  Cruce  (1913),  133  Pac.  865;  National  Bank  of  Webb 
City  v.  Dickinson,    102  Kan.  564. 

Kentucky.— Citizens'  Trust,  etc.,  Co.  v.  Hays,  167  Ky.  560,  180  S.  W. 
811;  Wettlaufer  v.  Baxter  (1910).  137  Ky.  326,  125  S.  W.  741;  Lynch- 
burg Shoe  Co.  v.  Hensley,  218  S.  W.  243. 

Louisiana. — Continental  Bank  &  Trust  Co.  v.  Times  Pub.  Co.  (1917), 
76  So.  612;  Donart  v.  Rabeto  (1917),  76  So.  166. 

Maryland. — Vandeford  v.  Farmers'  &  Mech's  Nat.  Bk.  of  Westminster, 
105  Md.  164.  66  Atl.  47;  Harper  v.  Davis  (1911),  115  Md.  349,  80  Atl. 
1012;  First  Denton  Natl.  Bk.  v.  Kenney  (1911),  116  Md.  24,  81  Atl.  227. 

Massachusefts.—Shepard  v.  Abbott  (1901),  179  Mass.  300,  60  N.  E. 
782;  Torpey  v.  Tebo  (1903),  184  Mass.  307,  68  N.  E.  223;  Mass.  Nat. 
Bk.  V.  Snow  (1905),  187  Mass.  159,  72  N.  E.  959;  Berenson  v.  London, 
etc.,  Ins.  Co.  (1909).  201  Mass.  172.  87  N.  E.  687;  Brvne  v.  Bryne  (1911), 
209  Mass.  179;  Union  Tr.  Co.  v.  McGinty  (1912),  212  Mass.  205,  98  N.  E. 
679;  Pierce  v.  Talbott  (1913),  213  Mass.  330.  100  N.  E.  553. 

Michigan.— Schmidt  v.  Pegg  (1912).  172  Mich.  159.  137  N.  W.  524; 
White  V.  Wadhams  (1919),  170  S.  W.  60. 

Minnesota. — Polk  County  State  Bank  of  Crookston  v.  Walters,  176 
N.  W.  496. 


§    1  FORM  AND  INTERPRETATION.  375 

Mississippi.—S'ivley  v.  Williamson   (1916),  72  So.  1008. 

Missouri.—Suhlette  v.  Brewington  (1909),  139  Mo.  App.  410,  122  S. 
W.  1150;  Dickey  v.  Adler,  143  Mo.  App.  326,  127  S.  W.  593;  Nelson  v. 
Diffcndcrffcr  (1914),  163  S.  W.  271;  Hawkins  v.  Wiest  (1912),  167  Mo. 
App.  439;  Val  Blatz  Brewing  Co.  v.  Interstate  Ice  &  Cold  Storage  Co. 
(1912),  143  S.  W.  542;  Mudd  v.  Farmers'  &  Merchants'  Bk.  of  Hunne- 
well   (1914),  162  S.  W.  314. 

Mo»/a«a.— Cornish  v.  Wolverton  (1905),  32  Mont.  456,  81  Pac.  4. 

Nebraska. — Aurora  State  Bk.  v.  Hayes  Fames  Elevator  Co.  (1911),  88 
Neb.  187;  Fisher  v.  O'Hanlon,  Rowan,  Appt.  (1913),  93  Neb.  529,  141 
N.  W.  157;  First  Nat'l  Bk.  v.  Greenlee  (1918),  166  N.  W.  559;  Heeler  v. 
Hiles  Estate  (1919),  172  N.  W.  363. 

New  Jersey. — Borough  of  Montvale  v.  Peoples  Bank  (1907),  67  Atl.  67. 

New  York. — Deyo  v.  Thompson  (1900),  53  A.  D.  9 ;  Izzo  v.  Ludington 
(1903),  79  A.  D.  272,  79  N.  Y.  Supp.  744;  Benedict  v.  Kress,  97  App. 
Div.  65,  89  N.  Y.  Supp.  607;  Young  v.  Am.  Bk.  No.  2  (1904),  44  Misc. 
308,  89  N.  Y.  Supp.  915;  Waddell  v.  Hanover  Nat.  Sav.  Bk.  (1905),  48 
Misc.  578,  97  N.  Y.  Supp.  305;  Hibbs  v.  Brown  (1907),  190  N.  Y.  167, 
affirming  112  A.  D.  214,  82  N.  E.  1108,  98  N.  Y.  Supp.  353;  Fulton  v. 
Varney  (1907),  117  A.  D.  572,  102  N.  Y.  Supp.  608;  Alartial  Armand  & 
Co.  v.  Creighton,  167  N.  Y.  Supp.  333 ;  Haddock,  Blanchard  &  Co.  v. 
Haddock  (1908),  192  N.  Y.  499,  82  N.  E.  682,  103  N.  Y.  Supp.  584; 
Zander  v.  N.  Y.  Security  &  Tr.  Co.  (1902),  39  Misc.  98,  78  N.  Y.  Supp. 
900;  Tanner's  Nat.  Bk.  v.  Lacs  (1909),  136  A.  D.  92,  120  N.  Y.  Supp.  669; 
Wray  v.  Miller  (1910),  120  N.  Y.  Supp.  787;  Eq.  Tr.  Co.  of  N.  Y.  v. 
Were  (1911),  132  N.  Y.  Supp.  351;  Rosenburg  v.  Schoenwald  (1911),  126 
N.  Y.  Supp.  615;  Eq.  Tr.  Co.  of  N.  Y.  v.  Howe  (1911),  129  N.  Y.  Supp. 
112;  Czerney  v.  Hass  (1911),  144  A.  D.  430;  Hilborn  v.  Penn.  Cement 
Co.  (1911),  145  A.  D.  442;  Ryan  v.  Sullivan  (1911),  143  A.  D.  471;  Eq. 
Tr.  Co.  V.  Taylor  (1911),  131  N.  Y.  Supp.  475,  72  Misc.  52;  Eq.  Tr.  Co. 
of  N.  Y.  V.  Newman  (1911),  129  N.  Y.  Supp.  259,  72  Misc.  502;  St. 
Lawrence  Co.  Nat.  Bk.  v.  Watkins  (1912),  135  N.  Y.  Supp.  461;  Owens 
v.  Blackburn  (1914),  161  A.  D.  827,  146  N.  Y.  Supp.  966;  Merchants 
Nat.  Bk.  of  St.  Paul  v.  Sante  Maria  Sugar  Co.  (1914),  147  N.  Y.  Supp. 
498;  Kinsella  v.  Lockwood  (1913),  140  N.  Y.  Supp.  512;  Eq.  Tr.  Co.  of 
N.  Y.  V.  Harger  (1913),  102  N.  E.  209;  Kerr  v.  Smith  (1913),  156  A.  D. 
807,  142  N.  Y.  Supp.  57;  Crosby  v.  Bank  of  Niagara  (1915),  154  N.  Y. 
Supp.  883;  Hubbard  v.  Syemite  Trap  Rock  Co.  (1917),  165  N.  Y.  Supp. 
486,  178  A.  D.  531;  Standard  Steam  Spec.  Co.  v.  Corn  Exch.  Bk.  (1917), 
116  N.  E.  386,  220  N.  Y.  478;  Lazarowitz  v.  Stafford  (1917),  167  N.  Y. 
Supp.  910;  Shubert  Theat.  Co.  v.  Dalton  (1917),  167  N.  Y.  Supp.  332; 
Osborne  v.  M.,  K.  &  T.  Ry.  Co.,  155  N.  Y.  Supp.  236,  92  Misc.  Rep.  166; 
Keister  v.  Wade,  182  N.  Y.  S.  119;  Nelson  v.  Citizens'  Bank,  180  N.  Y. 
S.  747. 

North  Carolma.— Myers  v.  Petty  (1910),  153  N.  Car.  462;  Pope  & 
Ballance  v.  Righter-Parry  Lumber  Co.  (1913),  78  S.  E.  65;  Newland  v. 
Moore  (1917),  92  S.  E.  367. 

North  Dakota.— Aamoth  v.  Hunter,  33  N.  D.  582,  157  N.  W.  299; 
Fleming  v.  Sherwood  (1912),  139  N.  W.  101;  Stutsman  County  Bank  v. 
Jones  (1917),  162  N.  W.  402. 


376  NEGOTIABLE    INSTRUMENTS.  §    2 

0/ito.— Rockficld  V.  First  Nat.  Rk.  of  Springfield  (1907).  11  Ohio  St. 
311,  83  N.  E.  392;  Miller  v.  Kyle  (1911),  85  Ohio  St.  186,  97  N.  E.  372. 

Oklahoma.— Lon^mor\\.  Nat.  Bk.  v.  Loukoncn  (1912),  127  Pac.  947; 
Voris  V.  Anderson  (1915),  153  Pac.  291;  DeGroat  v.  Frccht  (1913),  Zl 
Okla.  267,  131  Pac.  172;  Logan  Co.  Bank  v.  Farmers'  Nat.  Bank.  55 
Okla.  592,  155  Pac.  561;  Iowa  State  Sav.  Bk.  v.  Wigmall  (1916),  157 
(1918),  171  Pac.  859;  Union  Nat.  Bank,  etc.,  v.  Mayfield,  174  Pac.  1034. 

Oregon.— ViwW  v.  Angus  (1911),  60  Oreg.  95,  118  Pac.  284;  Bailey  v. 
Inland  Empire  Co.,  75  Ore.  309,  146  Pac.  991  ;  Triphonoff  v.  Sweeney 
(1913),  130  Pac.  979;  Page  v.  Ford,  65  Ore.  450.  131  Pac.  1013,  Ann.  Cas. 
1915A,  1048.  45  L.  R.  A.  (N.  S.)  247;  Nickell  v.  Bradshaw  (1919),  183 
Pac.  12. 

Pennsylvania. — Volk  v.  Shoemaker  (1911),  229  Pac.  407. 

South  Carolina.— YoW  v.  Moore  (1916),  88  S.  E.  18. 

South  Dakota.— Coleman  v.  Valentin  (1917),  164  N.  W.  67. 

Tennessee.— Gilley  v.  Harrell  (1906),  118  Tcnn.  115,  101  S.  W.  424; 
First  Nat.  Bk.  of  Elgin,  111.,  v.  Russell  (1911).  139  S.  W.  734;  Ahrens  & 
Ott  Co.  V.  Moore  &  Sons  (1915),  174  S.  W.  270;  White  v.  Hatcher  (1916), 
188  S.  W.  61;  Bank  of  Whitehouse  v.  White  (1917),  191  S.  W.  332; 
Weems  v.  Neblett  (1918),  202  S.  W.  930. 

Utah.—Smhh  v.  Brown  (1917),  165  Pac.  468. 

Virginia. — Williams  v.  Liphart  (1914),  81  S.  E.  77;  Colley  v.  Sum- 
mers Parrott  Hardware  Co.   (1916),  89  S.  E.  906. 

Washington. — Nelson  v.  Spokane  Grain  Co.  (1907),  47  Wash.  85,  91 
Pac.  570;  Thomson  v.  Koch  (1911),  62  Wash.  438,  113  Pac.  1110;  Parker 
V.  Saxton  (1911),  66  Wash.  260;  Barker  v.  Sartori  (1911),  66  Wash.  260, 
119  Pac.  611;  First  Nat.  Bk.  of  Snohomish  v.  Sullivan  (1911),  66  Wash. 
375;  Quest  v.  Ruggles  (1913),  72  Wash.  609,  131  Pac.  202;  Peninsula 
Nat.  Bk.  V.  Pederson  (1916),  158  Pac.  246;  Coolidge  &  McClaine  v.  Salt- 
marsh  (1917),  165  Pac.  508;  Bright  v,  Ofield,  81  Wash.  442,  143  Pac.  159. 
Curry  (1917),  91  S.  E.  801. 

West  Virginia. — Pomeroy  Nat.  Bk.  v.  Huntington  Nat.  Bk.  (1913), 
79  S.  E.  662;  Eskridge  v.  Thomas  (1917),  91  S.  E.  7;  Thompson  v. 
Curry  (1917),  91  S.  E.  801;  Hastings  v.  Gump,  108  S.  E.  600. 

Wisconsin  (Section  on  Municipal  Orders  and  Warehouse  Receipts 
added).— Westberg  v.  Chicago  Lumber  Co.  (1903),  117  Wis.  589,  94  N. 
W.  572;  Thorpe  v.  Mindeman  (1904),  123  Wis.  149,  101  N.  W.  417,  107 
Am.  St.  1003.  68  L.  R.  A.  146;  Bank  of  Evansville  v.  Kurts  (1918),  166 
N.  W.  658 ;  Clarke  v.  Tallmadge,  176  N.  W.  906. 

United  Sfates.—Forest  v.  Safety  Banking  &  Tr.  Co.  (1909),  174  Fed. 
345  (E.  D.  Pa.)  ;  Klotz  Throwing  Co.  v.  Manufacturers'  Commercial  Co. 
(1910),  103  C.  C.  A.  305  (N.  Y.),  179  Fed.  Reu.  397;  Smith  v.  Nelson 
Land  &  Cattle  Co.   (1914),  212  Fed.  56. 

§  2.     Certainty   as   to   sum ;   what   constitutes.      The    sum 

payable  is  a  sum  certain  within  the  meaning  of  this  act,  although 
it  is  to  be  paid : 


§    2  FORM   AND  INTERPRETATION.  377 

1.  With  interest;  or 

2.  By  stated  installments ;  or 

3.  By  stated  installments,  with  a  provision  that  upon  default 
in  payment  of  any  installment  or  of  interest,  the  whole  shall 
become  due;  or 

4.  With  exchange,  whether  at  a  fixed  rate  or  at  the  current 
rate;  or 

5.  With  costs  of  collection  or  an  attorney's  fee,  in  case  pay- 
ment shall  not  be  made  at  maturity.  ^'  *" 

See  text,  §§11,  48. 

Cross  sections:     1,  64-1,  109. 

The  Idaho,  Iowa,  North  Carolina  and  Wyoming  acts  omit :  "Or  of 
interest,"  in  subsection  3. 

See  section  197  of  the  North  Carolina  act.  Nebraska  adds :  "Pro- 
vided that  nothing  herein  contained  shall  be  construed  to  authorize  any 
court  to  include  in  any  judgment  on  an  instrument  made  in  this  state 
any  sum  for  attorney's  fees  or  otlier  costs  not  allowable  in  other  cases." 

In  South  Dakota  the  following  takes  the  place  of  subsection  5:  ''Pro- 
vided that  nothing  herein  contained  shall  be  construed  to  authorize  any 
court  to  include  in  any  judgment  or  instrument  made  in  this  state  any 
sum  for  attorney's  fees,  or  other  costs  not  now  taxabJe  by  law." 

*■  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Stipulated  attorney's  fees  are  recovered  as  a  part  of  contractual  obliga- 
tion.    Schillinger  v.  Leary  (Ala.),  77  So.  846. 

When  objection  made  only  actual  attorney's  fees  are  collectible  in  suit 
on  note.  Florence  Oil,  etc.,  Co.  v.  Hiawatha  Gas,  etc.,  Co.,  55  Colo.  378, 
135  Pac.  454. 

Attorney's  fees  sued  for  in  action  are  included  in  amount  claimed  in 
fixing  jurisdiction  of  court.  Ring  v.  Merchants'  Broom  Co.,  68  Fla  515, 
67  So.  132. 

Stipulation  as  to  default  in  payment  will  not  cover  interest  not  accrued 
on  the  principal.     Tyston  v.  Ellsworth,  18  Idaho  207,  109  Pac.  134. 

A  reasonable  sum  may  be  inserted  in  blanks  where  authority  is  given 
to  fill  same  without  avoiding  instrument.  Kramer  v.  Schnitzer,  268  111. 
603.  109  N.  E.  695. 

Failure  to  pay  interest  within  thirty  days  after  due  provision  rendering 
note  collectible  does  not  make  note  non-negotiable.  Commercial  Sav. 
Bank  v.  Schaffer,  —  la.  — ,  181  N.  W.  492. 

When  place  of  performance  does  not  govern  validity  of  attorney  fee 
provision.     Carscy  v.  Swan,  150  Ky.  473,  150  S.  W.  534. 

When  attorney's  fees  collectible  without  proof  of  incurring  same. 
First  Nat.  Bk.  of  Vicksburg  v.  :\Iayer,  129  La.  891,  57  So.  308. 

Attorney  fee  provision  passes  to  indorsee  with  note.  Winn  Parish 
Bank  v.  Wliite  Sulphur  Co.,  133  La.  282,  62  So.  907. 


378  NEGOTIABLE    INSTRUMENTS.  §    2 

Attornej's  fees  accrue  after  services  rendered  and  are  not  part  of  the 
action  on  note,  but  are  determined  on  application  to  court.  First  State 
Bank  v.  Cohasset  Wooden  Ware  Co.  (Minn.),  161  N.  W.  398. 

Attorney's  fees  due  as  soon  as  unpaid  note  placed  with  attorney  for 
collection.     Morrison  v.  Ornbaun,  30  Mont.  Ill,  75  Pac.  953. 

When  attorney's  fees  recoverable  as  costs  of  suit.  Bovee  v.  Helland, 
52  Mont.  51,  156  Pac.  416. 

When    ten    per    cent    collection    charges    and    attorney's    fees    are    not 
usurious. 
Gate  City  Nat.  Bank  v.  Strother  (Mo.  App.),  196  S.  W.  447. 

Reasonableness  of  attorney's  fees  need  not  be  proven  where  no  con- 
tention made.    First  Nat.  Bank  v.  Stam,  186  Mo.  App.  439,  171  S.  W.  567. 

Guaranty  as  to  attorney's  fees  in  note.  Townscnd  v.  Alcvvel,  —  Mo. 
App.  — ,  202  S.  W.  447. 

Where  attorney  employed  to  collect  note  fees  are  due  regardless  of 
manner  of  payment.     Williams  v.  Dockwilcr  (N.  M.),  145  Pac.  475. 

When  attorney  fee  provision  will  not  be  enforced  in  state  where  in- 
valid, although  made  and  payable  in  another  state.  Exchange  Bank  v. 
Appalachian  Land,  etc.,  Co.,  128  N.  C.  193,  38  S.  E.  813. 

Jurisdiction  of  court  determined  by  amount  demanded,  including  attor- 
ney's fees.  Exchange  Bank  v.  Appalachian  Land  &  Lumber  Co.,  128  N. 
C.  193,  38  S.  E.  813. 

Where  attorney  fee  is  valid  in  state  where  made  and  payable  it  will  be 
enforced.  First  Nat.  Bank  v.  Fleitman,  168  App.  Div.  75,  153  N.  Y.  Supp. 
869. 

The  provisions  of  the  statute  as  to  attorney  fees  do  not  change  the 
law  where  the  states  previously  held  such  provisions  against  public  policy. 
Miller  v.  Kyle,  85  Ohio  St.  186,  91  N.  E.  372,  74  Cent.  Law  J.  289. 

When  attornev's  fees  become  due.  Security  State  Bank  v.  Fussell,  36 
Okl.  527,  129  Pac.  746. 

Note  payable  on  given  date  providing  for  interest  from  date  if  not 
paid  when  due  and  interest  at  given  rate  from  date  on  which  made  pay- 
able is  negotiable.  Citizens'  Savings  Bank  v.  Landis,  Zl  Okl.  530,  132 
Pac.  1101. 

Court  may  add  stipulated  attorney's  fees  although  jury  omits  them 
from  verdict.     Continental  Gin  Co.  v.  Sullivan,  48  Okl.  332,  150  Pac.  209. 

Note  providing  for  attorney's  fees  and  an  additional  amount  in  case 
of  suit  is  negotiable.     Seton  v.  Exchange  Bank  (Okl.),  150  Pac.  1079. 

Attorney's  fees  added  although  not  submitted  by  court  to  jury  not 
error.    Fatoransky  v.  Pope  (Okl.),  157  Pac.  905. 

Attorney's  fees  may  be  recovered  whether  suit  is  to  foreclose  note  and 
chattel  mortgage  or  in  replevin.  First  Nat.  Bank  v.  Howard  (Okl.),  158 
Pac.  927. 

Provision  for  payment  of  "all  costs  of  collection"  authorizes  only 
leasonable  attorney's  fees.     Letcher  v.  Wrightsman  (Okl.),  158  Pac.  1152. 

Note  containing  two  interest  provisions  is  not  an  unconditional  promise 
to  pay  a  certain  sum  of  money.  Union  Nat.  Bank  v.  Mayfield  (Okla.), 
169  Pac.  626. 

Attorney's  fees  governed  by  making  demand  on  note  prior  to  suit  on 
a  demand  note.    Hodges  v.  Blaylock,  82  Ore.  179,  161  Pac.  396. 

Ten  per  cent  attorney's  fees  and  all  expenses  of  collection  provisions 
are  valid,  but  only  reasonable  amount  is  recoverable.  Holstrom  Nat. 
Bank  v.  Wood,  125  Tenn.  6,  140  S.  W.  31. 

When  indorser  is  liable  for  attorney's  fees.  Franklin  v.  The  Duncan, 
133  Tenti.  472,  182  S.  W.  230,  Ann.  Cas.  1917C.  1080. 


§   2  FORM  AND  INTERPRETATION.  379 

Provisions  for  attorney's  fees  are  a  part  of  contract  and  can  not  be 
collected  in  separate  action.  Merriinon  v.  Parkey,  136  Tenn.  645,  191  S. 
W.  327. 

Attorney's  fees  in  blank  is  an  agreement  to  pay  reasonable  fees.  Mc- 
Cormick  v.  Swem,  36  Utah  6,  102  Pac.  626. 

Provision  for  attorney  fees  in  case  of  suit  does  not  make  note  non- 
negotiable.  McCormick  v.  Severn,  36  Utah  6,  102  Pac.  626,  20  Ann.  Cas. 
1368. 

Stipulated  attorney's  fees  are  deemed  proper  unless  shown  otherwise. 
Utah  Nat.  Bank  v.  Nelson,  38  Utah  169,  111  Pac.  907 

Place  of  performance  governs  attorney  fee  provisions  in  some  cases. 
Oglesby  V.  Bank  of  New  York,  114  Va.  663,  11  S.  E.  468,  19  Va.  Law 
Reg.  122. 

Attorney  fee  stipulation  regarded  as  valid  although  question  unsettled. 
Colley  V.  Summers,  etc.,  Co.,  119  Va.  439,  89  S.  E.  906. 

Court  may  reduce  attorney's  fees  if  provision  be  found  unreasonable. 
Triplett  v.  Second  Nat.  Bank,  121  Va.  189,  92  S.  E.  897. 

No  attorney's  fees  recoverable  when  printed  blank  not  filled  in.  Scan- 
dinavian-American Bank  v.  Long,  75  Wash.  270,  134  Pac.  913. 

Indorser  can  not  recover  attorney's  fees  from  maker  when  indorsee 
did  not  sue  for  same.    Balkema  v.  Grolinund,  92  Wash.  326,  159  Pac.  127. 

Provision  for  payment  of  attorney's  fees  after  dishonor  does  not 
render  note  non-negotiable.  First  Natl.  Bank  of  Shawano  v.  Miller,  139 
Wis.  126,  120  N.  W.  820. 

Provision  for  attorney's  appearance  and  confessing  judgment  for 
amount  due  at  any  time  renders  non-negotiable.  Clark  v.  Tallmadge, 
—  Wis.  — ,  176  N.  W.  906. 

Courts  must  enforce  foreign  judgments  although  attorney's  fees  are 
included  as  a  part  of  the  judgments.  Westwatcr  v.  Murray,  245  Fed. 
427,  157  C.  C.  A.  589. 

Agreement  to  pay  five  per  cent  commission  for  collection  means  the 
amount  incurred  up  to  that  amount  in  collecting.  Chestertown  Bank  v. 
Walker,  163  Fed.  510,  90  C.  C.  A.  140. 

^*  The  following  is  a  complete  list  of  the  cases  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

/i/afcawa.— Bledsoe  v.  City  Nat.  Bk.  of  Selma  (1912),  7  Ala.  App.  195. 
60  So.  942;  Ex  parte  Bledsoe  (1913),  61  So.  813;  Brooks  v.  Greil  Bros. 
(1915),  68  So.  874;  Schillinger  v.  Leary,  11  So.  846. 

^n^owa.— People's  Nat.  Bk.  v.  Taylor  (1915),  149  Pac.  763. 

Arkansas.— ^^n\i  of  Holly  Grove  v.  Sudbury,  121  Ark.  59,  180  S.  W. 
470. 

Co/i7ormo.— Navajo  Co.  Bk.  v.  Dolson  (1912),  126  Pac.  153;  Stoddart 
V.  Goldin  (1919),  178  Pac.  707. 

Colorado. — The  Firestone  Coal  Co.  v.  McKissick  (1913),  24  Colo.  App. 
294;  Florence  Oil  &  Refining  Co.  v.  Hiawatha  Gas,  Oil  &  Refining  Co. 
(1913),  55  Colo.  App.  378,  135  Pac.  454. 

Florida. — Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886;  Taylor  v.  Am. 
Nat.  Bk.  of  Florida  (1912),  63  Fla.  631.  57  So.  678;  Holder  Turpentine 
Co.  v.  Kiser  Co.  (1915),  67  So.  85;  Ring  v.  Merchants'  Broom  Co.,  68 
Fla.  515,  67  So.  132. 


380  NEGOTIABLE    INSTRUMENTS.  §   2 

/cTa/io— Union  Stock  Yards  Nat.  Bk.  v.  Bolan  dQOR).  14  Ida.  87,  93 
Pac.  508;  Tyston  v.  Ellsworth  (1910),  18  Ida.  207,  109  Paa  134. 

Illinois. — Pitzer  V.  McCunc,  152  111.  App.  144;  Graves  v.  Neeves  (1913), 
183  111.  App.  235 ;  Kramer  v.  Schnitzer,  268  111.  603,  109  N.  E.  695. 

/nrfiono.— Milliken  v.  Security  Trust  Co.  (1918).  118  N.  E.  568;  Easley 
V.  Deer  (1919),  121  N.  E.  542. 

/oTtvi.— Farmers'  Loan  &  Tr.  Co.  v.  Planck  (1915),  152  N.  W.  390; 
State  Bk.  of  Halstad  v.  Bilstad  (1912).  136  N.  W.  204;  Commercial  Sav. 
Bank  v.  Schaffer.  181  N.  W.  492. 

Kansas.— Smi\.\\  v.  Nelson  Land  &  Cattle  Co.  (1914),  212  Fed.  56. 

Kentucky.— C^rscy  v.  Swan.  150  Ky.  473,  150  S.  W.  534. 

Louisiana. — First  Nat.  Bk.  of  Vicksburg  v.  Mayer  (1912),  129  La. 
981,  57  So.  308;  Winn  Parish  Bk.  v.  White  Sulphur  Lumber  Co.  (1913), 
62  So.  907. 

Mory/a«<f. —Chestertown  Bk.  v.  Walker  (1908).  163  Fed.  510,  90  C.  C. 
A.  140. 

Missouri.— Tizsh  v.  McColl.  176  Mo.  App.  198,  166  5.  W.  1113;  Bank 
of  Neelyville  v.  Lee  (1914).  168  S.  W.  7%;  First  Nat.  Bk.  v.  Stam 
(1914),  171  S.  W.  567;  Gate  City  Nat.  Bank  v.  Strother.  196  S.  W.  447; 
Townsend  v.  Alewel,  202  S.  W.  447;  American  Sav.  Bk.  v.  Sutton  (1918), 
402  S.  W.  572. 

Montana. — Bovce  v.  Helland,  52  Mont.  51,  156  Pac.  416;  Morrison  v. 
Ornbaun  (1904),  30  Mont.  Ill,  75  Pac.  953;  Cornish  v.  Wolverton  (1905). 
?>2  Mont.  456,  81  Pac.  4;  First  Nat.  Bank  v.  Berritt,  52  Mont.  359,  157 
Pac.  951. 

Nctv  /^r^rv.— Mackintosh  v.  Gibbs,  81  N.  J.  L.  577,  80  Atl.  554,  Aim. 
Cas.  1912D  163. 

Neiv  Mexico. — Williams  v.  Dockwiler  (1914),  145  Pac.  475. 

New  ForA'.— First  Nat.  Bank  v.  Fleitman,  153  N.  Y.  Supp.  869,  168 
A.  D.  75. 

North  Carolina. — Exchange  Bk.  v.  Apalachian  L.  &  L.  Co.  (1901), 
128  N.  Car.  193;  Newbern  Banking  &  Trust  Co.  v.  Duffy  (1910).  153 
N.  Car.  62,  68  S.  E.  915;  Franklin  Nat.  Bk.  v.  Roberts  Bros.  (1915),  84 
S.  E.  706. 

O/iio.— Miller  V.  Kyle  (1911).  85  Ohio  St.  186,  97  N.  E.  372. 

Oklahoma. — Continental  Gin  Co.  v.  Sullivan.  48  Okla.  332,  ISO  Pac. 
209;  Citizens'  Savings  Bank  v.  Landis,  Z7  Okla.  530,  132  Pac.  1101;  Ran- 
dolph V.  Hudson,  12  Okla.  516,  74  Pac.  946;  First  Nat.  Bk.  of  Stigler  v. 
Howard  (1916).  158  Pac.  927;  Security  State  Bank  v.  Fussell,  2,6  Okla. 
527,  129  Pac.  746;  Scton  v.  Exchange  Bk.  (1915).  150  Pac.  1079;  Potts 
V.  Crudup  (1915),  150  Pac.  170;  Tr.  &  Sav.  Bk.  of  Charles  City  v. 
Gleichman  (1915),  50  Okla.  441.  150  Pac.  908;  First  Nat.  Bk.  v.  Muskogee 
Pipe  Line  Co.  (1914).  139  Pac.  1136;  Citv  Nat.  Bk.  v.  Kelly  (1915).  151 
Pac.  1172;  Voris  v.  Anderson  (1915),  153  Pac.  291;  Union  Bank  v.  Mav- 
field  (1917),  169  Pac.  626;  Letcher  v.  Wrightsman  (Okla.),  158  Pac. 
1152. 


§    3  FORM  AND  INTERPRETATION.  381 

Oregon— Hodges  v.  Blaylock,  82  Ore.  179,  161  Pac.  396. 

Pennsylvania.— WdskkchcT  v.  Connelly  (1917),  100  Atl.  965. 

South  Carolina.— Smith  v.  Phifer,  104  S.  C.  396,  89  S.  E.  323. 

Tennessee.— Uohtron  Nat.  Bk.  v.  Wood  (1911),  125  Tenn.  6,  140  S. 
W.  31;  First  Nat.  Bk.  of.  Elgin,  111.,  v.  Russell  (1911),  139  S.  W.  734; 
Franklin  v.  The  Duncan,  133  Tenn.  472,  182  S.  W.  230,  Ann.  Cas.  1917C 
1080;  Merrimon  v.  Parkey  (1917),  191  S.  VV.  327. 

Texas.— Sugg  v.  Smith  (1918),  205  S.  W.  363;  Drinkard  v.  Jenkins 
(1919),  207  S.  W.  353. 

Utah.— McCormkk  v.  Swem  (1909),  36  Utah  6,  102  Pac.  626,  20  Ann. 
Cas.  1368;  Utah  Banking  Co.  v.  Newman  (1914),  138  Pac.  1146;  Utah 
Nat.  Bank  v.  Nelson,  38  Utah  169,  111  Pac.  907. 

Virginia.— Ogleshy  Co.  v.  Bk.  of  N.  Y.  (1913),  114  Va.  663,  19  Va. 
L.  Reg.  122,  77  S.  E.  468;  Colley  v.  Summers  Parrott  Hardware  Co. 
(1916),  89  S.  E.  906;  Triplett  v.  Second  Nat.  Bk.  of  Culpepper  (1917), 
92  Va.  897;  Sands  v.  Roller,  118  Va.  191,  86  S.  E.  857. 

Washington. — Parker  v.  Saxton  (1911),  66  Wash.  260;  Barker  v.  Sar- 
tori  (1911),  66  Wash.  260,  119  Pac.  611;  First  Nat.  Bk.  of  Snohomish  v. 
Sullivan  (1911),  66  Wash.  375;  Puget  Sound  State  Bank  v.  Wash.  Paving 
Co.  (1917),  162  Pac.  870;  Davis  v.  Hibbs  (1913),  73  Wash.  315,  131  Pac. 
1135;  Harris  v.  Johnson  (1913),  134  Pac.  1048;  Scandinavian-American 
Bk.  V.  Long  (1913),  134  Pac.  913;  Pease  v.  Syler  (1914),  138  Pac.  310; 
Bright  V.  Offield,  81  Wash.  442,  143  Pac.  159;  Balkema  v.  Giolimund 
(1916),  159  Pac.  127. 

West  Virginia.— First  Nat.  Bk.  of  Pineville  v.  Sanders  (1916),  88  S. 
E.  187;  Raleigh  Co.  Bk.  v.  Poteet  (1914),  82  S.  E.  332;  First  Nat.  Bk. 
V,  Sanders  (1916),  88  S.  E.  187. 

Wisconsin.— Thorpe  v.  Mindeman  (1904),  123  Wis.  149,  101  N.  W. 
417,  107  Am.  St.  1003,  68  L.  R.  A.  146;  First  Nat.  Bk.  of  Shawano  v. 
Miller  (1909),  139  Wis.  126,  120  N.  W.  820;  Clark  v.  Talmadge,  176  N. 
W.  906. 

United  5'/flf^.y.— Chestertown  Bank  v.  Walker,  163  Fed.  510,  90  C.  C. 
A.  140;  Mechanics'  American  Nat.  Bank  v.  Coleman,  204  Fed.  Rep.  24, 
122  C.  C.  A.  338;  Smith  v.  Nelson  Land  &  Cattle  Co.  (1914),  212  Fed.  56; 
Kennedy  v.  Broderick  (1914),  216  Fed.  137  (C.  C.  A.,  7th  Ct.)  ;  West- 
water  V.  Murray,  245  Fed.  427,  157  C.  C.  A.  589. 


§  3.  When  promise  is  unconditional.  An  unqualified 
order  or  promise  to  pay  is  unconditional  within  the  meaning  of 
this  act,  though  coupled  with : 

1.  An  indication  of  a  particular  fund  out  of  which  reim- 
bursement is  to  be  made,  or  a  particular  account  to  be  debited 
with  the  amount;  or 

2.  A  statement  of  the  transaction  which  gives  rise  to  the  in- 
strument. 


382  NEGOTIABLE    INSTRUMENTS.  §    3 

But  an  order  or  promise  to  pay  out  of  a  particular  fund  is 
not  unconditional.  *'  ** 

1.  Digest  of  some  of  the  decisions  in  which  this  section  is 
construed,  arranged  alphabetically  by  states : 

See  text,  §§  49,  51. 
Cross  sections :     1-2. 

Provision  retaining  title  of  chattel  in  payee  of  note  does  not  render  it 
non-negotiable.    Ex  parte  Bledsoe,  180  Ala.  586,  61  So.  813. 

Retention  of  title  to  property  does  not  destroy  negotiability  of  note. 
Citizens'  Nat.  Bank  v.  Bucheit  (Ala.),  71  So.  82. 

Conditional  indorsement.  Peoples  Bank  of  Mobile  v.  Moore,  —  Ala. 
— ,  78  So.  789. 

Word  "reimburse"  renders  promise  conditional  and  note  non-negotiable. 
Sacred  Heart  Church  Building  Committee  v.  Manson,  —  Ala.  — ,  82  So. 
498. 

Effect  of  words  "as  per  contract"  in  the  corner  of  note  upon  nego- 
tiability.    Strand  Amusement  Co.  v.  Fox,  —  Ala.  — ,  87  So.  332. 

Notation  under  signature  of  maker  did  not  impair  negotiability. 
Slaughter  v.  Bank  of  Bisbee,  17  Ariz.  484,  154  Pac.  1040. 

Conditional  promise  to  pay.  Rector  v.  Strauss,  —  Ark.  — ,  203  S.  W. 
1024. 

Letter  as  note  prior  to  Negotiable  Instruments  Law.  Equitable  Trust 
Co.  V.  Harger,  258  111.  615,  102  N.  E.  209. 

Instrument  containing  provisions  as  to  correspondence  course  render 
note  non-negotiable.  Midwest  Collection  Bureau  v.  Greenwald,  214  111. 
App.  468. 

A  note  providing  for  deduction  from  insurance  policy  in  case  of  death 
before  maturity  is  not  conditional.  Union  Bank  v.  Spies,  151  Iowa  178, 
130  N.  W.  929. 

Order  directing  payment  "on  account  of  contract"  is  negotiable.  First 
Nat.  Bank  v.  Lightner,  74  Kans.  736,  88  Pac.  59,  8  L.  R.  A.  (N.  S.)  231, 
118  Am.  St.  Rep.  353. 

Unconditional  promise  to  pay  qualified  by  words  "as  per  contract  dated 
March  24,  1913."  Continental  Bank,  etc.,  v.  Times  Pub.  Co.,  142  La. 
209,  76  So.  612. 

Provision  in  note  that  it  is  subject  to  approval  of  payee  makes  it  non- 
negotiable.     Sloan  V.  McCarty.  134  Mass.  245. 

The  words  "value  received  as  per  contract"  do  not  destroy  negotia- 
bility of  note.  Nat.  Bank  of  Newbury  v.  Wentworth,  218  Mass.  30,  105 
N.  E.  626. 

Direction  to  charge  to  a  certain  payment  a  definite  order  to  pay  is 
not  conditional.     Shepard  v.  Abbott,  179  Mass.  300,  60  N.  E.  782. 

Note  given  subject  to  approval  of  payee  bv  its  provision  is  not  nego- 
tiable.   Worden  Grocer  Co.  v.  Blanding,  161  Mich.  254,  126  N.  W.  212. 

Where  contract  was  transferred  with  note  on  back  of  which  the  words 
"per  contract"  appeared  the  purchaser  is  not  charged  with  provisions  of 
some  other  contract  giving  defense.  Snelling  State  Bank  v.  Clasen,  132 
Minn.  404,  157  N.  W.  643. 

Effect  of  retention  of  title  and  default  provisions  in  note.  Polk  Coun- 
ty State  Bank  of  Cropkston  v.  Walters,  —  Minn.  — ,  176  N.  W.  496. 

Question  of  negotiability  not  considered  where  tried  on  another  theory. 
Lebrecht  v.  Nellist,  184  Mo.  App.  335,  171  S.  W.  11. 


§    3  FORM  AND  INTERPRETATION.  383 

Note  given  to  "secure"  difference  between  two  sums  does  not  destroy 
negotiability.     Morehead  v.  Cummins,  —  Mo.  App.  — ,  230  S.  W.  656. 

Notation  "To  be  used  in  part  renewal  of  note"  on  back  of  check  as 
afifecting  negotiation.  R.  S.  Howard  Co.  v.  International  Bank  of  St. 
Louis,  198  Mo.  App.  284. 

Detachment  of  promissory  note  from  order  for  specified  goods  held  not 
to  render  the  instrument,  which  attached  was  non-negotiable,  negotiable. 
State  V.  Mitton,  Zl  Mont.  366,  96  Pac.  926. 

Provisions  in  an  instrument  for  delivery  of  property  for  installment 
payments  and  attorney  fees  in  case  of  suit  do  not  render  it  non-negotiable. 
First  Nat.  Bank  v.  Barrett,  52  Mont.  359,  157  Pac.  951. 

Note  otherwise  negotiable  is  not  changed  by  provisions  as  to  title 
remaining  in  vendor.  Whitlock  v.  Auburn  Lumber  Co.,  145  N.  C.  120, 
58  S.  E.  909,  12  L.  R.  A.  (N.  S.)   1214. 

Township  bonds  negotiable  in  form  are  not  affected  by  tax  provisions 
in  relation  to  paj^ments  in  statute  authorizing  their  issue,  the  amount 
finally  to  be  realized  being  definite.  Cleveland  Co.  v.  Bank  of  Gastonia, 
157  N.  C.  191,  72  S.  E.  996. 

Note  given  for  purchase  of  animal  which  is  warranted  does  not  destroy 
negotiability.     Critcher  v.  Ballard.  —  N.  C.  —   104  S.  E.  134. 

Condition  contained  in  note  that  it  does  not  affect  the  ownership  of 
goods  sold  renders  non-negotiable.  Fleming  v.  Sherwood,  24  N.  D.  144, 
139  N.  W.  101,  43  L.  R.  A.  (N.  S.)  945. 

Direction  to  pay  from  certain  insurance  draft,  the  same  being  balance 
of  account,  is  not  payable  from  particular  fund  so  as  to  render  promise 
to  pay  conditional.    Hanna  v.  McCrory,  19  N.  M.  183,  141  Pac.  996. 

Conditional  sale  provision  in  negotiable  note.  Welch  v.  Owenby,  — 
Okla.  — ,  175  Pac.  746. 

Provision  for  holding  notes  due  at  any  time  payee  feels  security  not 
sufficient  is  conditional.     Reynolds  v.  Vint,  IZ  Ore.  528,  144  Pac.  526. 

Note  is  non-negotiable  where  it  contains  provision  that  payee  may  upon 
certain  conditions  declare  it  due.  Western  Farquahar  IMachine  Co.  v.  Bur- 
nett, 82  Ore.  174,  161  Pac.  384. 

Promise  to  pay  if  order  is  accepted  is  not  negotiable.  Neylus  v.  Port, 
46  Pa.  Supr.  Ct.  428. 

Letter  promising  to  pay  "A"  if  "A"  advances  monev  is  non-negotiable. 
Equitable  Trust  Co.  of  N.  Y.  v.  Howe,  72  Misc.  46,  129  N.  Y.  Supp.  112. 

A  letter  promising  to  pay  a  definite  sum  in  certain  items  is  negotiable. 
Equitable  Trust  Co.  v.  Taylor,  146  App.  Div.  424,  131  N.  Y.  Supp.  475. 

"I  shall  pay  to  order  of"  held  to  be  negotiable  although  containing 
added  statements  as  to  transaction.  Merchants'  Nat.  Bk.  v.  Santa  Maria 
Sugar  Co.,  162  App.  Div.  248,  147  N.  Y.  Supp.  498. 

Words  referring  to  transaction  on  which  note  is  based  do  not  render 
note  non-negotiable.  Waterbury- Wallace  Co.  v.  Ivey,  99  Misc.  260,  163 
N.  Y.  Supp.  719. 

Draft  attached  to  bills  of  lading  is  not  conditional  because  of  word 
"cotton"  on  face  of  draft.  Springs  v.  Hanover  Nat.  Bk.,  209  N.  Y.  224, 
103  N.  E.  156,  52  L.  R.  A.  (N.  S.)  241. 

A  note  providing  for  payment  and  the  application  of  certain  moneys 
thereto  is  negotiable.  First  Nat.  Bk.  of  Snohomish  v.  Sullivan,  66  Wash. 
375,  119  Pac.  820,  Ann.  Cas.  1913C,  930. 

A  promise  is  unconditional  where  the  note  is  accompanied  with  an 
?dditional  instrument  designating  fund  from  which  payment  is  to  be  made. 
VanTassel  v.  McGrail,  93  Wash.  380,  160  Pac.  1053. 


384  NEGOTIABLE    INSTRITMENTS.  §    3 

Erasure  from  nolo  containing  unconditional  promise  to  pay  the  words 
"This  note  to  fulfill  a  certain  agreement."  Mason  v.  Shaffer,  —  W.  Va. 
—   96  S.  E.  1023. 

The  order  to  pay  is  absolute  where  object  for  which  drawn  is  stated. 
Brown  v.  Cow  Creek  Sheep  Co.,  21  Wyo.  1,  126  Pac.  886. 

Bill  of  exchange  accepted  against  indorsed  bills  of  lading  held  condi- 
tional.   Guaranty  Trust  Co.  v.  Grotian,  114  Fed.  Rep.  433,  52  C.  C.  A.  235. 

Words,  "charge  to  account  of  X,  100  bales  cotton,"  in  a  draft,  with 
bills  of  lading  attached,  held  to  render  conditional  the  promise  to  pay. 
Hannay  v.  Guarantee  Trust  Co.,  187  Fed.  Rep.  686. 

Direction  to  pay  and  credit  according  to  letter  is  not  conditional  so  as 
to  affect  negotiability.     In  re  Boyse,  33  Ch.  Div.  612. 


^*  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Alabama.— Ex  parte  Bledsoe,  180  Ala.  586,  61  So.  813;  Citizens'  Nat. 
Bank  of  Bucheit,  71  So.  82;  People's  Bank  of  Mobile  v.  Moore  (1918), 
78  So.  789;  Strand  Amusement  Co.  v.  Fox,  87  So.  332;  Sacred  Heart 
Building  Com.  v.  Manson   (1919),  82  So.  498. 

Arkansas.— Rector  v.  Strauss   (1918),  203  S.  W.  1024. 

^n.?o?;a.— Slaughter  v.  Bank  of  Bisbee  (1916),  17  Ariz.  484,  154  Pac. 
1040. 

Colorado. — Johnson  v.  Engstone  (1916),  155  Pac.  1095. 

Connecticut.— Nat.  Sav.  Bk.  v.  Cable  (1901),  73  Conn.  568,  48  Atl.  428. 

7;/iwo/.y.— Equitable  Trust  Co.  v.  Harger,  258  111.  615,  102  N.  E.  209; 
Midwest  Collection  Bureau  v.  Greenwald,  214  111.  App.  468. 

Iozva.~The  Union  Bk.  of  Bridgwater  v.  Spies  (1911),  151  Iowa  178, 
130  N.  W.  929. 

Kansas. — First  Nat.  Bk.  of  Hutchinson  v.  Lightener  (1906),  74  Kans. 
736,  88  Pac.  59,  8  L.  R.  A.   (N.  S.)  231,  118  Am.  St.  Rep.  353. 

Louisiana. — Bonart  v.  Rabito,  141  La.  970,  76  So.  166;  Continental 
Bank  v.  Times  Pub.  Co.,  142  La.  209,  76  So.  612. 

Maryland.— Tirst  Denton  Nat.  Bk.  v.  Kenney  (1911),  116  Md.  24; 
Denton  Nat.  Bk.  v.  Kenney  (1911),  116  Md.  124,  81  Atl.  227. 

Massachusetts.-Shepard  v.  Abbott  (1901),  179  Mass.  300,  60  N.  E. 
782;  Nat.  Bk.  of  Newberry  v.  Wentworth  (1915),  218  Mass.  30,  105  N. 
E.  626. 

Michigan. — Worder  Grocer  Co.  v.  Blanding,  161  Mich.  254,  126  N.  W. 
212;  White  v.  Wadhams  (1919),  170  N.  W.  60. 

Minnesota.— SmlVmg  State  Bank  v.  Clasen,  132  Minn.  404,  157  N.  W. 
643;  Polk  County  State  Bank  of  Brookston  v.  Walters,  —  Minn.  — ,  176 
N.  W.  496. 

Missouri.— Lehrecht  v.  Nellist,  184  Mo.  App.  335,  171  S.  W.  11;  R.  S. 
Howard  Co.  v.  International  Bank  of  St.  Louis  (1918),  198  Mo  App.  284, 
200  S.  W.  91  ;Morehead     v.  Cummins,  230  S.  W.  656. 

Montana.— States  v.  Mitton  (1908),  37  Mont.  366,  96  Pac.  926;  First 
Nat.  Bk.  of  Miles  City  v.  Barrett  (1916),  52  Mont.  359,  157  Pac.  95J 


§    4  FORM  AND  INTERrRETATION.  385 

New  Mexico.— Rznnd^  v.  McCrory,  19  N.  M.  183,  141  Pac.  996. 

New  For/;.— Hibbs  v.  Brown  (1907).  190  N.  Y.  167,  affirming  112  A. 
D.  214,  82  N.  E.  1108,  98  N.  Y.  Supp.  353;  Fulton  v.  Varncy  (1907).  117 
A.  D.  572,  102  N.  Y.  Supp.  608;  Eq.  Tr.  Co.  of  N.  Y.  v.  Newman  (1910). 
69  Misc.  494,  127  N.  Y.  Supp.  243 ;  Eq.  Tr.  Co.  v.  Howe,  72  Misc.  46,  129 
N.  Y.  Supp.  112;  Eq.  Tr.  Co.  v.  Taylor  (1911),  146  App.  Div.  424,  131 
N.  Y.  Supp.  475.  72  Misc.  52;  Eq.  Tr.  Co.  of  N.  Y.  v.  Were  (1911),  74 
Miss.  469.  132  N.  Y.  Supp.  351 ;  Merchants  Nat.  Bk.  of  St.  Paul  v.  Sante 
Maria  Sugar  Co.  (1914).  162  App.  Div.  248.  147  N.  Y.  Supp.  498;  Water- 
bury  Wallace  Co.  v.  Ivey  (1917),  99  Misc.  260.  163  N.  Y.  Supp.  719; 
Springs  V.  Hanover  Nat.  Bank,  269  N.  Y.  224.  103  N.  E.  156.  52  L.  R.  A. 
(N.  S.)  241. 

North  Caro/n/a.— Whitlock  v.  Auburn  Lumber  Co.  (1907).  145  N. 
Car.  120.  58  S.  E.  909.  12  L.  R.  A.  (N.  S.)  1214;  Bk.  of  Sampson  v. 
Hatcher  (1909),  151  N.  Car.  359.  66  S.  E.  308;  Commrs.  of  Cleveland  Co. 
V.  Bk.  of  Gastonia  (1911),  157  N.  Car.  191,  72  S.  E.  996;  Critcher  v. 
Ballard,  104  S.  E.  134. 

North  Dakota.— Fleming  v.  Sherwood,  24  N.  D.  144,  139  N.  W.  101, 
43  L.  R.  A.  (N.  S.)  945. 

Oklahoma.— ^e\ch.  v.  Owenby  (1919),  175  Pac.  746. 
Oregon. — Western  Farquhar  Machine  Co.  v.  Burnett,  82  Ore.  174,  161 
Pac.  384. 

Pennsylvania. — Neylus  v.  Port,  46  Pa.  Superior  Ct.  428. 

South  Dakota. — Coleman  v.  Valentine,  —  S.  D.  — .  164  N.  W.  67. 

Texas:— M.Qi.  Nat.  Bk.  v.  Vanderpool  (1917),  192  S.  W.  589. 

Tennessee.— First  Nat.  Bk.  of  Elgin.  111.,  v.  Russell  (1911).  139  S. 
W.  734. 

Washing'ton. — First  National  Bank  of  Snohomish  v.  Sullivan,  66  Wash. 
375.  119  Pac.  820,  Ann.  Cas.  1913C,  930;  Peninsula  Nat.  Bk.  v.  Pederson 
(1916),  158  Pac.  246;  VanTassel  v.  McGrail.  93  Wash.  380.  160  Pac.  1053. 

West  Virginia.— Mason  v.  Shaffer,  —  W.  Va.  — ,  96  S.  E.  1023. 

Wyoming. — Brown  v.  Cow  Creek  Co.  (1912),  21  Wyo.  1,  126  Pac.  886. 

United  States. — Guaranty  Trust  Co.  v.  Grotian,  114  Fed.  Rep.  433,  52 
C.  C.  A.  235;  Hannay  v.  Guaranty  Trust  Co.,  187  Fed.  Rep.  686. 


§  4.  Determinable  future  time ;  what  constitutes.  An 
instrument  is  payable  at  a  determinable  future  time,  within  the 
meaning  of  this  act,  which  is  expressed  to  be  payable : 

1.  At  a  fixed  period  after  date  or  sight;  or 

2.  On  or  before  a  fixed  or  determinable  future  time  specified 
therein ;  or 

3.  On  or  at  a  fixed  period  after  the  occurrence  of  a  specified 
event,  which  is  certain  to  happen,  though  the  time  of  happening 
be  uncertain. 


386  NEGOTIABLE    INSTRUMENTS.  §   4 

An  instrument  payable  upon  a  contingency  is  not  negotiable, 
and  the  happening  of  the  event  does  not  cure  the  defect. 

See  text,  §  49. 

Cross  sections:     1,  184,  1-3,  7-1,  71,  7Z. 

The  Wisconsin  act  (No.  1675-4)  substitutes,  for  the  last  paragraph,  the 
following:  "4.  At  a  fixed  period  after  date  or  sight,  though  payable 
before  then  on  a  contingency.  An  instrument  payable  upon  a  contingency 
is  not  negotiable,  and  the  happening  of  the  event  does  not  cure  the  defect, 
except  as  herein  provided." 

Corresponding  provision  of  English  Bill  of  Exchange  Act:  11  (1),  (2). 

1.  Digest  of  some  of  the  decisions  in  which  this  section  is 
construed,  arranged  alphabetically  by  states : 

If  payment  of  note  is  liable  to  happen  it  is  not  a  contingency.  Arnett 
v.  Clack,  —  Ariz.  — ,  198  Pac.  127. 

Promise  to  pay  on  happening  of  a  contingency  certain  to  happen  does 
not  affect  negotiability.  McClenathan  v.  Davis,  243  111.  87,  90  N.  E.  265, 
27  L.  R.  A.   (N.  S.)   1017. 

Extension  for  indefinite  period  does  not  prevent  demand  after  note  due. 
Lanum  v.  Harrington,  267  111.  57,  107  N.  E.  826. 

Uncertainty  as  to  time  of  payment  renders  note  non-negotiable  even 
though  in  mortgage.  Iowa  Nat.  Bank  v.  Carter,  144  Iowa  715,  123  N. 
W.  237. 

Note  containing  conditional  extension  for  definite  period  is  nego- 
tiable. State  Bank  of  Halsted  v.  Bilstad,  162  Iowa  433,  136  N.  W.  204,  49 
L.  R.  A.  (N.  S.)   132. 

Provision  for  declaring  debt  due  for  breach  of  stipulations  of  mort- 
gage does  not  render  note  non-negotiable.  Des  Moines  Sav.  Bank  v. 
Arthur,  163  Iowa_205,  143  N.  W.  556,  Ann.  Cas.  1916C,  498. 

Waiver  of  notice  of  extension  of  time  as  time  certain.  Nat.  Bank  of 
Webb  City,  _Mo.,  v.  Dickinson,  102  Kan.  564. 

Anticipating  payment  privilege  in  note  held  not  to  affect  negotiability 
under^  statute.     Lowel  Trust  Co.  v.  Pratt,  183  Mass.  379,  67  N.   E.  363. 

Privilege  of  anticipating  payment  renders  note  non-negotiable.  Ne- 
gotiable instruments  law  overlooked.  Pierce  v.  Talbot,  213  Mass.  330, 
100  N.   E.  553. 

Default  of  payment  provision  in  note  does  not  render  it  uncertain 
as  to  time.     Schmidt  v.  Pegg,  172  Mich.  159,  137  N.  W.  524. 

Check  payable  on  a  contingent  date  which  is  certain  to  happen  is 
good.     Keeler  v.  Hiles'  Estate,  —  Neb.  — ,  172  N.  W.  363. 

Postdated  check  accepted  in  good  faith.     Kuflik  v.  Vaccaro,  170  N.  Y, 

Marginal  notations  as  to  payment  did  not  control  body  of  note. 
Union  State  Bank  v.  Benson,  38  N.  Dak.  396,  165  N.  W.  509. 

Privilege  of  declaring  due  when  pavee  feels  insecure  renders  note 
non-negotjable._  Reynolds  v.  Vint,  73  Ore.  528,  114  Pac.  526. 

Provisions  in  mortgage  for  accelerating  time  of  payment  of  note. 
Westlake  v.  Cooper,  —  Okla.  — ,  171  Pac.  859. 


§   4  FORM  AND  INTERPRETATION.  387 

Provision  that  note  is  "due  if  ranch  is  sold  or  mortgaged"  does  not 
affect  negotiability.     Nickell  v.  Bradshaw,  —  Ore.  — ,  183  Pac.  12. 

Provisions  for  advancing  date  on  account  of  non-payment  of  taxes 
does  not  render  time  uncertain.  Bright  v.  Officld,  81  Wash.  442,  143 
Pac.   159. 

When  due  date  changed  by  contingency  note  is  non-negotiable.  Pugct 
Sound  State  Bank  v.  Washington  Paving  Co.,  94  Wash.  504,  162  Pac. 
870. 

Note's  negotiability  not  controlled  by  contingencies  in  mortgage.  Smith 
V.  Nelson  Land  &  Cattle  Co.,  212  Fed.  56,  128  C.  C.  A.  512. 


**The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Arisona.—Arnen  v.  Clack,  198  Pac.  127. 

California.— Blake  v.  Craig  (1918),  173  Pac.  1005. 

Colorado.— DrakQ  v.  Pueblo  Nat  Bk.  (1908),  96  Pac.  996. 

Idaho. — Union  Stockyards  Nat.  Bank  v.  Bolan,  14  Idaho  87,  93  Pac. 
508,  125  Am.  St.  Rep.  146. 

///iHou.— McClenathan  v.  Davis,  243  111.  87,  90  N.  E.  265,  27  L.  R  A 
(N.  S.)  1017;  Lanum  v.  Harrington,  267  111.  57,  107,N.  E.  826. 

Iowa. — Des  Moines  Saving  Bank  v.  Arthur,  163  Iowa  205.  143  N.  W. 
556,  Ann  Cas.  1916  C.  498;  Iowa  Nat.  Bk.  v.  Carter  (1909),  144  Iowa 
715,  123  N.  W.  237;  State  Bank  of  Halsted  v.  Bilstad,  162  Iowa  433, 
136  N.  W.  204,  49  L.  R.  A.  (N.  S.)  132. 

Kansas.— The  Rossville  State  Bk.  v.  Heslet  (1911),  84  Kans  315, 
113  Pac.  1052;  The  Holliday  St.  Bk.  v.  Hoffman  (1911),  85  Kans.  71, 
116  Pac.  239,  35  L.  R.  A.  (N.  S.),  390  Ann.  Cas.  1912  Dl ;  Brown  v. 
Cruce  (1913),  133  Pac.  865;  Nat.  Bank  of  Webb  City,  Mo.,  v.  Dickinson, 
102  Kan.  564. 

LoMmano.— Hibernia  Bk.  &  Tr.  Co.  v.  Dresser  (1912-1913),  61  So. 
561 ;  Bonart  v.  Rabito,  141  La.  970,  76  So.  166. 

Afary/oMC?.— Agricultural  Chem  Co.  v.   Stringer   (1917),   100  Atl.   774. 

Massachusetts.— LoweW  Trust  Co.  v.  Pratt,  183  Mass.  379,  67  N.  E. 
363;  Torpey  v.  Tebo  (1903),  184  Mass.  307,  68  N.  E.  223;  McQueen  v. 
Spalding  (1919).  120  N.  E.  850;  Pierce  v.  Talbot,  213  Mass.  330,  100 
N.   E.  553. 

Michigan.—Schmidt  v.  Pegg  (1912),  172  Mich.  159.  137  N.  W.  524; 
White  V.  Wadhams   (1919),  170  N.  W.  60. 

Nebraska— Keder  v.  Hiles'  Estate,  172  N.  W.  363. 

New  Mexico. — First  Nat.  Bk.  of  Albuquerque  v.  Stover  (1916),  155 
Pac.  905. 

New  Forfe.— Schlesinger  v.  Schultz  (1905),  110  A.  D.  356.  96  N.  Y. 
Supp.    383;     Usefof    v.     Herzenstein     (1909),    65     Misc.     45.     119    N. 


388  NEGOTIABLE    INSTRUMENTS.  §    5 

Y.  Supp.  290;  Wray  v.  Miller  (1910),  120  N.  Y.  Supp.  787; 
Eq.  Tr.  Co.  of  N.  Y.  v.  Were  (1911),  132  N.  Y.  Supp.  351;  Devine  v. 
Trice  (1915).  152  N.  Y.  Supp.  321;  Osl)orne  v.  M.,  K.  &  T.  Ry.  Co. 
(1915),  155  N.  Y.  Supp.  236;  Kerr  v.  Smith  (1913),  156  A.  D.  807,  142 
N.  Y.  Supp.  57;  Powell  v.  Began  (1917),  167  N.  Y.  Supp.  770;  Kulflik 
V.  Vaccaro   (1918),  170  N.  Y.  Supp.  13. 

North  Dakota— Union  State  Bank  v.  Benson,  38  N.  Dak.  396,  165 
N.  W.  509. 

Oldahojm.—DeGroat  v.  Focht  (1913),  131  Pac.  172;  Westlake  v. 
Cooper   (1918),  171   Pac.  859. 

Oregon.— ReynoMs  v.  Vint,  73  Ore.  528.  144  Pac.  526:  Western  Far- 
quhar  Mch.  Co.  v.  Burnett  (1916),  82  Ore.  174,  161  Pac.  384;  Nickell  v. 
Bradshaw  (1919),  183  Pac.  12. 

Pennsylvania. — Empire  Nat.  Bk.  of  Clarksburg  W.  Va.  v.  High  Grade 
Oil  Refining  Co.    (1918),   103  A  602. 

r^««^.y,y^^.— First  Nat.  Bk.  of  Elgin.  111.  v.  Russell  (1911),  139  S. 
W.  734;  White  v.  Hatcher   (1916),  188  S.  W.  61. 

Washington — Puget  Sound  State  Bank  v.  Washington  Paving  Com- 
pany, 94  Wash.  504,  162  Pac.  820;  Bright  v.  Offield,  81  Wish.  442,  143 
Pac.   159. 

West   Virginia.— Huhhard  v.  Morton    (1917),  92  S.  E.  252. 

Wisco7tsin.— Thorpe  v.  Mindeman  (1904),  123  Wis.  149,  101  N.  W. 
417,  107  Am.  St.  1003,  68  L.  R.  A.  146. 

United  States.— Kohey  v.  Hoffman  (1916),  229  Fed.  486;  Smith  v. 
Nelson  Land  &  Cattle  Co.,  212  Fed.  56,  128  C.  C.  A.  512. 


§  5.     Additional     provisions    not     affecting     negotiability. 

An  instrument  which  contains  an  order  or  promise  to  do  any  act 
in  addition  to  the  payment  of  money  is  not  negotiable.  But  the 
negotiable  character  of  an  instrument  otherwise  negotiable  is 
not  affected  by  a  provision  which, 

1.  Authorizes  the  sale  of  collateral  securities  in  case  the  in- 
strument be  not  paid  at  maturity ;  or 

2.  Authorizes  a  confession  of  judgment  if  the  instrument  be 
not  paid  at  maturity ;  or 

3.  Waives  the  benefit  of  any  law  intended  for  the  advantage 
or  protection  of  the  obligor ;  or 

4.  Gives  the  holder  an  election  to  require  something  to  be 
done  in  lieu  of  payment  of  money. 

But  nothing  in   this   section   shall  validate  any   provision   or 
stipulation  otherwise  illegal.*'  ** 

See  text,  §  51. 


§    5  FORM   AND  INTERPRETATION.  389 

In  Illinois  the  words  "under  this  Act,"  arc  added  at  the  end  of  the 
first  sentence  and  the  words  "if  the  instrument  be  not  paid  at  maturity" 
are  omitted  in  subsection  2.  And  the  following  words  are  added  to 
the  last  paragraph :  "Or  authorize  the  waiver  of  exemptions  from  exe- 
cution." 

The  North  Carolina  act  (No.  197)  contains  the  following  as  re- 
lating to  subdivision  2  above:  "That  nothing  in  this  act  shall  authorize 
tiie  enforcement  of  an  authorization  to  confess  judgment  or  a  waiver 
of  homestead  or  personal  property  exemptions  or  a  provision  to  pay 
counsel  fees  for  collection  incorporated  in  any  instrument  mentioned  in 
this  act;  but  the  mention  of  such  provision  in  such  instrument  shall  not 
affect  the  other  terms  of  such  instruments  or  the  negotiability  thereof." 

Kansas  adds  to  subsection  1  the  following":  "Or  in  case  the  security 
should  depreciate  in  value  or  in  case  the  holder  for  reasonable  cause 
deems  himself  insecure."  A  subsection  5  is  added  as  follows :  "Provi- 
sions or  agreements  in  concurrent  writings  or  mortgages  given  to  secure 
payment  of  such   instruments." 

Kentucky  omits  subdivision  3  above. 

The  Wisconsin  act  (No.  1675-5)  adds:  "or  authorize  the  waiver  of 
exemptions  from  execution." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

Words  "without  defalcation"  are  surplusage.  First  Nat.  Bank  of 
Pocky  Ford  v.  Lewis,  57  Colo.  125,  139  Pac.  1102. 

Note  giving  right  to  take  possession  of  property  when  insecure  held 
not  negotiable.  Kimpton  v.  Studebaker  Bros.  Co.,  14  Idaho  552,  94 
Pac.   1039,  125  Am.  St.  Rep.  185. 

Promise  to  do  an  act  in  addition  to  payment  of  money  and  failure 
therein  default  only  hastens  date  of»payment  and  does  not  afifect  nego- 
tiability.    Finley  v.  Smith,  165  Ky.  445,  177  S.  W.  262,  L.  R.  A.   1915F, 

m. 

Promise  to  give  added  security  in  case  collateral  declines  and  in  de- 
fault due  date  advanced  renders  note  non-negotiable.  Hibernia  Bank 
V.  Dresser,  132  La.  532,  61  So.  561. 

Option  to  receive  money  or  stock  does  not  affect  negotiability.  Pratt 
v.  Higginson   (Mass.),  119  N.  E.  661. 

Agreement  to  pay  money  and  keep  certain  securities  unincumbered 
renders  note  non-negotiable.  Strickland  v.  National  Salt  Co.,  79  N. 
J.  Eq.  182,  81  Atl.  828. 

Confession  of  judgment  provision  affects  negotiability.  Yankolivitz 
V.  Wernick,  20  Pa.  Dist.  Rep.  223,  59  U.  of  P.  Law  Rev.  573. 

Provision  for  confession  of  judgment  at  any  term  is  not  negotiable. 
Milton  Nat.  Bank  v.  Beaver,  25   Pa.   Super  Ct.  494. 

Time  of  payment  not  so  uncertain  as  to  affect  negotiability  where 
promise  of  added  security  or  default.  Empire  Nat.  Bank  v.  Highgrade 
Oil.  etc.,  Co.   (Pa.),   103  Atl.  602. 

"At  any  time  after  note  becomes  due"  does  not  affect  negotiability. 
Green  v.  Dick  &  Shope,  72  Pa.  Super  Ct.  266. 

Note  authorizing  confession  of  judgment  at  anvtime  is  not  nego- 
tiable. First  Nat.  Bank  v.  Russell,  124  Tcnn.  618,  139  S  .W.  739,  Ann. 
Cas.  1913A  203. 


390  NEGOTIABLE    INSTRUMENTS.     '  §    5 

Promise  to  pay  money  and  wheat  renders  note  non-negotiable. 
Thomson  v.  Koch,  62  Wash.  438,  113  Pac.  1110. 

Provision  to  pay  taxes  is  one  which  renders  note  non-negotiable  as 
addition  to  payment  of  money.  Bright  v.  Offield,  81  Wash.  442,  143 
Pac.   159. 

Words  "at  any  time  hereafter"  are  not  definite  enough  to  render  note 
negotiable.    Clark  v.  Tallmadge,  —  Wis.  — ,  176  N.  W.  906. 

Provision  for  giving  added  collateral  in  case  of  depreciation  does  not 
destroy  negotiability.  Railway  Equipment  Co.  v.  Merchants  Nat.  Bank, 
136  U.  S.  268,  10  Sup.  Ct.  999,  34  L.  ed.  349. 

Question  as  to  effect  of  added  promises  not  considered.  National 
Salt  Co.  v.  Ingraham,  143  Fed.  805,  74  C.  C.  A.  479. 

^*  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Ex  parte   Bledsoe   (1913),  61   So.  813. 

California. — Navajo  Co.  Bk.  v.  Dolson   (1912),  126  Pac.  153. 

Colorado. — First  Nat.  Bank  of  Rocky  Ford  v.  Lewis,  57  Colo.  125, 
139  Pac.  1102. 

7<fa/to.— Kimpton  v.  Studebaker  Bros.  Co.  (1908),  14  Ida.  552,  94 
Pac.  1039,   125  Am.  St.  Rep.  185. 

Iowa. — Council  Bluffs  v.  Cuppey,  41  Iowa  104;  The  Union  Bk.  of 
Bridgewater  v.  Spies  (1911),  151  Iowa  178;  Steel  v.  Ingraham  (1915), 
155  N.  W.  294. 

Kansas.— The  Rossville  State  Bk.  v.  Heslet  (1911),  84  Kans.  315, 
113  Pac.  1052;  The  Holliday  St.  Bk.  v.  Hoffman  (1911),  85  Kans.  71, 
116  Pac.  239,  35  L.  R.  A.  (N.  S.)  390,  Ann.  Cas.  1912D  1. 

Kentucky.— Finley  v.  Smith  (1915),  165  Ky.  445,  177  S.  W.  262, 
L.  R.  A.  1915F  777. 

Louisiana. — Hibernia  Bank  v.  Dresser,  132  La.  532,  61  So.  561 ;  Bon- 
art  v.  Rabito,  141  La.  970,  76  So.  166;  McDonald  v.  Leis  Admr.,  12 
La.  435. 

Maryland.— Whitcomh  v.  Nat.  Exchange  Bk.  (1914),  91  Atl.  689, 
123  Md.  612. 

Minnesota.—SneWmg   State   Bank   v.   Clasen    (1916),   157   N.   W.  643. 

Nebraska.— First  Nat.  Bk.  of  Sydney  v.  Baldwin  (1916),  158  N.  W. 
371. 

New  7^r.rry.— Strickland  v.  Nat.  Salt  Co.  (1911),  77  N.  J.  Eq.  328, 
81  Atl.  828,  affirmed  79  N.  J.  Eq.  182  (1911). 

North  Carolina.— Sykes  v.  Everett  (1914),  83  S.  E.  585. 

Oklahonta.—lowsi  State  Sav.  Bk.  v.  Wignall  (1916),  157  Pac.  725; 
Williams  v.  TurnbuU  (1917),  162  Pac.  770. 

P^nnjy/z^ania.— Milton  Nat.  Bk.  v.  Beaver  (1904),  25  Pac.  Super. 
Ct.  494 ;  Volk  v.  Shoemaker,  229  Pa.  407,  78  Atl.  933 ;  Empire  Nat.  Bank 
v.  Highgrade  Oil,  etc.,  Co.   (Pa.),  103  Atl.  602;  Yankolivitz  v.  Wernick, 


§   6  FORM  AND  INTERPRETATION.  391 

20   Pa.   Dist.   Rep.  223,   59  U.   of   P.   Law,   Rev.   573;   Green   v.   Dick  & 
Shope,  72  Pa.  Sup.  St.  266. 

Tennessee.— First  Nat.  Bank  v.  Russell,  124  Tenn.  618,  139  S.  W.  739, 
Ann.  Cas.  1913A,  203. 

Washington.— Thomson  v.  Koch  (1911),  62  Wash.  438,  113  Pac.  irO; 
Bright  V.  Offield,  81  Wash.  442,  143  Pac.  159;  Moore  &  Co.  v.  Burling 
(1916),  160  Pac.  420. 

IVest  Virginia. — Greenbrier  Valley  Bk.  v.  Bair   (1913),  77  S.  E.  274. 

Wisconsitt. — Wisconsin  Meeting  of  Baptists  v.  Bablcr  (1902),  115 
Wis.  289,  91  N.  W.  678 ;  Clark  v.  Tallmadge,  176  N.  W.  906. 

United  States.— Lincoln  Nat.  Bank  v.  Perry,  66  Fed.  287,  14  C.  C.  A. 
273;  Kennedy  v.  Broderick,  216  Fed.  137,  132  C.  C.  A.  381;  Kobey  v. 
Hoffman,  229  Fed.  486,  143  C.  C.  A.  554;  Railway  Equipment  Co.  v. 
Merchants  National  Bank,  136  U.  S.  268,  10  Sup.  Ct.  999,  34  L.  ed.  349; 
National  Salt  Co.  v.  Ingraham  143  Fed.  805,  74  C.  C.  A.  479. 


§  6.  Omissions ;  seal ;  particular  money.  The  validity 
and  negotiable  character  of  an  instrument  are  not  affected  by  the 
fact  that 

1.  It  is  not  dated;  or 

2.  Does  not  specify  the  value  given,  or  that  any  value  has 
been  given  therefor;  or 

3.  Does  not  specify  the  place  where  it  is  drawn  or  the  place 
where  it  is  payable ;  or 

4.  Bears  a  seal;  or 

5.  Designates  a  particular  kind  of  current  money  in  which 
payment  is  to  be  made. 

But  nothing  in  this  section  shall  alter  or  repeal  any  statute 
requiring  in  certain  cases  the  nature  of  the  consideration  to  be 
stated  in  the  instrument.^*  ** 

See  text,  §§  51,  54.  43,  50,  58.    Cross  sections :     13,24,65,17,3.93,225. 

In  Illinois  subsection  5  begins  as  follows :  "Is  payable  in  currency 
or  current  funds :  or"  and  the  last  paragraph  of  said  subsection  is 
omitted. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

^/a6ama.— Bledsoe  v.  City  Nat.  Bk.  of  Selma  (1912),  7  Ala.  App. 
195,  60  So.  942. 

California. — Eastman  v.  Sunset  Park  Land  Co.,  —  Cal.  App.  — ,  170 
Pac.  642. 

Colorado.— UUtry  v.  Brohm   (1905),  20  Colo.  App.  389,  79  Pac.  180. 


392  NEGOTIABLE    INSTRUMENTS.  §    7 

Connecticut. — St.  Paul's  Episcopal  Church  v.  Fields  (1909),  81  Conn. 
670,  72  Atl.  145. 

Florida. — Williams  v.   Peninsular  Grocery  Co.   (1917),  75  So.  517. 

/«djana.— Hubbard  v.  First  Nat.  Bk.  (1916),  114  N.  E.  642;  Dieter 
V.  Burke  (1914),  107  N.  E.  304. 

/owv7.— Dille  V.  White  (1906),  132  Iowa  327,  109  N.  W.  909,  10  L.  R. 
A.  (N.  S.)  510;  Allison  v.  Hollembeak  (1908),  138  Iowa  479,  114  N.  W. 
1059;  LcClere  v.  Philpott  (1915),  151  N.  W.  825. 

Maryland.— Arnd  v.  Heckert  (1908),  108  Md.  300,  70  Atl.  416. 

Massachusetts.— Chrke  v.  Pierce  (1913),  215  Mass.  552,  102  N.  E. 
1094. 

Missouri— Bk.  of  Houston  v.  Dav  (1909),  145  Mo.  App.  410,  122  S. 
W.  756:  Milbank-Scampton  Milling  Co.  v.  Parkwood  (1911),  133  S.  W. 
667;  Nelson  v.  Diffenderffer  (1914),  163  S.  W.  271. 

New  York.-McLeod  v.  Hunter  (1899),  29  Misc.  Rep.  558,  61  N. 
Y.  Supp.  73;  Didato  v.  Coniglio  (1906),  100  N.  Y.  Supp.  466,  50  Misc. 
280;  Church  v.  Stevens  (1907),  56  Misc.  Rep.  572,  107  N.  Y.  Supp.  310; 
Amsinck  v.  Rogers  (1907),  189  N.  Y.  252,  82  N.  E.  134,  12  L.  R.  A. 
(N.  S.)  875,  121  Am.  St.  858;  Hebbelthwaite  v.  Flint  (1919),  173  N. 
Y.   Supp.   81. 

North  Carolina.— Burns  v.  Starr  (1914),  81  S.  E.  929;  Aycock  Sup- 
ply Co.  V.  Windlez   (1918),  96  S.  E.  664. 

Tennessee.— Easley  v.  East  Tenn.  Nat.  Bk.   (1917),  198  S.  W.  66. 

Texas.— Met.  Nat.  Bk.  v.  Vanderpool   (1917),  192  S.  W.  589. 


§  7.  When  payable  on  demand.  An  instrument  is  pay- 
able on  demand : 

1.  Where  it  is  expressed  to  be  payable  on  demand,  or  at  sight, 
or  on  presentation ;  or 

2.  In  which  no  time  for  payment  is  expressed. 

Where  an  instrument  is  issued,  accepted  or  indorsed  when 
overdue,  it  is,  as  regards  the  person  so  issuing,  accepting  or 
indorsing  it,  payable  on  demand.*'  •*' 

See  text,  §  47. 

Cross  sections :     71,  73.  17-5,  24. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

Statement  on  face  of  note  that  it  was  not  to  be  paid  unless  payee  per- 
formed certain  services  destroyed  negotiability.  Spotton  v.  Dyer,  —  Cal. 
App.  — ,  184  Pac.  23.  ' 

Presentment  for  payment  must  be  within  time  fixed  in  instrument, 
Torgerson  v.  Ohnstad,  —  Minn.  — .  182  N.  W.  724. 


§    7  FORM  AND  INTERPRETATION.  393 

Authority  to  fill  blanks  with  dates  docs  not  make  demand  note. 
Usefof  V.  Herzenstein,  65  Misc.  Rep.  45.  119  N.  Y.   Supp.  290. 

Note  payable  on  demand  after  date  is  a  demand  note  and  demand 
in  reasonable  time  is  sufficient.  Hardon  v.  Dixon,  11  App.  Div.  241, 
78  N.  Y.  Supp.   106. 

Statute  of  limitations  on  note  payable  on  demand  after  date.  Schles- 
inger  v.  Schultz,  110  App.  Div.  356,  96  N.  Y.  S.  383. 

Effect  of  postdating  of  check.     Kutlik  v.  Vaccaro,  170  N.  Y.  S.  13. 

Where  time  of  payment  is  not  specifically  mentioned  it  is  a  demand 
note.     Keister  v.  Wade,  182  N.  Y.   S.  119. 

Trade  acceptances  expressed  as  payable  on  Nov.  1  and  Dec.  1,  re- 
spectively, are  not  payable  on  demand.  United  Ry.  &  Logging  Supply  Co. 
V.  Siberian  Commercial  Co.,  —  Wash.  — ,  201  Pac.  1. 

^"  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Califorma— Wetzel  v.  Cale  (1917),  165  Pac.  692;  Spotton  v.  Dyer,  — 
Cal.  App.  — ,  184  Pac.  23. 

Iowa.— City  Dep.  Bk.  v.  Green  (1908),  138  Iowa  156,  115  N.  W.  893; 
Anderson  v.  First  Nat.  Bk.  of  Chariton  (1909),  144  Iowa  251,  122  N. 
W.  918. 

A'fl«.ya.f.— Doty  v.  Garfield  Township  (1913),  89  Kans.  719. 

Maryland. — American  Agricultural  Chemical  Co.  v.  Scrimger  (1917), 
100  Atl.  774. 

Michigan. — First  Nat.  Bk.  v.  Coharset  Woodenware  Co.  (1917),  161 
N.   W.   398. 

Minnesota. — Forgerson  v.  Ohnstad,  182  N.  W.  724. 

Missouri. — Hawkins  v.  Wiest    (1912),   167  Mo.   App.  439. 

New  York.— McLeod  v.  Hunter  (1899),  29  Misc.  Rep.  558,  61  N.  Y. 
Supp.  73;  Hardon  v.  Dixon,  77  App.  Div.  241,  78  N.  Y.  Supp. 
106;  Schlesinger  v.  Schultz  (1905),  110  A.  D.  356.  96  N.  Y.  Supp. 
383;  Didato  v.  Coniglio  (1906).  50  Misc.  Rep.  280,  100  N.  Y. 
Supp.  466;  Usefof  v.  Herzenstein  (1909),  65  Misc.  Rep.  45,  119  N.  Y. 
Supp.  290;  Riddle  v.  Bk.  of  Montreal  (1911),  145  A.  D.  207,  130  N.  Y. 
Supp.  15;  Gilbert  v.  Adams  (1911),  131  N.  Y.  Supp.  787;  Kuflik  v. 
Vaccaro  (1918),  170  N.  Y.  Supp.  13;  Keister  v.  Wade,  182  N.  Y.  S. 
119. 

North  Dakota.— First  Nat.  Bk.  of  Pomerov  v.  Buttery  (1908),  17 
N.  D.  326,  116  N.  W.  341.  168  L.  R.  A.  (N.  S.)  878;  Shuman  v.  Citizens 
State  Bk  of  Rugby   (1914),  147  N.  W.  398. 

Pennsylvania. — Rhone  v.   Keystone  Coal  Co.    (1915),  95  Atl.  930, 

Washington. — United  Rv.  &  Logging  Supplv  Co.  v.  Siberian  Commer- 
cial Co.,  —  Wash.  — ,  201  Pac.  21. 

West   Virginia.— Lewis   Hubbard  &  Co.  v.   Morton    (1917),   92   S.   E. 

252. 

United  States.—SnUi\an  v.  Ellis  (1915),  219  Fed.  694  (C.  C.  A.,  8th 
Ct.). 


394  NEGOTIABLE    INSTRUMENTS.  §    8 

§  8.  When  payable  to  order.  The  instrument  is  payable 
to  order  where  it  is  drawn  payable  to  the  order  of  a  specified 
person  or  to  him  or  his  order.  It  may  be  drawn  payable  to  the 
order  of : 

1.  A  payee  who  is  not  maker,  drawer  or  drawee;  or 

2.  The  drawer  or  maker;  or 

3.  The  drawee ;  or 

4.  Two  or  more  payees  jointly ;  or 

5.  One  or  some  of  several  payees ;  or 

6.  The  holder  of  an  office  for  the  time  being. 

Where  the  instrument  is  payable  to  order  the  payee  must  be 
named  or  otherwise  indicated  therein  with  reasonable  cer- 
tainty.*' ** 

See  text,  §§  Zl ,  46,  as  to  holder  of  office. 

Cross  section,  184.  Sub.  Sec.  2  "Drawee"  by  mistake  in  original 
New  York  Act. 

Corresponding  provision   of   English   Bills   of  Exchange  Act.  8    (4). 

In  Illinois  after  subsection  6  the  following  is  inserted :  "7.  An  in- 
strument payable  to  the  estate  of  a  deceased  person  shall  be  deemed 
payable  to  the  order  of  the  administrator  or  executor  of  his  estate :" 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Pavee  may  be  any  one  not  a  maker,  drawer  or  drawee.  Stafiford  v. 
Hill,  —  Cal.  App.  —  200  Pac.  Z2>.  ^ 

Note  payable  to  order  of  A  or  B  is  negotiable.  Bank  v.  Spies,  151 
Iowa  178,   130  N.  W.  928. 

Negotiable  instrument  indorsed  bv  either  of  two  joint  payees  is 
sufficient.  Voris  v.  Schoonover,  91  Kan.  530,  138  Pac.  607,  50  L.  R.  A. 
(N.  S.)   1097. 

Note  payable  to  order  of  maker  is  negotiable  when  indorsed  by  maker. 
Doplh  V.  Stubblefield,  —  Md.  — ,  108  Atl.  448. 

Payment  to  survivor  of  joint  payees  discharges  negotiable  instru- 
m.ent.     Park  v.  Parker,  216  Mass.  405,  103  N.  E.  936. 

Note  payable  to  order  of  blank  cannot  be  filled  in  by  any  bearer.  Tower 
V.  Stanley,  220  Mass.  429,  107  N.  E.  1010. 

Who  may  bring  suit  on  note  payable  to  two  persons  in  alternative. 
Passut  V.  Heubner,  81  Misc.  Rep.  249,  142  N.  Y.  Supp.  546. 

Indorsement  to  order  of  blank,  bearer  may  not  fill  blank.  State  v, 
Hinton,  56  Ore.  428,  109  Pac.  24. 

Note  indorsed  to  order  of  C  or  D  does  not  affect  negotiability.  Page 
V.  Ford,  65  Ore.  450,  131  Pac.  1013,  45  L.  R.  A.  (N.  S.)  247,  Ann.  Gas. 
1915B   1048. 

Note  payable  to  A  or  wife  is  construed  to  pass  to  survivor  if  one 
died  before  maturity.     Smith  v.  Haire,  133  Tenn.  343,  181   S.  W.  161. 


§    9  FORM  AND  INTERPRETATION.  395 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Ca/i/omia.— Stafford  v.  Hill,  —  Cal.  App.  — ,  200  Pac.  33. 

Colorado. —Sca\3i  v.  M.   &  M.  Bank   (1918),  171  Pac.  752. 

///i;zow.— Peterson  v.  Emery   (1910),  154  111.  App.  294. 

Jowa.— The  Union  Bk.  of  Bridgewater  v.  Spies  (1911),  151  Iowa, 
178,  130  N.  W.  928. 

Kansas.— Voris  v.  Schoonover  (1914),  91  Kans.  530,  138  Pac.  607, 
50  L.  R.  A.  (N.  S.)   1097. 

Maryland.— Dolph  v.  Stubblefield,  —  Md.  — ,  108  Atl.  448. 

Massachusetts.— Mass.  Nat.  Bk.  v.  Snow  (1905),  187  Mass.  159,  72 
N.  E.  959 ;  Park  v.  Parker,  216  Mass.  405,  103  N.  E.  936 ;  Tower  v.  Stan- 
ley. 220  Mass.  429,  107  N.  E.  1010. 

New  York.— Uilhorn  v.  Penn.  Cement  Co.  (1911),  145  A.  D.  442; 
Passut  V.  Heubner,  81  Misc.  Rep.  249,  142  N.  Y.  Supp.  546. 

North  Dakota.— Aarnoth  v.  Hunter  (1916),  157  N.  W.  299. 

Or<'^OH.— State  v.  Hinton,  56  Ore.  428,  109  Pac.  24;  Page  v.  Ford 
(1913),  65  Ore.  450,  131  Pac.  1013,  45  L.  R.  A.  (N.  S.)  247,  Ann.  Cas. 
1915A,  1048. 

Tennessee.—Sm\th  v.  Haire,  133  Tenn.  343,  181  S.  W.  161 ;  Moore  v. 
Carey   (1917),  197  S.  W.   1093. 

Virginia. — Guewant  v.  Guewant    (1902),   7  Va.   L.   R.  639. 

United  States.— MWion  v.  Pensacola  Bk.  &  Tr.  Co.  (1911),  190  Fed. 
126,  111  C.  C.  A.  166. 

England— Chamherlain  v.  Young  (1893),  2  Q.  B.  206. 

§  9.  When  payable  to  bearer.  The  instrument  is  pay- 
able to  bearer: 

1.  When  it  is  expressed  to  be  so  payable;  or 

2.  When  it  is  payable  to  a  person  named  therein  or  bearer ;  or 

3.  When  it  is  payable  to  the  order  of  a  fictitious  or  non-ex- 
isting person,  and  such  fact  was  known  to  the  person  making  it 
so  payable;  or 

4.  When  the  name  of  the  payee  does  not  purport  to  be  the 
name  of  any  person  ;  or 

5.  When  the  only  or  last  indorsement  is  an  indorsement  in 
blank.*- 1" 

See  text,  §  46. 

Cross  sections:  30,  34,  16,  56,  124,  191. 


396  NEGOTIABLE    INSTRUMENTS.  §    9 

In  Illinois  the  following  is  substituted  for  subsection  3:  "3.  When 
it  is  payable  to  the  order  of  a  person  known  by  the  drawer  or  maker 
to  be  fictitious  or  non-existent,  or  of  a  living  person  not  intended  to 
have  any  interest  in  it,"  and  for  subsection  5  the  following:  "5.  When, 
although  originally  payable  to  order,  it  is  indorsed  in  blank  by  the  payee 
or  a  subsequent  indorsee." 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Indorsement  in  blank  shown  makes  prima  facie  case.  Kaladner  v. 
First  Nat.  Bk.,  —  Ala.  —   84  So.  562. 

Note  payable  to  order  indorsed  in  blank  is  thereafter  negotiable  by 
delivery.    Davis  v.  First  Nat.  Bank  of  Blakley,  192  Ala.  8,  68  So.  261. 

Note  payable  to  assumed  name  of  payee  can  be  enforced  in  true 
name  of  payee.     Lockland  v.   Storch,  123  Ark.  253,  185  S.  W.  262. 

Drafts  made  payable  to  fictitious  persons  by  agent  authorized  to 
issue  same  are  payable  to  bearer.  American  Hominy  Co.  v.  National 
Bank  of  Decatur,  —  111.  — ,  128  N.  E.  391. 

Drafts  are  payable  to  bearer  although  made  payable  to  payees  who 
exist  but  whose  names  are  forged  and  draft  transferred.  Bartlett  v.  First 
Nat.  Bank,  247  111.  490,  93  N.  E.  ZZ7. 

Note  payble  to  fictitious  person  or  bearer  is  payable  to  bearer.  Lane 
V.  Krekle,  22   Iowa  404. 

Draft  payable  to  fictitious  payee  by  drawer  without  his  knowledge 
is  not  payable  to  bearer.  American  Exp.  Co.  v.  People's  Sav.  Bank, 
—  la.  — ,  181  N.  W.  701. 

Maker  of  note  to  fictitious  person  estopped  to  assert  the  fiction 
against  ignorant  holder.     Kohn  v.  Watkins,  26  Kan.  691. 

Non-negotiable  note  does  not  become  negotiable  by  indorsement  in 
blank.  Wettlaufer  v.  Baxter,  137  Ky.  362,  125  S.  W.  741,  26  L.  R.  A. 
(N.  S.)  804. 

Indorsement  in  blank  by  payee  of  promissory  note  renders  payable 
to  bearer.     Mass.  Nat.  Bank  v.  Snow,  187  Mass.  159,  72  N.  E.  959._  _ 

Failure  to  pay  to  person  authorized  by  check,  although  a  fictitious 
name  appears  thereon,  renders  drawee  bank  liable  to  drawer.  Jordan 
Marsh  Co.  v.  Nat.  Shawmut  Bank,  201  Mass.  397,  87  N.  E.  740,  22  L. 
R.  A.  (N.  S.)  250. 

Recovery  on  instrument  made  to  fictitious  payee  depends  upon  show- 
ing that  maker  knew  the  same  to  be  true.  Boles  v.  Harding,  201  Mass. 
103.  87  N.  E.  481. 

Indorsement  of  note  in  blank  makes  it  payable  to  bearer.  Leavitt  v. 
Wintman,  —  Mass.  — ,  125  N.  E.  390. 

Indorsement  of  fictitious  payee's  name  is  a  forgery.  People  v. 
Wardner,  104  Mich.  Z2,7,  62  N.  W.  405. 

Knowledge  of  agent  that  checks  are  drawn  to  fictitious  persons  by 
request  of  drawer's  agent  makes  check  payable  to  bearer.  Equitable 
Life  Assurance  Societv  v.  Nat.  Bank  of  Commerce  (Mo.  App.),  181 
S.  W.  1176. 

Instrument  payable  to  estate  of  deceased  person  is  payable  to  bearer. 
In  re  Ziegenheim  (Mo.  App.),  187  S.  W.  893. 

Firm  name  under  which  several  persons  are  doing  business  is  not  a 
fictitious  name  in  note.  Write  Away  Pen  Co.  v.  Buckner,  188  Mo. 
App.  259,  175  S.  W.  81. 


§   9  FORM  AND  INTERPRETATION.  397 

Where  drawer  of  check  has  no  knowledge  of  fictitious  payee  check 
is  not  payable  to  bearer.  Egner  v.  Corn  Exchange  Bank,  42  Misc.  Rep. 
552,  86  N.  Y.  Supp.  107. 

Production  of  check  payable  to  cash  is  prima  facie  evidence  of 
ownership.  Cleary  v.  DeBeck  Co.,  54  Misc.  Rep.  537,  104  N.  Y.  Supp. 
831. 

Where  checks  are  forged  and  payable  to  payees,  known  by  the  forger 
to  have  no  interest  therein,  they  are  payable  to  bearer.  Trust  Company 
of  America  v.  Hamilton  Bank,   127  App.  Div.  515,  112  N.  Y.  Supp.  84. 

Instrument  unknowingly  made  payable  to  a  fictitious  bearer  gives 
holder  no  rights.  United  Cigar  Stores  Co.  v.  American  Raw  Silk  Co., 
171  N.  Y.  S.  480. 

Instrument  must  knowingly  be  made  by  maker  to  fictitious  person 
to  render  it  payable  to  bearer.  Shipman  v.  Bank,  126  N.  Y.  318,  27 
N.   E.  371. 

Regulations  of  Treasury  Department  that  funds  are  payable  only 
upon  checks  payable  to  order  control,  and  fictitious  payees  do  not  render 
them  payable  to  bearer.  Phillips  v.  Mercantile  Nat.  Bank,  140  N.  Y. 
556,  35  N.  E.  982,  23  L.  R.  A.  584,  Z7  Am.  St.  Rep.  596. 

A  requested  draft  payable  to  B  and  then  indorsed  B's  name.  C 
endorsee  collected  from  B.  Held  B  could  collect  from  C  as  not  payable 
tc  bearer.  Seaboard  Nat.  Bank  v.  Bank  of  America,  193  N.  Y.  26,  85 
N.  E.  829. 

Indorser  in  blank  of  non-negotiable  note  becomes  liable  only  as 
assignor.     Johnson  v.  Lassiter,  155  N.  C.  50,  71   S.  E.  23. 

Instruments  are  payable  to  bearer  only  when  knowingly  made  to 
fictitious  persons  by  maker.  Armstrong  v.  Bank,  46  Ohio  St.  512,  22  N. 
E.  866,  6  L.  R.  A.  625,  15  Am.  St.  Rep.  655. 

Drawer  of  check  bound  by  knowledge  of  his  agent  that  check  was 
procured  to  be  drawn  to  fictitious  persons  by  fraud.  Jones  v.  People's 
Bank  Co.,  95  Ohio  St.  253,  116  N.  E.  34. 

Indorsement  in  blank  makes  note  payable  to  bearer.  Stevens  v. 
Pierce,  —  Okla.  — ,  193  Pac.  417. 

Presumption  of  knowledge  of  maker  that  payee  of  note  was  fictitious 
after  judgment  and  verdict.  Weishaas  v.  Pendeton,  7Z  Ore.  190,  144 
Pac.  401. 

Note  payable  to  W.  E.  D.  &  Co.  indorsed  by  W.  E.  D.  in  the  former 
name  under  which  he  did  business  was  not  to  fictitious  person  so  as  to  ren- 
der it  payable  to  bearer.     Hill  v.  McCrow,  88  Ore.  299. 

Checks  drawn  by  A,  who  was  authorized  to  draw  same  by  employer, 
to  person  who  did  not  know  and  was  not  intended  to  know  thereof, 
were  to  fictitious  payee  and  payable  to  bearer.  Snyder  v.  Corn  Exchange 
Nat.  Bank,  221  Pa.  599,  70  Atl.  876. 

Principal  precluded  from  setting  up  forgery  where  manager  forged 
checks  and  also  payees'  names.  Litchfield  Shuttle  Co.  v.  Cumberland 
Valley  Nat.  Bank,  134  Tenn.  379,  183  S.  W.  1006. 

Drawer  does  not  vouch  for  authority  of  agent  to  indorse  name  of 
payee  where  agent  fraudulently  procures  checks  to  be  issued.  Good- 
tellow  V.  First  Nat.  Bank,  71  Wash.  554,  129  Pac.  90,  44  L.  R.  A.  (N. 
S.)    580. 

Government  bound  by  act  of  officer  in  making  checks  to  fictitious 
persons.  Smith  v.  Nelson  Land  &  Cattle  Co.,  212  Fed.  Rep.  56,  128  C. 
C.  A.  512. 

Distinction  between  government  and  person  as  drawer.  National 
Bank  of  Commerce  v.  United  States,  224  Fed.  679,  140  C  C.  A.  219. 


398  NEGOTIABLE   INSTRUMENTS.  §   9 

Drawee  of  government  checks  has  notice  that  only  checks  paj^able 
to  order  should  be  paid,  whether  payable  to  bearer  by  construction  or 
so  written.     United  States  v.  Chase  Nat.  Bank,  241  Fed.  535,  537. 

Draft  made  payable  to  fictitious  payee  by  drawer  who  knew  is  payable 
to  bearer.     American  Hominy  Co.  v.  Millikin  Nat.  Bank,  273  Fed.  5^0. 

Check  payable  to  M.  or  order  is  not  to  a  fictitious  person  although 
issued  for  a  forged  note.    Vinden  v.  Hughes  (1905),  1  K.  B.  795. 

Acceptor's  ignorance  of  the  fact  that  the  bill  was  made  payable  to  A. 
who  was  to  have  no  interest  therein  does  not  prevent  bill  being  payable 
to  bearer.     Bank  of  England  v.  Vagliano  L.  R.  (1891),  A.  C.  107. 

Drawer's  ignorance  as  to  payee's  existence  is  immaterial.  Clutton  v. 
Attenborough  L.  R.  (1897).  A.  C.  90. 

Post-dated  check  may  be  stamped  bill  payable  on  demand.  Royal 
Bank  v.  Tottenham  (1894),  2  Q.  B.  715. 

Plaintiffs  entitled  to  recover  for  moneys  had  and  received  where 
check  issued  by  them  on  forged  note  was  intercepted  and  cashed,  it  be- 
ing made  to  H.  or  order.  North  &  South  Wales  Bank,  Ld.,  v.  Macbeth 
(1908),  1  K.  B.  13,  L.  R.  (1908)  A.  C.  137. 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

^/afcawa.— Bledsoe  v.  City  Nat.  Bank,  180  Ala.  586,  60  So.  942; 
Davis  v.  First  Nat.  Bank  of  Blakeley,  192  Ala.  8,  68  So.  261  ;  Kaladner  v. 
First  Nat.  Bank,  89  So.  562. 

Arisona.—PeopWs  Nat.  Bk.  v.  Taylor  (1915),  17  Ariz.  215,  149  Pac. 
763. 

Arkansas.— Lockland  v.  Storch.  123  Ark.  253,  185  S.  W.  262;  Wil- 
liamson Bk.  &  Tr.  Co.  v.  Miles  (1914),  169  S.  W.  368. 

Ca/i/ornwi.— Hatton  v.  Holmes,  97  Cal.  208,  31   Pac.  1131. 

District  of  Columbia.— Union  Nat.  Bank  of  Columbia  v.  Cook  (1918), 
96  S.  E.  484. 

Illinois.— '^od  V.  Security  Bk.  of  Chicago  (1911),  163  111.  App.  82; 
Bartlett  v.  First  Nat.  Bank.  247  111.  490,  93  N.  E.  337;  American  Hom- 
iny Co.  v.  National  Bank,  128  N.  E.  391. 

lozm. — American  Express  Co.  v.  People's  Sav.  Bank,  181   N.  W.  701. 

Kansas.— Grand  Lodge  v.  State  Bank,  92  Kan.  876.  142  Pac.  974,  L. 
R.  A.  1915B,  815;  Grand  Lodge  v.  Emporium  Bank  (1917),  101  Kan. 
369,  166  Pac.  490;  Kohn  v.  Watkins,  26  Kan.  691. 

Kentucky.— Ohio  Vallev  Bk.  &  Tr.  Co.  v.  Gt.  Southern  Fire  Ins.  Co. 
(1917),  197  S.  W.  399;  Wettlaufer  v.  Baxter,  137  Ky.  362,  125  S.  W. 
741,  26  L.  R.  A.  (N.  S.)  804. 

Louisiana.— Rose  v.   Shaw    (1919),  80  So.  727. 

Massachusetts.— Shavj  v.  Smith,  150  Mass.  166,  22  N.  E.  887,  6  L. 
R.  A.  348;  Mass.  Nat.  Bank  v.  Snow,  187  Mass.  159,  72  N.  E.  959; 
Murphy  v.  Met.  Nat.  Bk.  (1906),  191  Mass.  159;  Boles  v.  Harding 
(1909),  201  Mass.  103,  87  N.  E.  481;  Jordan  Marsh  Co.  v.  Nat.  Shawmut 
Bank,  201  Mass.  397,  87  N.  E.  740,  22  L.  R.  A.  (N.  S.)  250;  Leavett  v. 
Wintman,  —  Mass.  — ,  125  N.  E.  390. 


§    10  FORM  AND  INTERPRETATION.  399 

Miclngatu.—Fehier  v.  Babillion,  45  Mich.  384,  8  N.  W.  99;  People  v. 

Wardner.    104  Mich.  337,  62   N.   W.   405;   Harmon  v.  Old   Detroit   Nat. 

Bank,  153  Mich.  73,  116  N.  W.  617,  17  L.  R.  A.   (N.  S.)   514,   126  Am. 
St.  Rep.  467. 

Missouri.— Equitable  Life  Assur.  Co.  of  U.  S.  v.  Nat.  Bk.  of  Com- 
merce (1916)  (Mo.  App),  181  S.  W.  1176;  Write  Away  Pen  Co.  v. 
Buckner,  188  Mo.  App.  259,  175  S.  W.  81. 

New  York. — Egner  v.  Corn  Exchange  Bank,  42  Misc.  Rep.  552,  86 
N  Y  Supp.  107;  Trust  Co.  of  Am.  v.  Hamilton  Bk.  (1908),  127  A.  D.  515, 
112  N.  Y.  Supp.  84;  Shipman  v.  Bank,  126  N.  Y.  318,  27  N.  E.  371; 
Cleary  v.  DeBeck  Co.,  54  Misc.  Rep.  537,  104  N.  Y.  Supp.  831;  United 
Cigar  Stores  Co.  v.  American  Raw  Silk  Co.,  171  N.  Y.  Supp.  480;  Phillips 
V.  Mercantile  Nat.  Bank,  140  N.  Y.  556,  35  N.  E.  982,  23  L.  R.  A.  584, 
37  Am.  St.  Rep.  596;  Seaboard  Nat.  Bk.  v.  Bk.  of  America  (1908), 
193  N.  Y.  26,  85  N.  E.  829;  Fifth  National  Bank  v.  Central  National 
Bank,  82  Hun.  559,  affirmed  152  N.  Y.  636. 

North  Carolina. — Johnson  v.  Lassiter,  155  N.  C.  50,  71  S.  E.  23; 
Newland  v.  Moore,  173  N.  C.  728,  92  S.  E.  367. 

Oklahoma.— Stevens  v.  Pierce,  193  Pac.  417. 

Oregon.— Wehhaas  v.  Pendleton,  73  Ore.  190,  144  Pac.  401;  Hill  v. 
McCrow  (1918),  88  Ore.  299,  170  Pac.  306. 

Pennsylvania.— Lincoln  Nat.  Bank  of  Pittsburg  v.  Miller  (1917), 
100  Atl.  269,  255  Pa.  467;  Snyder  v.  Corn  Exchange  National  Bank, 
221  Pa.  599,  70  Atl.  876. 

Tennessee.— Chism  v.  Bank,  96  Tenn.  641,  36  S.  W.  387,  32  L.  R.  A. 
778;  Unaka  Nat.  Bank  v.  Butler  (1904),  113  Tenn.  574,  83  S.  W.  655; 
Litchfield  Shuttle  Co.  v.  Cumberland  Valley  Nat.  Bank,  134  Tenn.  379, 
183  S.  W.  1006. 

Vermont.— Hale  v.  Windsor  Sav.  Bank  (1917),  98  Atl.  993. 

Virginia.— Colona  v.  Parksley  Bank   (1917),  92  S.  E.  979. 

Washington.— GoodieWow  v.  First  Nat.  Bank  (1913),  71  Wash.  554, 
44  L.  R.  A.  (N.  S.)  580,  129  Pac.  90. 

Wisconsin.— Marling  v.  Fitzgerald  (1909),  138  Wis.  93.  120  N.  W. 
388. 

United  States.—Smith  v.  Nelson  Land  &  Cattle  Co.,  212  Fed.  Rep. 
56  128  C.  C.  A.  512;  Nat.  Bank  of  Commerce  v.  U.  S.  (1915),  224 
Fed.  679,  140  C.  C.  A.  219  (9th  Ct.)  ;  U.  S.  v.  Chase  Nat.  Bk.  (1918),  250 
Fed.  105 ;  State  v.  Chase  Nat.  Bank,  241  Fed.  535,  537 ;  American  Hominy 
Co.  V.  Millikin  Nat.  Bank,  273  Fed.  550. 

England.— Vinden  v.  Hughes  (1905),  1  K.  B.  759;  Bank  of  England  v. 
Vagliano,  L.  R.  (1891),  A.  C.  107;  Clutton  v.  Attenborough,  L.  R.  (1897), 
A.  C.  90;  Royal  Bank  v.  Tottenham  (1894),  2  Q.  B.  715;  North  &  South 
Wales  Bank  Ld.  v.  Macbeth  (1908),  1  K.  B.  13,  L.  R.  (1908)  A.  C.  137. 


§  10.  Terms,  when  sufficient.  The  instrument  need  not 
follow  the  language  of  this  act,  but  any  terms  are  sufficient  which 
clearly  indicate  an  intention  to  conform  to  the  requirements 
hereof.i-i» 


400  NEGOTIABLE  INSTRUMENTS.  §11 

See  text,  §40. 

Cross  section :    17. 

Alabama,  Idaho,  Iowa,  North  Carolina  and  Wyoming  insert  the 
word  "negotiable"  between  the  words  "The"  and  "instrument"  above. 

The  Wisconsin  act  (No.  1675-10)  adds  to  this  section  the  following 
words :  "Memoranda  upon  the  face  or  back  of  the  instrument,  whether 
signed  or  not.  material  to  the  contract,  if  made  at  the  time  of  delivery, 
are  part  of  the  instrument,  and  parol  evidence  is  admissible  to  show 
the  circumstances  under  which  they  were  made." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Words  sufficient  if  indicate  promise  to  pay.  Lehner  v.  Roth,  —  Mo. 
App.  — ,  227  S.  W.  833. 

Terms  of  instrument  need  not  follow  statute  to  be  negotiable.  Nelson 
v.  Citizens'  Bank,  180  N.  Y.  S.  747. 

Words  denoting  that  mortgage  is  assignable  do  not  govern  nego- 
tiability of  note  otherwise  silent  in  its  provisions.  Quest  v.  Ruggles, 
72  Wash.  609,  131  Pac.  202. 

Certificate  of  deposit  payable  on  its  return  properly  indorsed  is 
negotiable.  Forest  v  Safetv  Banking  &  Trust  Co.  (E.  D.  Pa.),  174 
Fed.  345. 

I'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Alabama.— Bledsoe  v.  City  Nat.  Bank  of  Selma,  180  Ala.  586,  60  So. 
942. 

Maryland.— Black  v.  First  Nat.  Bank  (1903),  96  Md.  399,  54  Atl.  88. 

Missouri.— Oshorne  v.  Fridrich  (1908),  134  Mo.  App.  449;  Lehner 
v.  Roth,  227  S.  W.  833. 

New  ForA-.— Gilbert  v.  Adams  (1911),  131  N.  Y.  Supp.  787;  Nelson 
V.  Citizens'  Bank,  180  N.  Y.  Supp.  747. 

Washington.— Quest  v.  Ruggles  (1913),  72  Wash.  609,  131  Pac.  202. 

United  States. — Forest  v.  Safety  Banking  &  Trust  Co.  (E.  D.  Pa.), 
174  Fed.  345. 


§  11.  Date,  presumption,  as  to.  Where  the  instrument 
or  an  acceptance  or  any  indorsement  thereon  is  dated,  such  date 
is  deemed  prima  facie  to  be  the  true  date  of  the  making,  drawing, 
acceptance  or  indorsement,  as  the  case  may  be.^-  ^* 

See  text,  §43. 

Construing  corresponding  provisions   of   English    Bills  of  Exchange 
Act:    13  (1). 


§    12  FORM  AND  INTERPRETATION.  401 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Condition  in  note  that  it  is  not  payable  until  payee  performs  certain 
services  destroys  negotiability.  Spotton  v.  Dyer,  —  Cal.  App.  — ,  184 
Pac.  23. 

Burden  of  proving  forgery  by  alteration  of  date  is  on  defendant. 
National  City  Bank  v.  Shelton  Electric  Co.,  96  Wash.  74,  164  Pac.  933. 

I'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Ca/(7onn"a.— Mollev  v.  Pierson  (1918),  174  Pac.  98;  Spotton  v.  Dyer, 
—  Cal.  App.  — ,  184  Pac.  23. 

Kentucky.— Ehey  v.  People's  Bank  of  Bardwell  (1916),  185  S.  W. 
873. 

New  York.—Sugdir  v.  Silverman   (1919),  173  N.  Y.  Supp.  182. 

Washington.— liational  City  Bank  v.  Shelton  Electric  Co.,  96  Wash. 
74,  164  Pac.  933. 


§  12.  Ante-dated  and  post-dated.  The  instrument  is  not 
invalid  for  the  reason  only  that  it  is  ante-dated  or  post-dated, 
provided  this  is  not  done  for  an  illegal  or  fraudulent  purpose. 
The  person  to  whom  an  instrument  so  dated  is  delivered,  ac- 
quires the  title  thereto  as  of  the  date  of  delivery.*-  ^^ 

See  text,  §43. 

Missouri  act  uses  word  "valid"  instead  of  "invalid,"  a  clerical  error. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:     13   (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Drawer  can  not  be  garnisheed  as  payee's  debtor  after  delivery  of  post- 
dated check.  American  Agricultural  Chemical  Co.  v.  Scrimger,  130 
Md.  389,  100  Atl.  774. 

Ante-dated  or  post-dated  instruments  and  effect  of.  Bank  of  Hous- 
ton V.  Day,  145  Mo.  App.  410,  122  S.  W.  756. 

Post-dating  of  instrument  does  not  affect  negotiability  and  negotiat- 
ing prior  to  date  does  not  put  indorsee  upon  inquiry.  Trephonoff  v. 
Sweeny,  65  Ore.  209,  130  Pac.  979. 

*»The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  vv^here  this  section  has  been  construed : 

Idaho.—Smhh  y.  Fields   (1911),  19  Ida.  558,  114  Pac.  668. 

Kentucky.— First  Nat.  Bk.  v.  Bickel  (1911),  143  Ky.  754,  137  S.  W. 
790. 


402  NEGOTIABLE    INSTRUMENTS.  §    13 

Maryland. — American  Agricultural  Chemical  Company  v.  Scrimger, 
130  Md.  389,  100  Atl.  774. 

Missouri— Houston  v.  Day  (1909),  145  Mo.  App.  410,  122  S.  W.  756. 

New  York.— A]hert  v.  Hoffman  (1909),  64  Misc.  Rep.  87,  117  N.  Y. 
Supp.  1043. 

Or^^oM.— Triphonoff  v.  Sweeney  (1913),  65  Ore.  209,  130  Pac.  979. 
Pennsylvania.— Rathion  v.  Locher    (1906),  215  Pac.  571. 
Virginia.— Colona  v.  Parksley  Bank  (1917),  92  S.  E.  979. 
West  Virginia.— Lewis  Hubbard  &  Co.  v.  Morton  (1917),  92  S.  E.  252. 

JVisconsin.— Citizens  Nat.  Bank  of  Green  Bay  v.  Harter  (1908),  134 
Wis.  408. 

§  13.  When  date  may  be  inserted.  Where  an  instru- 
ment expressed  to  be  payable  at  a  fixed  period  after  date  is  is- 
sued undated,  or  where  the  acceptance  of  an  instrument  payable 
at  a  fixed  period  after  sight  is  undated,  any  holder  may  insert 
therein  the  true  date  of  issue  or  acceptance,  and  the  instrument 
shall  be  payable  accordingly.  The  insertion  of  a  wrong  date 
does  not  void  the  instrument  in  the  hands  of  a  subsequent  holder 
in  due  course;  but  as  to  him,  the  date  so  inserted  is  to  be  re- 
garded as  the  true  date.^'  ^* 

See  text,  §43. 

Cross  section :     14. 

Construing  corresponding  provision  of  English  Bills  of  Exchange 
Act :     Section  12. 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Knowingly  inserting  wrong  date  in  undated  instrument  will  avoid 
same  as  to  party  so  inserting  date.  Bank  of  Houston  v.  Day,  145  Mo. 
App.  410,  122  S.  W.  756. 

^»The  following  is  a  complete  hst  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Iowa.— Booch  v.  Goochi   (1916),  16  N.  W.  333. 

Missouri.— Houston  v.  Day  (1916),  145  Mo.  App.  410,  122  S.  W.  756. 

Temiessee.—Ho\man  v.  Higgins,  134  Tenn.  387,  183  S.  W.  1008,  L. 
R.  A.   1916F,   1263. 

r^;ra.y.— Landon  v.  Foster  Drug  Co.   (1916),  186  S.  W.  434. 

United  States.— Richards  v.  Street   (1908),  31  App.  D.  C.  427. 


§    14  FORM  AND  INTERPRETATION.  403 

§  14.  Blanks,  when  may  be  filled.  Where  the  instru- 
ment is  wanting  in  any  material  particular,  the  person  in  pos- 
session thereof  has  a  prima  facie  authority  to  complete  it  by 
filling  up  the  blanks  therein.  And  a  signature  on  a  blank  paper 
delivered  by  the  person  making  the  signature  in  order  that  the 
paper  may  be  converted  into  a  negotiable  instrument  operates 
as  a  prima  facie  authority  to  fill  it  up  as  such  for  any  amount. 
In  order,  however,  that  any  such  instrument,  when  completed, 
may  be  enforced  against  any  person  who  became  a  party  there- 
to prior  to  its  completion,  it  must  be  filled  up  strictly  in  accord- 
ance with  the  authority  given  and  within  a  reasonable  time.  But 
if  any  such  instrument  after  completion,  is  negotiated  to  a  holder 
in  due  course,  it  is  valid  and  effectual  for  all  purposes  in  his 
hands,  and  he  may  enforce  it  as  if  it  had  been  filled  up  strictly 
in  accordance  with  the  authority  given  and  within  a  reasonable 
time. 

See  text,  §58. 

Cross  sections:     124,  125,  66,  109.  119-5,  52,  15. 

In  Illinois  the  words  "issued  or"  arc  added  before  "negotiated"  in 
the  last  sentence. 

In  South  Dakota  the  following  is  substituted  for  this  section :  "One 
who  makes  himself  a  party  to  an  instrument  intended  to  be  negotiable, 
but  which  is  left  wholly  or  partly  in  blank,  for  the  purpose  of  filling 
afterwards,  is  liable  on  the  instrument  to  an  indorsee  thereof  in  due 
course,  in  whatever  manner  and  at  whatever  time  it  may  be  filled,  so 
long  as  it  remains  negotiable  in  form." 

The  Kentucky  act  says  "negotiable"  instead  of  "negotiated." 

The  Wisconsin  act  (No.  1675-14)  reads,  "complete  it  prior  to  nego- 
tiation by  filling,"  etc.,  instead  of  "complete  it  by  filling,"  etc. 

The  Wisconsin  act  reads,  "operates  as  an  authority,"  etc.,  instead  of 
"operates   as  a  prima   facie   authority." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Alteration  by  inserting  legal  rate  of  interest  in  blank  is  not  material. 
Crawford  v.   Simonton,  163  Ala.  609,  50  So.  1024. 

Payee  may  be  holder  in  due  course.  Ex  parte  Goldberg  v.  Lewis, 
191  Ala.  356,  67  So.  839,  L.  R.  A.  191 5F,  1147. 

Insertion  of  more  than  legal  rate  in  interest  blank  is  material  altera- 
tion.    Ayers  v.  Walker,  54  Colo.  571.  131  Pac.  384. 

Estoppel  is  good  against  one  who  signs  note  in  blank  except  name 
of  payee  where  payee's  firm  filled  in  and  negotiated  it  in  bank  after 
mdorsing  payee's  name.     Richards  v.  Street,  31  App.  Cas.  D.  C.  427. 

Where  note  given  with  authority  to  insert  necessary  amount  of 
attorney's  fees  it  was  not  an  alteration  to  do  so  after  services  rendered, 
Kramer  v,  Scbnitzer,  268  111.  603,  109  N,  E.  695, 


404  NEGOTIABLE    INSTRUMENTS.  §    14 

Filling  in  blank  after  words  "payable  at"  docs  not  avoid  instrument 
in  hands  of  holder  in  due  course.  Johnston  v.  Hoover,  139  Iowa  143, 
117  N.  W.  277. 

Note  payable  "on  or  before  four  after  date"  is  not  a  demand 

note.     In  re  Estate  of  Philpott.  169  Iowa  555,  151  N.  W.  825. 

When  can  payee  be  holder  in  due  course.  Devoy  &  Kuhn  Coal  Co. 
V.  Huttig,  174  Iowa  357,  156  N.  W.  413. 

Note  should  be  reformed  which  was  indorsed  prior  to  payee's  learn- 
ing of  the  omission  of  his  name  by  putting  in  name.  Farmers  Loan 
&  Trust  Co.  V.  Brown   (Iowa),  165  N.  W.  70. 

Plaintiff's  right  to  complete  instrument.  First  Nat.  Bank  of  Hawk- 
eye  V.  Patterson,  —  la.  — ,  177  N.  W.  545. 

Where  defendant  signed  note  in  blank  for  certain  purpose  and  the 
purpose  was  carried  out  plaintiffs  were  holders  for  value,  as  note  was 
filled  in  in  accordance  with  authority,  although  done  in  plaintiff's 
presence.     Herman's  Exr.  v.  Gregory,  131  Ky.  819,  115  S.  W.  809. 

It  is  not  alteration  to  fill  in  blank  with  place  of  payment  either 
within  or  without  the  state.  Diamond  Distilleries  Co.  v.  Gott,  137  Ky. 
585,  126  S.  W.  131,  31  L.  R.  A.  (N.  S.)  643. 

Note  executed  in  blank  is  issued  to  payee  and  not  negotiated  where 
his  name  appears  as  payee.  Southern  Nat.  Life,  etc.,  Co.  v.  People's 
Bank  (Ky.),   198  S.  W.  543. 

Person  in  possession  of  instrument  made  in  blank  has  prima  facte 
authority  to  fill  in  all  blanks.  Linthicum  v.  Bagby,  131  Md.  644,  102 
Atl.  997. 

Incomplete  instruments  put  purchaser  upon  inquiry  as  to  authority 
to  complete.  Boston  Steel  &  Iron  Co.  v.  Steuer,  183  Mass.  140,  66  N. 
E.  646,  97  Am.  St.  Rep.  426. 

Maker  having  added  another  provision  note  was  held  in  due  course 
by  payee,  who  could  sue  the  prior  indorser  in  blank  as  indorser.  Thorpe 
V.  White,  188  Mass.  333,  74  N.  E.  592. 

An  instrument  is  negotiated  when  handed  for  value  to  the  payee 
named  therein.  Liberty  Trust  Co.  v.  Tilton,  217  Mass.  462,  465,  105  N. 
E.  605,  L.  R.  A.  191 5B,.  144. 

Check  received  by  payee  thereof  from  a  third  person  in  payment  of 
debt  is  held  in  due  course,  although  drawn  without  authority.  National 
Investment  Co.  v.  Corey,  222  Mass.  453,  111  N.  E.  357. 

Check  payable  to  bank  received  from  third  person  in  payment  of  his 
indebtedness,  without  notice  of  infirmities,  was  held  in  due  course. 
Colonial  Fur  Co.  v.  First  Nat.  Bank,  227  Mass.  12,  116  N.  E.  731. 

Payee  can  not  be  holder  in  due  course.  Long  v.  Shafer,  185  Mo. 
App.  641,  171  S.  W.  69. 

Note  in  several  inks  not  presumed  completed  before  delivery  and 
signature.  Exchange  Bank  v.  Robinson,  185  Mo.  App.  582,  172  S.  W. 
628. 

Notes  providing  for  interest  in  blank  draw  legal  rate  without  filling 
blank.     Hornstein  v.  Cifuno,  86  Neb.  103,  125  N.  W.  136. 

Plaintiff  has  burden  of  showing  blanks  filled  within  reasonable  time. 
Madden  v.  Gaston,  137  App.  Div.  294,  121  N.  Y.  Supp.  951. 

Testimony  of  maker  that  authority  to  fill  in  blanks  was  not  given 
will  rebut  presumption  of  authority.  Equitable  Trust  Co.  of  New  York 
V.  Lyons,  72  Misc.  Rep.  49,  129  N.  Y.  Supp.  79. 

Knowledge  of  transferee  that  instrument  was  incomplete  and  com- 
pleted before  transfer  puts  him  upon  inquiry  as  much  as  accepting  it 
uncompleted.    Dumbrow  v.  Geld,  72  Misc.  Rep.  400,  130  N.  Y.  Supp.  182. 


§    14  FORM  AND  INTERPRETATION.  405 

Drawer  can  not  recover  when  payee  holder  in  due  course.  Berg- 
strom  V.  Ritz-Carlton  Co.,  171  App.  Div.  776,  154  N.  Y.  Supp.  959. 

Delivery  of  note  in  blank  gives  implied  authority  to  fill  blanks. 
Business  Man's  League  v.  Sregow,  153  N.  Y.  Supp.  231. 

Payee  holder  in  due  course.  Brown  v.  Brown,  91  Misc.  Rep.  220, 
154  N.  Y.  Supp.  1098. 

Prima  facie  authority  to  fill  in  blanks  is  rebuttable.  Bloom  v.  Hor- 
witz,  100  Misc.  Rep.  687,  166  N.  Y.  Supp.  786. 

When  may  payee  in  note  executed  in  blank  become  purchaser  for 
value.     Miller  v.  Campbell.  173  App.  Div.  821,  160  N.  Y.  Supp.  834. 

Plaintiff's  right  to  fill  in  blank  in  note.  Keister  v.  Wade,  182  N.  Y. 
S.  119. 

Plaintiflf  takes  subject  to  equities  of  defendant  against  payee  where 
signature  is  forgery.     Seymour  v.  Leyman,  10  Ohio  St.  283. 

Payee  entitled  to  recover  although  surety  induced  to  sign  by  fraud 
of  maker.     Potts  v.  First  State  Bank   (Okla.),  151   Pac.  859. 

Person  in  possession  has  prima  facie  authority  to  fill  blank  in  note. 
Simpson  v.  First  Nat.  Bank  of  Roseburg,  —  Ore.  — ,  185  Pac.  913. 

Payee  may  be  holder  for  value  when  instrument  is  negotiated  to  him. 
Johnson  v.  Knipe   (Pa.),  103  Atl.  957. 

Filling  in  an  unauthorized  amount  is  a  defense  and  burden  is  on 
indorsee.    Massey  v.  Massey,  —  Pa.  — ,  110  Atl.  341. 

Position  of  holder  for  value  not  necessarily  changed  because  he  is 
also  payee.     Figures  v.  Fly,  137  Tenn.  358,  378,  193  S.  W.  117. 

Where  note  given  with  authority  to  cashier  to  fill  in  blank  before 
words  "after  date"  not  avoided  by  his  doing  so  four  months  later  by 
adding  words  "four  months."  Howard  National  Bank  v.  Arbuckle 
(Vt.),  102  Atl.  477. 

Purchasers  of  incomplete  instruments  are  put  upon  inquiry  as  to 
authority  of  person  intrusted  with  them.  Guerrant  v.  Guerrant,  7  Va. 
L.  Reg.  639. 

Where  one  intrusted  with  note  signed  in  blank  exceeded  amount 
authorized  the  holder  was  not  a  holder  in  due  course  against  maker, 
the  note  being  used  to  pay  indebtedness  and  the  holder's  name  inserted 
as  payee.    Herdman  v.  Wheeler  (1902),  1  K.  B.  361. 

Maker  of  note  estopped  to  deny  validity  where  note  executed  in 
blank  to  have  amount  inserted  and  name  of  designated  payee,  amount 
increased  above  authority.     Lloyds  Bank  v.  Cooke   (1907),  1  K.  B.  794. 

Payee  never  holder  in  due  course.  Lewis  v.  Clay,  67  L.  T.  Q.  B.  (N 
S.)  224. 

^■The    following  is  a    complete  list  of  the  cases,    arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Alabama.— Goldberg  v.  Lewis,  191  Ala.  356,  67  So.  839.  L.  R.  A. 
191SF,   1157;   Crawford  v.    Simonton,  163  Ala.  609,  50  So.   1024. 

Colorado.— Ayers  v.  Walker,  54  Colo.  571,  131  Pac.  384. 

Connecticut.— Chvdznd  Co.  v.  Chittenden  (1909),  81  Conn.  667,  71 
Atl.  935. 

Illinois.— ManassieT  v.  Wright  (1910),  158  111.  App.  214;  Kramer 
V.  Schnitzer,  268  111.  603,  109  N.  E.  695. 

Indiana. — Kindler  Co.  v.  First  Nat.  Bank  of  Fond  du  Lac  (1915), 
109  N.  E.  66. 


406  NEGOTIABLE    INSTRUMENTS.  §    14 

/owo.— Vander  Ploey  v.  Van  Zunk  (1907),  135  Iowa  350.  112  N.  W. 
807  13  L.  R.  A.  (N.  S.)  490;  Johnston  v.  Hoover  (1908),  139  Iowa 
143,  117  N.  W.  277;  LeClcrc  v.  Philpotl  (1915),  169  Iowa  555,  151  N. 
W.  825;  Devoy  v.  Kuhn  Coal  &  Coke  Co.  (1916),  156  N.  W.  412; 
Farmers  Loan  &  Tr.  Co.  v.  Brown  (1917),  165  N.  W.  70;  Builders' 
Lime  &  Cement  Co.  v.  Weimer,  170  Iowa  444,  151  N.  W.  100,  Ann. 
Cas.  1917C,  1174;  Devoy  &  Kuhn  Coal  Co.  v.  Huttig,  174  Iowa  357, 
156  N.  W.  413;  First  Nat.  Bank  of  Hawkeye  v.  Patterson,  177  N.  W. 
545. 

Kansas— Iowa  City  State  Bank  v.  Claypool  (1914),  137  Pac.  949. 

Kentucky.—Stan\ey  v.  Davis  (1908).  32  Ky.  L.  1135,  107  S.  W.  773; 
Herman's  Excr.  v.  Gregory  (1909),  131  Ky.  819.  115  S.  W.  809;  Dia- 
mond Distilleries  Co.  v.  Gott.  137  Ky.  585,  126  S.  W.  131,  31  U  R.  A. 
(N.  S.)  643;  Southern  Nat.  Life,  etc.,  Co.  v.  People's  Bank  (Ky.), 
198  S.  W.  543. 

Mar.v/CM(/.— Linthicum  v.  Bagby  (1917),  131  Md.  644,  102  Atl.  997. 

Massachusetts. — Boston  Steel  &  Iron  Co.  v.  Steuer  (1903),  183 
Mass.  140,  66  N.  E.  646,  97  Am.  St.  Rep.  426;  Thorpe  v.  White,  188 
Mass.  333,  74  N.  E.  592;  Lowell  v.  Bickford,  201  Mass.  543,  545,  88 
N.  E.  1 ;  J.  G.  Brill  &  Co.  v.  Norton,  etc..  Railway,  189  Mass.  431,  437, 
75  N.  E.  1090;  Liberty  Trust  Co.  v.  Tilton,  217  Mass.  462,  105  N.  E. 
605,  L.  R.  A.  19^58,  144;  Colonial  Fur  Co.  v.  First  Nat.  Bank.  227 
Mass.  12,  116  N.  E.  731;  Perry  v.  Pye  (1913),  215  Mass.  403,  102  N. 
E.  653;  Stone  v.  Sergeant  (1915),  220  Mass.  445,  107  N.  E.  1014;  Tower 
V.  Stanley  (1915),  220  Mass.  429,  107  N.  E.  1010;  Munroe  v.  Stanley, 
220  Mass.  438,  107  N.  E.  1012. 

Missouri. — Exchange  Bank  v.  Robinson,  185  Mo.  App.  582,  172  S. 
W.  628;  Long  v.  Shafer,  185  Mo.  App.  641,  171   S.  W.  69. 

Nebraska.— Rovr\?,\cm  v.  Cifuno,  86  Neb.  103,  125  N.  W.  136;  Hart- 
ington  Bank  v.  Breslin  (1910).  88  Neb.  47,  128  N.  W.  659,  31  L.  R.  A. 
(N.  S.)   130,  Ann.  Cas.  1912B  1008. 

New  ForA;.— Yonker's  Nat.  Bank  v.  Mitchell  (1913),  141  N.  Y.  Supp. 
128;  First  Nat.  Bank  of  the  City  of  Brooklyn  v.  Bridley  (1906),  112  A. 
D.  398,  98  N.  Y.  Supp.  445;  Madden  v.  Gaston  (1910),  137  A.  D.  294. 
121  N.  Y.  Supp.  951;  Rodgers  v.  Baker  (1910),  136  A.  D.  851,  122  N. 
Y.  Supp.  91;  Eq.  Tr.  Co.  of  N.  Y.  v.  Lyons  (1911),  72  Misc.  Rep.  49, 
129  N.  Y.  Supp.  79;  Dumbrow  v.  Gelb  (1911),  72  Misc.  Rep.  400,  130  N. 
Y.  Supp.  182;  Biz  Men's  League  of  Harlem  v.  Sragow  (1915),  153 
N.  Y.  Supp.  231;  Brown  v.  Brown.  91  Misc.  Rep.  220,  154  N.  Y.  Supp. 
1098;  Bergstron  v.  Ritz-Carlton  Co.,  171  App.  Div.  .776,  154  N.  Y. 
Supp.  959;  Cole  v.  Harrison  (1915),  153  N.  Y.  Supp.  200;  Flood  v. 
Steinmetz  (1915),  153  N.  Y.  Supp.  192;  Bank  of  Franco-Americine 
V.  Bergstrom  (1916),  157  N.  Y.  Supp.  635;  Keister  v.  Wade,  182  N. 
Y.  Supp.  119;  Union  Tr.  Co.  of  New  Jersey  v.  McCrum  (1911), 
145  A.  D.  409,  129  N.  Y.  Supp.  1078,  affirmed  without  opinion, 
207  N.  Y.  721 ;  Miller  v.  Campbell,  173  App.  Div.  821.  160  N.  Y.  Supp. 
834;  Bloom  v.  Horwitz  (1918).  100  Misc.  Rep.  687,  166  N.  Y.  Supp.  786; 
Hathaway  Co.  v.  Co.  of  Delaware.  185  N.  Y.  368.  78  N.  E.  153.  13  L.  R. 
A.  (N.  S.)  273,  113  Am.  St.Rep.209. 

North  Carolina.— VhWW^s  v.  Hensley  (1917),  94  S.  E.  673. 

Ohio. — Seymour  v.  Lej^man,  10  Ohio  St.  283. 


§    15  FORM  AND  INTERPRETATION.  407 

Oklahoma.— Fotts  v.   First  State  Bank    (Okla.),  151   Pac.  859.^ 

Oregon. — Simpson  v.  First   Nat.   Bank  of   Roseburg,  —  Ore.  — ,   185 
Pac.  913 

Pennsylvania. — Massy    v.    Massy,    110    Atl.    341 ;    Johnston    v.    Knipe 
(Pa.),    105  Atl.   705;  Johnston   v.   Knipe    (Pa.),   103   Atl.  957. 

Tennessee. — Holman    v.    Higgins,    134    Tenn.    387,    183    S.    W.    1008; 
Figures  v.  Fly,  137  Tenn.  358,  193  S.  W.  117. 

Vermont.— B.o\i2ir A   National   Bank  v.  Arbuckle    (Vt.),    102   Atl.  477. 

Virginia. — Guewant  v.   Guewant    (1902),  7  Va.  L.  R.  639;   Brown   v. 
Thomas  (1917),  92  S.  E.  977. 

Washington.— BoviXts  v.   Frazer,   59  Wash.   336,   109  Pac.   812,   31    L. 
R.  A.   (N.  S.)   613. 

West   Virginia.— Rvism\ss&\  v.   White   Oak   Co.    (1917),  92   S.   E.  672. 


§  15.  Incomplete  instrument  not  delivered.  Where  an 
incomplete  instrument  has  not  been  delivered  it  will  not,  if  com- 
pleted and  negotiated,  without  authority,  be  a  valid  contract  in 
the  hands  of  any  holder,  as  against  any  person  whose  signature 
was  placed  thereon  before  delivery.^'  ^' 

See  text,  §  53. 

In  the  Wisconsin  Act  the  word  "negotiation"  is  substituted  for  the 
word  "delivery"  at  the  end  of  the  section. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

Plea  must  show  knowledge  of  incompleteness  to  affect  its  validity. 
Bass  V.  Lee   (Fla.),  74  So.  7. 

Maker  is  not  liable  where  notes  in  blank  were  not  delivered  even 
in  hands  of  innocent  holder.  Holzman,  Cohen  &  Co.  v.  Teague,  158 
N.  Y.  Supp.  211. 

'"  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Colorado.— ^ormzin  v.  McCarthy   (1913),   138  Pac.  28. 

Florida. — Bass  v.  Lee  (Fla.),  74  So.  7. 

Louisiana.— FoWzotto  v.  People's  Sav.  Bank  (1910),  125  La.  770,  51 
So.    843. 

MwjOMn.— Burchett  v.  Fink  (1909).  139  Mo.  App.  381;  Chitwood 
V.  Hatfield  (1909),  136  Mo.  App.  688;  Allen  Grocery  Co.  v.  Bank  of 
Buchanan  Co.   (1916),  192  Mo.  App.  476,  181  S.  W.  777. 

New  York.— Linick  v.  Nutting  (1910),  125  N.  Y.  Supp.  93;  Holz- 
man, Cohen  &  Co.  v.  Teague    (1915),   156  N.  Y.   Supp.  290;  Holtzman, 


408  NEGOTIABLE   INSTRUMENTS.  §    16 

Cohen  &  Co.  v.  Teague    (1916),  158  N.  Y.   Supp.  211;  Rubel  v.   Honig 
0917),  164  N.  Y.  Supp.  219. 

Washington.—Seaiik  Nat.  Bk.  v.  Becker  (1913),  133  Pac.  613. 

West  Virginia.— Rusmissel  v.  White  Oak  Stave  Co.  (1917),  92  S. 
W.  672. 

United  States. — In  re  Continental  Engine  Co.   (1916),  234  Fed.  58. 

§16.  Delivery;  when  effectual;  when  presumed.  Every 
contract  on  a  negotiable  instruinent  is  incomplete  and  revocable 
until  delivery  of  the  instrument  for  the  purpose  of  giving  effect 
thereto.  As  between  immediate  parties,  and  as  regards  a  re- 
mote party  other  than  a  holder  in  due  course,  the  delivery,  in 
order  to  be  effectual,  must  be  made  either  by  or  under  the  au- 
thority of  the  party  making,  drawing,  accepting  or  indorsing, 
as  the  case  may  be ;  and  in  such  case  the  delivery  may  be  shown 
to  have  been  conditional,  or  for  a  special  purpose  only,  and  not 
for  the  purpose  of  transferring  the  property  in  the  instrument. 
But  where  the  instrument  is  in  the  hands  of  a  holder  in  due 
course,  a  valid  delivery  thereof  by  all  parties  prior  to  him  so  as 
to  make  them  liable  to  him  is  conclusively  presumed.  And  where 
the  instrument  is  no  longer  in  the  possession  of  a  party  whose 
signature  appears  thereon,  a  valid  and  intentional  delivery  by 
him  is  presumed  until  the  contrary  is  proved.  •*■  ** 

See  text.  §  53. 

Cross  sections:     15,  64-1,  109,   56,  9-5,  56,   124,  191,  51,  187,  52-3,  55. 

The  North  Carolina  Act  (Sec.  16)  omits  "accepting"  in  the  second 
sentence. 

Kansas  omits  next  to  the  last  sentence. 

In  South  Dakota  the  third  paragraph  beginning  with  the  word  "but" 
and  ending  with  the  word  "presumed"  is  omitted  and  the  following 
sentence  substituted :  "An  indorsee  of  a  negotiable  instrument  in  due 
course,  acquires  an  absolute  title  thereto,  so  that  it  is  valid  in  his  hands, 
notwithstanding  any  provision  of  law  making  it  generally  void  or  void- 
able and  notwithstanding  any  defect  in  the  title  of  the  person  from 
whom  he  acquired  it," 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Notice  of  failure  to  comply  with  conditions  before  delivery  must  be 
shown  to  holder  before  successful  defense  on  that  ground.  Ex  parte 
Goldberg  &  Stone,  191  Ala.  356,  67  So.  839. 

Conditional  delivery  contract  need  not  be  in  writing.  Norman  v 
McCarthy,   56  Colo.  290.   138   Pac.  28. 

Transfer  which  constitutes  delivery.  Lewis  County  v.  State  Bank 
of  Peck,  —  Ida.  — ,  170  Pac.  98. 


§    16  FORM  AND  INTERPRETATION.  409 

Delivery  of  note  on  condition  shown  by  oral  evidence.  Straus  v. 
Citizens    State  Bank,   164  111.   App.   420. 

Date  of  delivery  makes  note  effective  and  mailing  same  is  sufficient 
Burr  v.  Becklar,  264  111.  230,  106  N.  E.  206,  L.  R.  A.  1916A,  1049. 

Where  note  is  negotiated  in  breach  of  faith  holder  has  burden  of 
l-roof  to  show  holder  in  due  course.  Waukee  Sav.  Bank  v.  Jones,  179 
Iowa  261,  159  N.  W.  691. 

Agreement  before  delivery  that  maker  was  not  to  pay  cannot  be 
shown.     Stevens  v.  Inch,  98  Kan.  306,   158  Pac.  43. 

Parol  agreement  before  execution  cannot  be  shown  that  note  was  to 
be  extended.  Commercial  Nat.  Bank  v.  Hutchinson  Box  Co.,  98  Kan. 
350,   158  Pac.  44. 

Surety  may  show  conditional  signing  if  he  shows  payee's- knowledge 
before  delivery.  Goutermont  v.  Bland,  99  Kan.  431,   162  Pac.  270. 

Holder  in  due  course  may  recover  on  note  indorsed  in  blank  by 
payee  from  whom  it  was  stolen.  Mass.  Nat.  Bank  v.  Snow,  187  Mass. 
159,  72  N.  E.  959. 

Bill  of  exchange  must  be  delivered  and  indorsed  by  payee  before  it 
is  in  existence  when  made  to  the  order  of  the  drawer.  Stouffcr  v. 
Curtis,  198  Mass.  560,  85  N.  E.  180. 

Holder  in  due  course  entitled  to  recover  although  check  issued  without 
authority.     Buzzell  v.   Tobin,  201  Mass.   1,  86  N.  E.  923. 

Holders    in    due   course    are    not    immediate    parties.      Libertv    Trust 
Co.  V.  Tilton,  217  Mass.  462,  464,   105  N.   E.  605,  L.  R.   A.   19r5B,   144. 
Selling    of    note    to    payee    named    therein    is    a    negotiation    thereof. 
National  Investment  Co.  v.  Corey,  222  Mass.  453,  111  N.  E.  357. 

No  delivery  held  to  be  defense  against  holder  in  due  course.  Shef- 
fer  V.  Fleischer,   158  Mich.  270,   122  N.  W.  543. 

Where  municipal  bonds  payable  to  bearer  are  stolen  and  negotiated, 
purchaser  takes  title  in  good  faith  it  is  valid.  Citv  of  Adrian  v. 
Whitney  Central  Nat.  Bank,  180  Mich.  171,  146  N.  W.  654. 

Checks  drawn  to  order  of  A,  who  indorsed  them  and  gave  them  to 
drawer  to  deliver  to  B,  held  delivered  to  A.  Behrens  v.  Kruse,  132 
Minn.  69,   155   N.  W.   1065. 

Conditional  delivery  for  special  purpose  shown  as  defense  against 
payee.     First  Nat.  Bank  v.  Miller,  —  N.  D.  — ,  179  N.  W.  997. 

Failure  of  performance  of  condition  as  part  of  delivery  may  be 
shown  by  parol  evidence.  Gamble  v.  Riley,  39  Okla.  363,  135  Pac. 
390. 

Agreement  as  to  maker's  liability  to  pay  one-half  is  no  defense. 
Bailey  v.  Lankford    (Okla.),   154  Pac.   672. 

When  note  transferred  by  payee  before  maturity  and  after  payment 
of  maker  is  good  in  hands  of  holder  in  due  course.  Critser  v.  Steeley 
(Okla.),  162  Pac.  795. 

Burden   of   proving  conditional    delivery  of   note   in  blank  is   on   de- 
fendant.    Madden  v.   Gaston,   137   App.   Div.  294,   121    N.   Y.   Supp.  951 
Check  stolen  by  payee  and  endorsed  for  value,  holder  in  due  course 
entitled  to  recover.     Schaeffer  v.   Marsh,  90  Misc.  Rep.  307,   153  N.  Y. 
Supp.   16. 

Conversation  at  time  of  making  note  admissible  only  to  show  no 
contract  until  a  certain  event  happened.  Weinhandler  v.  Loewenthal, 
159  N.  Y.   Supp.  695. 

Delivery  on  unfulfilled  condition  must  be  pleaded.  Bloom  v.  Hor- 
.witz.  97  Misc.  Rep.  622,  162  N.  Y.  Supp.  230, 


410  NEGOTIABLE    INSTRUMENTS.  §    16 

Note  delivered  on  condition  which  was  not  fulfilled  is  not  shown 
to  have  valid  inception.  Rubel  v.  Honig,  178  App.  Div.  53,  164  N.  Y. 
Supp.  219. 

Collateral  oral  agreement  cannot  be  shown  unless  fraud,  accident 
or  mistake  pleaded.  Cherokee  Co.  v.  Meroney,  173  N.  C.  653,  92  S.  E. 
616. 

Parol  evidence  may  be  admitted  to  show  execution  of  note  upon 
conditions  of  a  certain  contingency  happening.  Farrington  v.  McNeill, 
174  N.  C.  420,  93  S.  E.  957. 

Parol  evidence  to  vary  date  of  falling  due  not  admissible.  Home- 
v;ood  People's   Bank  v.  Heckert,  207  Pa.  231,  56  Atl.  431. 

Maker  may  show  want  of  consideration  and  intention  of  parties  as 
tc   delivery.     Lee  v.   Benjamin    (R.   I.),   102  Atl.  713. 

When  delivery  presumed.  Commercial  Security  Co.  v.  Donnald  Drug 
Co.,  —  S.  Car.  — ,  96  S.  E.  529. 

Defendant    has    burden    of    showing    conditional    delivery.      Smith    v. 
Brown    (Utah),   165   Pac.  468. 

When  evidence  shows  no  contract  or  conditioned  delivery.  Mar- 
tineau  v.  Hanson,  47  Utah  549,  155  Pac.  432. 

Conditioned  endorsement  before  delivery  must  be  shown  to  have 
been  called  to  attention  of  payee  before  delivery  completed.  Farmers' 
&  Stockgrowers'  Bank  v.  Pahvent  Valley  Land  Co.  (Utah),  165  Pac. 
462. 

Failure  of  payee  to  secure  additional  indorsers  as  agreed  may  be  set 
up  as  defense  of  conditional  delivery.  Seattle  National  Bank  v.  Becker, 
74  Wash.  431,  133  Pac.  613. 

Oral  agreement  to  pay  from  certain  fund  does  not  control  promise 
to  pay  in  note.     Gwinn  v.  Ford,  85  Wash.  571,  148  Pac.  891. 

Note  stolen  from  maker  held  valid  in  hands  of  holder  for  value. 
Angus  V.  Downs,  85  Wash.  75,  147  Pac.  630,  L.  R.  A.  19^  5E,  351. 

Prior  agreement  to  surrender  note  upon  condition  happening  is 
not  admissible.     Post  v.  Tamm,  91   Wash.  504,   158  Pac.  91. 

Contemporaneous  oral  agreements  may  be  shown  between  parties 
other  than  holders  in  due  course.  Hodge  v.  Smith,  130  Wis.  326,  110 
N.  W.   192. 

Parol  testimony  mav  show  intent  as  to  delivery.  Paulson  v.  Boyd, 
137  Wis.  241,  118  N.  W.  841. 

Where  note  to  bank,  an  assignment  of  stock  placed  with  bank  con- 
ditioned that  if  stock  taken  note  to  be  collected,  delivery  held  condi- 
tional.    Union   Investment    Co.  v.   Epley,    164  Wis.  438,    160  N.   W.    175. 

Conditions  of  delivery  mav  be  shown  between  parent  and  child. 
Storey  v.   Storey,  131   C.   C.   A.  269,  214  Fed.  973. 

Note  handed  to  payee  with  understanding  that  A  must  sign  is  not 
delivered.  Continental  Engine  Co.,  In  re,  234  Fed.  Rep.  58,  148  C.  C.  A. 
74. 

Holder  in  due  course  entitled  to  recover  on  municipal  bonds  although 
indorser  had  no  valid  delivery.  Town  of  Newbern  v.  National  Bank, 
234  Fed.  209,  148  C.  C.  A.  111. 

Terms  of  note  not  varied  bv  parol  evidence  showing  installment 
privileges.    Nalitzky  v.  Williams,  237  Fed.  Rep.  802,  151  C.  C.  A.  44. 

Contract  not  in  writing  not  to  very  terms  of  note.  Hitchings,  etc., 
Co.  V.  Northern  Leather  Co.   (1914),  3  K.  B.  907. 

Where  payee  indorsed  bill  of  exchange  and  handed  to  bank  for 
discount  the  property  therein  did  not  pass  until  discounted.  Dawson  v, 
Isle  (1906),  1  Ch.  633. 


§    16  FORM  AND  INTERPRETATION.  411 

la.  The  following  is  a  complete  lists  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Alabama. — Bank  of  Tallasee  v.  Jordan  (1917),  75  So.  930;  Norwood 
V.  Stinnett  (1919),  80  So.  431;  Bank  of  Carterville  v.  Gunter,  4  Ala. 
App.  539,  58  So.  757;  Stone  v.  Goldberg  &  Lewis  (1912),  6  Ala.  App.  249, 
60  So.  744;  Bledsoe  v.  City  Nat.  Bk.  of  Sclma  (1912).  7  Ala.  App.  195. 
60  So.  942;  Goldberg  v.  Stone.  191  Ala.  356,  67  So.  839;  Haas  v.  Com- 
merce Tr.  Co.  (1915),  69  So.  984;  Citizens  Nat.  Bank  v.  Bucheit  (1916). 
71  So.  82. 

Arizona.— Gray  v.  Baron  (1910),  13  Ariz.  70,  108  Pac.  229;  Fidelity 
Title  Guaranty   Co.  v.   Ruby,   16  Ariz.  75,   141   Pac.   117. 

Arkajtsas.—Ard  v.  Bowie  (1916),  125  Ark.  169,  187  S.  W.  1066; 
Horn  V.   Brand    (1918),  203  S.  W.  5. 

Colorado.—Sayre  v.  Leonard  (1914).  57  Colo.  116,  140  Pac.  196;  De- 
vine  V.  Western  Slope  Assn.,  27  Colo.  App.  368;  Norman  v.  McCarthy, 
56  Colo.  290,  138  Pac.  28. 

Delaware. — Wilmington  Trust  Co.  v.  Morgan,  28  Del.  261,  92  Atl. 
988. 

CoM«^c/tVM^— Atwood   V.   Atwood    (1913).   86   At!.  29. 

F/onrfa.— Bland  v.  Fidelity  Trust  Co.  (1916).  71  So.  630:  Donegan 
V.  Dekle  Inv.  Co.  (1917),  74  So.  11;  Williams  v.  Peninsular  Grocery  Co. 
(1917),  75  So.  517. 

Idaho.— Lewis  County  v.  State  Bank  of  Peck,  —  Ida.  — .  170  Pac.  98. 

///mot.y.— Shipley  v.  Carroll,  45  111.  285;  Clarke  v.  Johnson,  54 
III.  296;  Strauss  v.  Citizen's  St.  Bank  of  Elmhurst  (1911),  164  111.  App. 
420;  Burr  v.  Beckler,  264  III.  230,  106  N.  E.  206,  L.  R.  A.  1916A,  1049. 

lowa.—Sdma  Sav.    Bank   v.    Harlan    (1914),  167   Iowa   673,  149   N. 

W.  882;    Roy  v.  Duff    (1915).    152    N.  W.   606;  Rule   v.   Carey  (1916). 

159  N.   W.   699;  Waukee    Sav.    Bank   v.   Jones,  179   Iowa   261,  159   N. 
W.   691. 

Kansas.— Wood  v.  Bank  of  Whitewater  (1914),  91  Kans.  522;  Bar- 
tholomew V.  Fell,  92  Kans.  64,  139  Pac.  1016;  Goutermont  v.  Bland,  99 
Kan.  431,  162  Pac.  270;  Commercial  Nat.  Bank  v.  Hutchinson  Box 
Co.,  98  Kan.  350,  158  Pac.  44;  Stevens  v.  Inch,  98  Kan.  306.  158  Pac.  43. 

Kentucky.— Key  v.   Usher    (1907),  30   Ky.   L.   R.   667,  99  S.  W.   324. 

Massachusetts.— Mass.  Nat.  Bank  v.  Snow  (1905\  187  Mass.  159.  72 
N.  E.  959;  Hill  v.  Hall.  191  Mass.  253,  77  N.  E.  831;  StoufTer  v.  Curtis 
(1908),  198  Mass.  560,  85  N.  E.  180;  Buzzell  v.  Tobin  (1909),  201  Mass. 
1,  86  N.  E.  923;  Liberty  Trust  Co.  v.  Tilton,  217  Mass.  462,  464,  105  N.  E. 
605,  L.  R.  A.  1915B.  144;  National  Investment  Co.  v.  Corey.  222  Mass. 
453,  111  N.  E.  357. 

Michigan. — Gen.  Conf.  Assn.  etc.  v.  Mich.  Sanitarium  (1911).  166 
Mich.  504;  Sheffer  v.  Fleischer,  158  Mich.  270,  122  N.  W.  543;  City  of 
Adrian  v.  Whitney  Central   Nat.   Bank,   180  Mich.   171,   146  N.  W.  654, 

Minnesota.— Bchrens  v.  Kruse  (1916),  132  Minn.  69,  155  N.  W.   1065. 

Mississippi— Homes  Bros,  v,  McCall   (1916),  74  So.  786. 


412  NEGOTIABLE   INSTRUMENTS.  §    16 

Missouri— Scmmcs  &  Co.  v.  Barnett  (1916),  190  S.  W.  394;  Chand- 
ler V.  Hedrick,  187  Mo.  App.  664,  173  S.  W.  93. 

New  Jersey. — Borough  of  Montvale  v.  People's  Bank  (1907),  74  N. 
J.  Law  464,  67  Atl.  67;  Linbarger  v.  Board  of  Education  of  West  N.  Y. 
(1912),  83  N.  J.  L.  446,  85  Atl.  235. 

New  York.— Greeser  v.  Sugarman  (1902),  76  N.  Y.  Supp.  922,  37 
Misc.  Rep.  799;  Poess  v.  Twelfth  Ward  Bank  (1904),  43  Misc.  45, 
86  N.  Y.  Supp.  857;  Moak  v.  Stevens  (1904),  45  Misc.  Rep.  147,  91  N. 
Y.  Supp.  903;  Colburn  v.  Arbccan  (1907),  54  Misc.  623,  104  N.  Y. 
Supp.  926;  Madden  v.  Gaston  (1910),  137  A.  D.  294,  121  N.  Y.  Supp. 
951;  Linick  v.  Nutting  (1910),  125  N.  Y.  Supp.  93;  Pfister  v.  Heins 
(1910),  136  A.  D.  457;  Stoughton  v.  Chu  Fong  (1911),  130  N.  Y. 
Supp.  228;  Niblock  v.  Sprague  (1911),  200  N.  Y.  Supp.  390;  Smith  v. 
Dotterweich  (1911),  200  N.  Y.  299,  93  N.  E.  985,  33  L.  R.  A.  (N.  S.) 
829;  In  re  Marine  (1912),  140  N.  Y.  Supp.  230;  Yonker's  Nat.  Bank  v. 
Michell  (1913),  141  N.  Y.  Supp.  128;  Senft  v.  Schaeffer  (1913),  142  N. 
Y.  Supp.  380,  81  Misc.  152;  Flood  v.  Steinmetz  (1915),  153  N.  Y. 
Supp.  192;  Holzman,  Cohen  &  Co.  v.  Teague  (1915),  156  N.  Y.  Supp. 
290;  Schaeffer  v.  Marsh  (1915),  90  Misc.  Rep.  307,  153  N.  Y.  Supp. 
96;  Weinhandler  v.  Loewenthal,  159  N.  Y.  Supp.  695;  Empire  Trust  Co. 
V.  Manhattan  Co.  (1916),  162  N.  Y.  Supp.  629;  Bloom  v.  Horwitz,  97 
Misc.  Rep.  622,  162  N.  Y.  Supp.  230;  Holtzman,  Cohen  &  Co.  v. 
Teague  (1916),  158  N.  Y.  Supp.  211;  Empire  Trust  Co.  v.  President 
&  Directors  Man  Co.  (1917),  162  N.  Y.  Supp.  629;  Dalrymple  v. 
Schwartz  (1917),  164  N.  Y.  Supp.  496;  Rubel  v.  Honig,  178  App.  Div. 
53  (1917),  164  N.  Y.  Supp.  219;  Grannis  v.  Stevens,  216  N.  Y.  583,  111 
N.  E.  263;  Niblock  v.  Sprague,  200  N.  Y.  390,  93  N.  E.  1105. 

North  Dakota.— Vkts  v.  Silver,  15  N.  Dak.  51,  106  N.  W.  35;  First 
State  Bank  of  Eckman  v.  Kelly  (1915),  30  N.  Dak.  84,  152  N.  W.  125; 
Stockton  V.  Turner  (1915),  152  N.  W.  275;  Marlatt  v.  Coulture  (1919), 
169  N.  W.  582 ;  First  Nat.  Bank  v.  Miller,  179  N.  W.  997. 

North  Carolina.— Cherokee  Co.  v.  Meroney,  173  N.  C.  653,  92  S.  E. 
616;  Farrington  v.  McNeil,  174  N.  C.  420,  93  S.  E.  957. 

Oklahoma.— Gamble  v.  Riley  (1913*),  39  Okla.  363,  135  Pac.  390; 
Critser  v.  Steeley  (Okla.),  162  Pac.  795;  Bailey  v.  Lankford  (Okla),  154 
Pac.  672. 

Oregon.— Gress  v.  Wessinger  (1918),  172  Pac.  495;  Louis  County 
v.  Bank  of  Peck   (1918),  170  Pac.  98. 

Pennsylvania.— First  Nat.  Bank  v.  McBride  (1911),  230  Pac.  261; 
Lincoln  Nat.  Bank  of  Pittsburg  v.  Miller  (1917),  100  Atl.  269,  255 
Pa.  467;  Homewood  Peoples'  Bank  v.  Heckert,  207  Pa.  231,  56  Atl.  431. 

Rhode  Island.— Lee  v.  Benjamin    (R.  L),  102  Atl.  713. 

South  Carolina. — Commercial  Security  Co.  v.  Donnald  Drug  Co. 
(1918),  96  S.  E.  529. 

South  Dakota.— Piper  v.  Hagen  (1914),  146  N.  W.  692;  Larson  v. 
Sequin    (1914),   149  N.   W.   174. 

f//a/j.— Martineau  v.  Hanson,  47  Utah.  549,  155  Pac.  432;  Smith  v. 
Brown  (1917),  165  Pac.  468:  Bank  y,  Pahvent  Valley  Land  Co.  (Utah), 
165  Pac.  462. 


1 


§    17  FORM  AND  INTERPRETATION.  413 

Washington.— Vo^i  v.  Tamm,  91  Wash.  504,  158  Pac.  91 ;  Angus  v. 
Downs  (1915),  147  Pac.  630.  85  Wash.  75,  L.  R.  A.  1915E,  351;  Morris- 
Miller  Co.  V.  Von  Pressentin,  63  Wash.  74,  114  Pac.  912;  Seattle 
National  Bank  v.  Becker,  74  Wash.  431,  133  Pac.  613;  Gwin  v.  Ford, 
85  Wash  571,  148  Pac.  891. 

Wisconsin.— Schuhz  v.  Kosbab  (1905),  125  Wis.  157;  Hodge  v. 
Smith  (1907),  130  Wis.  326,  110  N.  W.  192;  Paulson  v.  Boyd  (1908), 
137  Wis.  241,  118  N.  W.  841;  U.  S.  Investment  Co.  v.  Epley  (1916), 
164  Wis.  438,  160  N.  W.  175;  Harder  v.  Reinhardt,  162  Wis.  558,  156 
N.   W.  959. 

United  States. — Continental  Engine  Co.,  In  re,  234  Fed.  Rep.  58, 
148  C.  C.  A.  74;  Nalitzky  v.  Williams,  237  Fed.  Rep.  802,  151  C.  C  A. 
44;  United  States  v.  Chase  Nat.  Bank.  (1917),  241  Fed.  535;  Storey  v. 
Storey,  131  C.  C.  A.  269,  214  Fed.  973;  Town  of  Newburn  v.  National 
Bank,  234  Fed.  209,  148  C.  C.  A.  111. 


§  17.  Construction  where  instrument  is  ambiguous.  Where 
the  language  of  the  instrument  is  ambiguous,  or  there  are  omis- 
sions therein,  the  following  rules  of  construction  apply : 

1.  Where  the  sum  payable  is  expressed  in  words  and  also  in 
figures  and  there  is  a  discrepancy  between  the  two,  the  sum  de- 
noted by  the  words  is  the  sum  payable;  but  if  the  words  are 
ambiguous  or  uncertain,  reference  may  be  had  to  the  figures  to 
fix  the  amount. 

2.  Where  the  instrument  provides  for  the  payment  of  in- 
terest, without  specifying  the  date  from  which  interest  is  to  run, 
the  interest  runs  from  the  date  of  the  instrument,  and  if  the  in- 
strument is  undated,  from  the  issue  thereof ; 

3.  Where  the  instrument  is  not  dated,  it  will  be  considered 
to  be  dated  as  of  the  time  it  Vv^as  issued ; 

4.  Where  there  is  a  conflict  between  the  written  and  printed 
provisions  of  the  instrument,  the  written  provisions  prevail; 

5.  Where  the  instrument  is  so  ambiguous  that  there  is  doubt 
whether  it  is  a  bill  or  note,  the  holder  may  treat  it  as  either  at 
his  election ; 

6.  Where  a  signature  is  so  placed  upon  the  instrument  that 
it  is  not  clear  in  what  capacity  the  person  making  the  same  in- 
tended to  sign,  he  is  to  be  deemed  an  indorser ; 

7.  Where  an  instrument  containing  the  words  "I  promise 
to  pay"  is  signed  by  two  or  more  persons,  they  are  deemed  to 
be  jointly  and  severally  liable  thereon.*'  *■ 

See  text,  §  299. 

Cross  sections :  64,  63. 


414  NEGOTIABLE    INSTRUMENTS,  §    17 

In  North  Carolina  subsection  2  is  omitted  and  transferred  to  an- 
other section  of  the  law. 

The  Wisconsin  act  (No.  1675-17)  adds  another  subdivision,  viz.; 
"8.  Where  several  writings  are  executed  at  or  about  the  same  time, 
as  parts  of  the  same  transactions,  intended  to  accomplish  the  same 
object,  they  may  be  construed  as  one  and  the  same  instrument  as  to 
all  parties  having  notice   thereof." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

Purpose  for  which  signature  placed  on  note.  Pineland  Realty  Co.  v. 
Clements,  —  La.  —   88  So.  818. 

Joint  and  several  note  holder  may  proceed  against  one  in  equity  and 
the  other  at  law.     Lewenstein  v.  Forman,  223  Mass.  325,  111  N.  E.  962. 

If  doubt  whether  instrument  is  a  bill  or  note,  holder  may  treat  it 
as  either.     Didato  v.  Coniglio,  50  Misc.  Rep.  280,  100  N.  Y.  Supp.  466. 

Negotiable  if  blank  left  for  rate  of  interest.  Franklin  Nat.  Bank 
v.  Roberts  Bros.,  168  N.  C.  473,  84  S.  E.  706. 

One  signing  instrument  and  not  otherwise  showing  is  an  indorser. 
Krumm  v.  El  Reno  State  Bank,  —  Okla.  — ,  201  Pac.  364. 

Parol  evidence  not  admissible  to  show  that  one  intended  to  sign 
as  an  indorser  where  he  signs  in  place  of  maker.  Lumbermen's  Nat. 
Bank  of  Portland  v.  Campbell,  61  Ore.  123,  121  Pac.  427. 

Although  not  signing  as  an  indorser  held  to  be  an  indorser  by  in- 
tendment.    Moore  v.  Carey,   138  Tenn.  332,  197  S.  W.  1093. 

Parol  evidence  admissible  to  show  corporation  signed  as  surety. 
Spencer  v.   Alki   Point   Transportation    Co.,   53   Wash.   17,   101    Pac.   509. 

Where  signature  does  not  indicate  capacity  person  intended  to  sign, 
it  is  as  indorser.  Bank  of  California  v.  Starrett,  —  Wash.  — ,  188 
Pac.  410. 

One  signing  in  place  of  maker's  name  is   not  an  indorser.  Ger- 

mania  Nat.  Bank  v.  Mariner,  129  Wis.  544,  109  N.  W.  574. 

Where  ambiguity  as  to  written  and  typewritten  the  writing  pre- 
vails and  note  is  not  uncertain.  Acme  Coal  Co.  v.  Northrup  Nat.  Bank, 
23  Wyo.  66,  146  Pac.  593,  L.  R.  A.  191 5D,  1084. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Alabama.— '^tW  v.  Birmingham  (1913),  9  Ala.  App.  212,  62  So.  971; 
Potter  .  Tucker  (1914),  66  So.  922;  Turner  v.  Turner  (1915),  69  So.  503; 
Long  V.  Givin  (1919),  80  So.  440. 

Colorado. ~V>\\try  v.  Brohm  (1905),  20  Colo.  App.  389,  79  Pac.  180; 
Milnen  Bank  &  Trust  Co.  v.  Whipple  (1916),  156  Pac.  1098. 

Connecixcut.—?xQZ\ox  v.  Banby,  90  Conn.  251,  96  Atl.  935. 

7//mo«.— Illinois  v.  Lewinger  (1911),  252  111.  332,  96  N.  E.  837,  Ann. 
Cas.  1912D,  239;  Burr  v.  Beckler   (1914),  106  N.   E.  206,  264  111.  230. 

/ozm.— Porter  v.  Moles   (1911),  151  Iowa  279,  131  N.  W.  23. 

Kentucky. — Mechanics  &  Farmer's  Sav.  Bank  v.  Katterjohn  (1910), 
137  Ky.  427,  125  S.  W.  1071. 


§    18  FORM   AND  INTERPRETATION.  415 

Louisiana.— J.  I.  Case  Threshing  Machine  Co.  v.  Bridger  (1913), 
133  La.  754,  63  So.  319;  Pineland  Realty  Co.  v.  Clements,  —  La.  — ,  88 
So.  818. 

Massachusetts.— Lcwenstcin  v.  Forinan  (1916),  223  Mass.  325,  111 
N.   E.   962. 

Minnesota.—Spieving  v.  Spiering   (1917),  164  N.  W.  583. 
Missotiri.— Bank  of  Houston  v.  Day   (1909),  122  S.  W.  756,   145  Mo. 
App.  410. 

Nebraska.— Hornstein  v.  Clifuno   (1910),  86  Neb.  103. 

New  Mexico.— mil  v.   Hart    (1917),    167   Pac.   710. 

New  York.— Didato  v.  Coniglio  (1906),  100  N.  Y.  Supp.  466,  50 
Misc.  280;  Tanner's  Nat.  Bank  v.  Lacs  (1909),  136  A.  D.  92,  120  N. 
Y.   Supp.  669;  Van  Vlict  v.  Kanter    (1910),  124  N.  Y.  Supp.  63. 

North  Caro/ma.— Franklin  Nat.  Bank  v.  Roberts  Bros.,  168  N.  C. 
473,  84  S.  E.  706. 

O/iio— Dollar  Sav.  Bank  v.  Barberton  Pottery  Co.  (1907),  17  Ohio 
Dec.  539. 

Oklahoma.— Critsar  v.  Steley  (1917),  162  Pac.  795;  Krumm  v.  El 
Reno  State  Bank,  —  Okla.  — ,  201  Pac.  364. 

Or^^ron.— Lumberman's  Nat.  Bank  of  Portland  v.  Campbell  (1912), 
61  Oreg.  123,  121  Pac.  427;  Anderson  v.  Stayon  State  Bank  (1916), 
82  Ore.  357,   159   Pac.   1033. 

Rhode  Island.— De^hey  v.  Choquet   (1907),  28  R.  L  338. 

Tennessee.— Moore  v.  Carey    (1917),  138  Tenn.  332,   197  S.  W.   1093. 

Washington.—Spencer  v.  Alki  Point  Transp.  Co.  (1909),  53  Wash. 
77,  101  Pac.  509;  Pease  v.  Syler  (1914),  138  Pac.  310;  Churchill  v. 
Miller  (1916),  90  Wash.  694,  156  Pac.  851;  Smith  v.  Doty  (1916),  157 
Pac.  881;   Bank  of  California  v.   Starrett,   188  Pac.  410. 

Wisconsin.— Germania.  Nat.  Bank  v.  Mariner  (1906),  129  Wis.  544, 
109  N.  W.  574. 

Wyoming.— Acme  Coal  Co.  v.  Northrup  Nat.  Bank  of  Ida  (1915), 
23  Wyo.  66,  146  Pac.  593,  L.  R.  A.  1915D,  1084. 

§  18.  Liability  of  person  signing  in  trade  or  assumed  name. 
No  person  is  liable  on  the  instrument  whose  signature  does  not 
appear  thereon  except  as  herein  otherwise  expressly  provided. 

But  one  who  signs  in  a  trade  or  assumed  name  will  be  liable 
to  the  same  extent  as  if  he  had  signed  in  his  own  name.^'  ^' 

See  text,  §  44. 

Cross  sections :   42,  49. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  23, 
(1),    (2). 


416  NEGOTIABLE    INSTRUMENTS.  '  §    19 

Wyoming  omits  the  word   "expressly"  in  the   first   sentence." 

*  Digest  of  some  of  the  decisions  in  ivhich  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Condition  in  note  payable  on  demand  did  not  affect  its  negotiability. 
Goodfellow  V.  Farnham,  —  Mass.  — ,  128  N.  E.  776. 

Liability  of  person  who  does  not  sign  note.  Young  v.  Bray,  54  Mont. 
415. 

Only  partner  who  signed  held  to  be  liable.  Logan  v.  Parson,  79 
Ore.  381,  155  Pac.  365. 

When  a  note  is  signed  in  the  firm  name  by  "A,  member  of  the 
firm  authorized  to  sign  the  firm  name,"  all  partners  are  liable.  Frazier 
V.  Cottrell,  82  Ore.  614.  162  Pac.  834. 

Not  pertinent  to  an  oral  guaranty  by  the  pavee.  Swenson  v.  Stolz, 
36  Wash.  318,  78  Pac.  999. 

*"  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Kansas. — New  York  L.  Ins  Co.  v.  Martindale  (1907),  75  Kans.  142, 
88   Pac.  559,   121   Am.   St.  362. 

Massachusetts. — Goodfellow  v.  Farnham,  128  N.  E.  776. 

Missouri. — Mineral  Belt  Bank  v.  Elking  Lead  &  Zinc  Co.  (1913), 
158   S.   W.   1066. 

Montana.— Kohrs  v.  Smith  (1912),  45  Mont.  467,  124  Pac.  275; 
Young  V.  Bray  (1918),  170  Pac.  104;  First  Nat.  Bank  v.  Cottonwood  Land 
Co.,  51  Mont.  544,  154  Pac.  582. 

Oregon. — Logan  v.  Parson,  79  Ore.  381,  155  Pac.  365;  Gardner  v. 
Wiley  (1905).  46  Oreg.  96,  79  Pac.  341;  Frazier  v.  Cottrell,  82  Ore. 
614,  162  Pac.  834. 

Washington.—St2it\.\t  Shoe  Co.  v.  Packard  (1906),  43  Wash.  527, 
86  Pac.  845,  117  Am.  St.  1064;  Swenson  v.  Stoltz,  36  Wash.  318,  78 
Pac.  999. 

Wisconsin.— YrzWmg  v.  Sicher   (1919),  169  N.  W.  607. 

United  States.— In  re  Robson  (1914),  218  Fed.  452  (C.  C.  A.,  2d 
Ct.) 


§19.     Signature  by  agent;   authority;  how  shown.     The 

signature  of  any  party  may  be  made  by  a  duly  authorized  agent. 
No  particular  form  of  appointment  is  necessary  for  this  pur- 
pose; and  the  authority  of  the  agent  may  be  established  as  in 
other  cases  of  agency.*'  *' 

See  text.  §§  44,  ZZ. 

The  Kentucky  act  reads :  "The  signature  of  any  party  may  be  made 
by  an  agent  duly  authorized  in  writing." 


§    20  FORM   AND  INTERPRETATION.  417 

Construing  corresponding  provision  of  English  Bills  of  Exchange 
Act:     Sec.  91. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is 
construed  arranged  alphabetically  by  states: 

In  Kentucky  the  authority  to  execute  a  negotiable  instrument  must 
be  in  writing,  but  not  to  execute  a  non-negotiable  instrument.  Finley 
V.   Smith,   165  Ky.  445,  177  S.  W.  262,  L.  R.  A.  191 5F,  111. 

Necessary  to  show  authority  of  the  agent  to  indorse.  Scotland 
County  Nat.  Bank  v.  Hohn.  146  Mo.  App.  699,  125  S.  W.  539. 

Matter  of  sufficient  proof  of  authority  is  left  to  the  common  law. 
Grant  Co.  State  Bank  v.  N.  W.  Land  Co.,  28  N.  D.  479,  150  N.  W.  736. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

/owa.— Watts   V.   Savings   Bank    (1917),   165   N.   W.   897. 

Kansas.— ^t^  York  L.  Ins  Co.  v.  Martindalc  (1907),  75  Kans.  142, 
88  Pac.   559,   121  Am.   St.  362. 

Kentucky.— Ym\ty  v.  Smith,  165  Ky.  445,  177  S.  W.  262,  L.  R.  A. 
191SF,  W. 

Massachusetts.—Stone  v.  Sergeant   (1915),   107  N.  E.   1014. 

Missouri.— Houston  v.  Day  (1909),  145  Mo.  App.  410;  Scotland  Co. 
Nat.  Bank  v.  Hohn  (1910),  146  Mo.  App.  699,  125  S.  W.  539;  Gage  v. 
Bank  of  Holcomb   (1917),  196  S.  W.  1077. 

Nebraska.— First  Nat.  Bank  of  Shenandoah  v.  Kelgord  (1912),  91 
Neb.  178.  135  N.  W.  548. 

New  For^fe.— Burstein  v.  People's  Tr.  Co.  (1911),  143  A.  D.  165; 
Burstein  v.  Sullivan  (1909),  134  A.  D.  623;  Hubbard  v.  Syemite  Trap 
Rock  Co.  (1917),  165  N.  Y.  Supp.  486;  Standard  Steam  Spec  Co.  v. 
Corn  Exch.  Bank  (1917),  116  N.  E.  386,  220  N.  Y.  478. 

North  Dakota.— Grant  Co.  State  Bank  v.  N.  W.  Land  Co.,  28  N. 
D.  479,   150  N.   W.  736. 

Washington. — Nat.  Bank  of  Commerce  of  Seattle  v.  Puget  Sound 
Biscuit  Co.  (1910),  6  Wash.  192,  112  Pac.  265;  Citizens  Nat.  Bank  v. 
Ariss  (1912),  68  Wash.  448;  Hanson  v.  Northern  Bank  &  Trust  Co. 
(1917),  167  Pac.  97. 

United  States. — Nat.  Bank  of  Commerce  in  St.  Louis  v.  Sancho  Pag. 
Co.  (1911),  110  C.  C.  A.  112,  186  Fed.  257. 


§  20.  Liability  of  person  signing  as  agent,  etc.  Where 
the  instrument  contains  or  a  person  adds  to  his  signature  words 
indicating  that  he  signs  for  or  on  behalf  of  a  principal,  or  in 
a  representative  capacity,  he  is  not  liable  on  the  instrument  if 
he  was  duly  authorized;  but  the  mere  addition  of  words  describ- 


418  NEGOTIABLE   INSTRUMENTS.  §    20 

ing  him  as  an  agent,  or  as  filling  a  representative  character, 
without  disclosing  his  principal,  does  not  exempt  him  from  perr 
sonal  liability.*'  *" 

See  text.   §§   33,   125. 

Cross  sections:     17-6,  63.  64. 

The  Virginia  act  (§  20)  inserts  after  "capacity,"  "without  disclosing 
his  principal." 

Construing  corresponding  provisions  of  English  Bills  of  Exchange 
Act:     Sec.  26   (1),   (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Parties  held  individually  liable  contrary  to  general  rule.  Briel  v. 
Exchange  National  Bank,  172  Ala.  475,  55  So.  808. 

Evidence  admitted  to  show  relation.  Peabody  School  Furnlturfe 
Co.  V.  Whitman,  6  Ala.   App.   182,  60  So.  470. 

Held  liable  as  individuals.  Briel  v.  Exchange  Nat.  Bank,  180  Ala. 
576,  61   So.  277. 

Parol  evidence  admissible.  Planters  Chemical,  etc.,  Co.  v.  Stearns, 
189  Ala.  503,  66  So.  699. 

Note  with  seal  of  company  and  signed  by  ofificers  is  note  of  the 
company.  New  England  Electric  Co.  v.  Shook,  27  Colo.  App.  30,  145 
Pac.    1002. 

N^me  of  company  printed  on  note  and  signed  "A.  Pres."  held  note 
of   company.     Second    Bank  v.   Midland   Co.,    155   Ind.  581. 

When  signature;  to  note  is  as  agent  or  individual.  Flick  v.  Jordan, 
—  Ind.  — ,   129  N.  E.  42. 

Note  held  individual  obligation  and  not  of  corporation.  Day  v. 
Ramsdell,  90  Iowa  731,  52  N.  W.  208. 

Personal  note  of  maker,  as  no  principal  named.  Schumaker  v.  Dolan, 
154  Iowa  207,  134  N.  W.  624. 

Oral  evidence  not  admissible  to  show  note  that  of  corporation. 
McCandless  v.  Belle  Plaine  Co.,  78  Iowa  161,  42  N.  W.  635,  4  L.  R.  A. 
396. 

Personal  and  not  corporate  liability.  Exchange  Bank  v.  Schultz, 
167  Iowa  136,   149  N.  W.  99. 

Evidence  admissible  to  show  note  that  of  company.  Western  Gro- 
cer Co.  V.  Lackman,   75  Kan.  34,  88  Pac.  527. 

By  sections  20  and  58  construed  together  parol  evidence  admissible 
G.   C.   Riordan   &  Co.  v.  Thornsbury,   178  Ky.   324,  198  S.  W.  920. 

Agent  of  undisclosed  principal  personally  liable.  Dayries  v.  Lindsly, 
128  La.  259,  54  So.  791. 

Proof  required  In  show  liabilitv.  Belmont  Dairy  Co.  v.  Thresher, 
124  Md.  320,  92  Atl.  766. 

Intention  of  parties  to  be  carried  out  if  possible.  Carpenter  v. 
Farnsworth,   106   Mass  561. 

Note  held  that  of  corporation.  Miller  v.  Roach,  150  Mass.  140, 
22  N.  E.  634,  6  L.  R.  A.  71. 

Estate  not  liable  where  name  does  not  appear  on  note.  Tuttle  v. 
First  Nat.  Bank  of  Greenfield,  187  Mass.  533,  73  N.  E.  560.  105  Am. 
St.  Rep.  420. 


§    20  FORM   AND  INTERPRETATION.  419 

Trustee  individually  liable  if  he  had  no  authority  to  sign  for  the 
estate.     Dunham  v.  Blood,  207  Mass.  512,  93  N.  E.  804. 

Under  section  20  agent  not  liable  if  he  describes  himself  as  agent  of 
a  disclosed  principal.     Jump  v.  Sparling,  218  Mass.  324,  105  N.  E.  878. 

When  evidence  admissible  in  support  of  answer  of  signature  in  rep- 
resentative capacity.     Adams  v.  Swig,  —  Mass.  — ,  125  N.  E.  857. 

Officer  held  liable  as  an  individual.  Rudolph  Wurlitzer  Co.  v. 
Rossman,  196  Mo.  App.  78,  190  S.  W.  636. 

Note  ambiguous  and  parol  evidence  admissible  to  show  whether  it 
was  signed  as  an  individual.  Myers  v.  Chesley,  190  Mo.  App.  371,  177 
S.  W.  326. 

Note  signed  "A  Co.,  B,  Prest.,"  held  note  of  the  corporation.  Reeve 
V.  First  Bank,  54  N.  J.  L.  208,  23  Atl.  853,  16  L.  R.  A.  143. 

Section  20  does  not  change  the  law  in  New  Jersey,  Phelps  v.  Weber, 
£4  N.  J.  L.  630,  87  Atl.  468. 

Note  signed  by  agent  and  corporation  liable.  Crandall  v.  Robbins, 
83  App.  Div.  618,  82  N.  Y.  Supp.  317. 

Depends  on  knowledge  of  payee  whether  trustee  is  bound  indi- 
vidually or  otherwise.  Kerby  v.  Reugamer,  107  App.  Div.  491,  95  N.  Y. 
Supp.   408. 

As  note  was  ambiguous  evidence  was  admitted  to  show  it  was  that 
of  the  company.  Dunbar  Co.  v.  Martin,  53  Misc.  Rep.  312,  102  N.  Y. 
Sup.  91. 

Committee  and  officers  not  personally  liable.  Chelsea  Exch.  Bank  v. 
First  United  Presbyterian  Church,  89  Misc.  Rep.  616,  152  N.  Y.  Supp. 
201. 

Trustee  bound  unless  name  of  principal  appears  on  note.  Megowan 
V.  Peterson.  173  N.  Y.  1,  65  N.  E.  738. 

Agent  of  disclosed  principal.       Somers  v.  Hanson,   78  Ore.  429,   153 
Pac.  43. 

Parol  evidence  held  admissible  and  not  contrary  to  section  20.  Birm- 
ingham Iron  Foundry  v.  Regnery,  33  Pa.   Super  Ct.  54. 

Name  of  company  at  top  of  note  and  signed  by  secretary  and  treas- 
urer is  note  of  company.  Chatham  Nat.  Bank  v.  Gardner,  31  Pa. 
Super  Ct.   135. 

Agent  of  undisclosed  principal  held  to  be  personally  liable.  Grange 
Trust  Co.  V.  Brown,  49  Pa.  Super.  Ct.  274. 

Note  signed  by  trustees  of  church  and  church  liable.  Wilson  v. 
Clinton   Chapel,   etc.,   Church    (Tenn.),    198    S.   W.  244. 

Name  of  company  printed  on  a  receipt  form  and  signed  by  secretary 
and  treasurer  is  a  note  of  the  two  individuals.  Daniel  v.  Glidden,  38 
Wash.  556,  80  Pac.  811. 

Note  of  a  firm  when  name  appears.  Citizens  Nat.  Bank  v.  Ariss, 
68  Wash.  448,  123  Pac.  593. 

Signature  as  in  a  representative  capacity  does  not  bind  the  maker 
as  an  individual.  First  Natl.  Bank  of  Salem  v.  Jacobs,  —  W.  Va.  — , 
102  S.  E.  491. 

Joint  note  of  corporation  and  individuals.  Nunnemaker  v.  Poss,  116 
Wis.  444. 

Ambiguous  and  parol  evidence  admissible.  Germania  Nat.  Bank 
v.   Mariner,   129  Wis.   544,    109  N.   W.   574. 

Section  20  is  not  opposed  to  parol  evidence.  American  Trust  Co. 
V.  Canevin,  184  Fed.  Rep.  657,  107  C  C.  A.  543. 


420  NEGOTIAIJLR    INSTRUMENTS.  §    20 

'^"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

.•I/fl6aw(7.— Bricl  v.  Ex.  Nat.  Bank  (1911),  172  Ala.  475,  55  So.  808; 
Briel  v.  Exchange  Nat.  Bank,  180  Ala.  576,  61  So.  277 ;  Peabody  School 
Furniture  Co.  v.  Whitman  (1912),  6  Ala.  App.  182,  60  So.  470;  Plant- 
ers Chemical,  etc.,  Co.  v.  Stearns,  189  Ala.  503,  66  So.  699. 

Arkansas.— Corning  v.  Nimnich   (1916),  183  S.  W.  756. 

Colorado.— New  England  Electric  Co.  v.  Shook  (1915),  27  Colo 
App.  30,  145  Pac.  1002. 

Connecticut.— Fascucci  v.   Rossi    (1917),   101   Atl.  22. 
India7ia.—Bayh    v.    Hanna    (1919),    122    N.    E.    7;    Second    Bank    v 
Midland  Co.,  155  Ind.  581 ;  FHck  v.  Jordan,   129  N.  E.  42. 

/owa.— Schumacher  v.  Dolan  (1912),  54  Iowa  207,  134  N.  W.  624; 
Exch.  Bank  of  Marcus  v.  Schults  (1914),  167  Iowa  136,  149  N.  W.  99; 
McCandless  v.  Bell  Plaine  Co.,  78  Iowa  161,  42  N.  W.  635,  4  L.  R.  A 
396;  Day  v.   Ramsdell,  90  Iowa  731,  52  N.  W.  208. 

Kansas. — Weston  Grocer  Co.  v.  Lackman  (1907),  75  Kans.  34,  88 
Pac.  527;  Bateman  v.  Sarback  (1914),  89  Kans.  488. 

Kentucky.— G.  C.  Riordan  &  Co.  v.  Thornsbury,  178  Ky.  324,  198  S 
W.  920. 

Louisiana.— Bzyxies  v.  Lindsly   (1911),  128  La.  259,  54  So.  791. 

Maryland.— F\rs\.  Denton"  Nat.  Bank  v.  Kenney  (1911),  116  Md  124 
81  Atl.  227,  Ann.  Cas.  1913B,  1337;  Belmont  Dairy  Co.  v.  Thrasher  (1914) 
92  Atl.  766,  124  Md.  320. 

Massachusetts.— Czrptnier  v.  Farnsworth,  106  Mass.  561 ;  Miller  v. 
Roach,  150  Mass.  140,  22  N.  E.  634,  6  L.  R.  A.  71;  Tuttle  v.  First  Nat. 
Bank  of  Greenfield  (1905),  187  Mass.  533,  JZ  N.  E.  560,  105  Am.  St. 
Rep.  420;  Dunham  v.  Blood  (1911),  207  Mass.  512,  93  N.  E.  804;  Jump 
V.  Sparling,  218  Mass.  324,  105  N.  E.  878;  Adams  v.  Swig,  —  Mass.  — 
125  N.  E.  857. 

Missouri.— Mytvs  v.  Chesley,  190  Mo.  App.  371,  177  S.  W.  326;  Wur- 
litzer  Co.  v.  Rossman,  196  Mo.  App.  78,   190  S.  W.  636. 

Nebraska.— Vxrs^.    Nat.    Bank   of   Shenandoah  v.   Kelgord    (1912),   91 

Neb.  178,  135  N.  W.  548. 

New  Jersey.— Reeve  v.  First  Bank,  54  N.  J.  L.  208,  23  Atl.  853,  16 
L.  R.  A.  143;  Phelps  v.  Weber  (1913),  84  N.  J.  L.  630.  87  Atl.  468. 

New  York.— Crandall  v.  Robbins,  83  App.  Div.  618,  82  N.  Y.  Supp. 
317;  C.  N.  Bank  v.  Clark,  139  N.  Y.  307;  First  Nat.  Bank  v.  Wallis, 
150  N.  Y.  455;  Chelsea  Exch.  Bank  v.  First  United  Presbyterian 
Church,  89  Misc.  Rep.  616,  152  N.  Y.  Supp.  201;  Megowan  v.  Peter- 
son (1902),  173  N.  Y.  1.  65  N.  E.  738;  Kerby  v.  Ruegamer  (1905), 
107  A.  D.  491,  95  N.  Y.  Supp.  408;  Dunbar  Co.  v.  Martin  (1907),  53 
Misc  Rep.  312.  102  N.  Y.  Supp.  91;  Burstein  v.  Sullivan  (1909),  134 
A.  D.  623;  The  Van  Norton  Tr.  Co.  v.  L.  Rosenberg,  Inc.  (1909),  62  Misc. 
285,  114  N.  Y.  Supp.  1025;  Burstein  v.  People's  Tr.  Co.  (1911),  143  A. 
D.  165;  International  Trust  Co.  v.  Caroline  (1912),  137  N.  Y.  Supp. 
932. 


§§    21-22  FORM  AND  INTERPRETATION.  421 

Oregon.— Page  v.  Ford  (1913).  65  Ore.  450,  131  Pac.  1013,  Ann  Cas. 
1915A,  1048;  Somers  v.  Hanson,  78  Ore.  429,  153  Pac.  43. 

Pennsylvania. — Chatham  Nat.  Bank  v.  Gardner  (1906),  31  Pa.  Super. 
Ct.  135;  Birmingham  Iron  Foundry  v.  Regncry  (1907),  33  Pa.  Super.  Ct. 
54;  Grange  Trust  Co.  v.  Brown   (1911),  49  Pa.  Super.  Ct.  274. 

Tennessee. — Wilson  v.  Clinton  Chapel,  Zion  Church  (1917),  198  S. 
W.  244. 

IVashington.— Daniel  v.  Glidden  (1905),  38  Wash.  556,  80  Pac.  Ill; 
Citizens  Nat.  Bank  v.  Ariss  (1912),  68  Wash.  448,  123  Pac.  593. 

IVest  Virginia.— DoWar  Sav.  &  Gr.  Co.  v.  Crawford  (1911),  70  S. 
E.  1089;  First  Nat.  Bank  of  Salem  v.  Jacobs,  102  S.  E.  491. 

Wisconsin. — Nunnemaker  v.  Poss,  116  Wis.  444,  92  N.  W.  375;  Ger- 
niania  Nat.  Bk.  v.  Mariner  (1906),  129  Wis.  544,  109  N.  W.  574. 

United  States.— Am.  Trust  Co.  v.  Canevin  (1911),  184  Fed.  Rep.  657, 
107  C.  C.  A.  543;  Nat.  Bank  of  Commerce  in  St.  Louis  v.  Sancho  Pack- 
ing Co.   (1911),  110  C.  C.  A.  112,  186  Fed.  257. 


§21.  Signature  by  procuration;  effect  of.  A  signature 
by  "procuration"  operates  as  notice  that  the  agent  has  but  a 
Hmited  authority  to  sign,  and  the  principal  is  bound  only  in  case 
the  agent  in  so  signing  acted  within  the  actual  limits  of  his 
authority.*'  *' 

See  text,  §§  44,  33. 

Construing  corresponding  provision  of  English  Bills  of  Exchange 
Act:    Sec.  25. 

In  the  Illinois  Act  the  word  "only"  in  the  above  section  is  omitted. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

Check  drawn  in  excess  of  authority  and  company  not  bound.  Reid 
V.  Rigby  &  Co.   (1894),  2  Q.  B.  40. 

*•  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Arkansas. — Schaap  v.  State  Nat.  Bank  of  Texarkana  (1919),  208 
S.  W.  309. 

New  Jersey.— Ti..  M.  Owen  &  Co.  v.  Storms  &  Co.  (1909),  78  N.  J. 
L.  154,  72  Atl.  441. 


§  22.     Effect    of    indorsement    by    infant    or    corporation. 

The  indorsement  or  assignment  of  the  instrument  by  a  corpora- 
tion or  by  an  infant  passes  the  property  therein,  notwithstand- 


422  NEGOTIABLE   INSTRUMENTS.  §    23 

ing  that  from  want  of  capacity  the  corporation  or  infant  may 
incur  no  liability  thereon.**  *" 

See  text,  §§  24,  123. 

Cross  sections :  29,  66. 

1 — This   section   construed: 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  22  (2); 
22    (2). 

In  North  Carolina  this  section  in  a  modified  form  was  transferred 
to  another  article  or  chapter.  The  words  "or  married  woman"  are  in- 
serted after  the  word  "infant"  in  both   places. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

When  indorsed  by  a  corporation.  Willard  v.  Crook,  21  App.  D.  C. 
237. 

Infant  may  disaffirm.  Murray  v.  Thompson,  136  Tenn.  118,  188  S. 
W.  578,  L.  R.  A.  1917B,  1172. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

^/a&awa.— Citizens   Nat.   Bank  v.   Bucheit    (1916),  71    So.  82. 

Minnesota.— Thorpe  v.  Cooley   (1918),   165  N.  W.  265. 

New  ForJfe.— Oppenheim  v.  Reigal  Cigar  Co.   (1904),  90  N.  Y.  355. 

North  Carolina.— Vance  v.  Bryan  (1912),  158  N.  Car.  502,  74  S.  E. 
459. 

Tennessee. — Murray  v.  Thompson,  136  Tenn.  118,  188  S.  W.  578, 
L.  R.  A.  1917B,  1172. 

United  5"/a /«:.?.— Willard  v.  Crook   (1903),  21  App.  D.  C.  237. 

§  23.  Forged  signature ;  effect  of.  Where  a  signature  is 
forged  or  made  without  authority  of  the  person  whose  signature 
it  purports  to  be,  it  is  wholly  inoperative,  and  no  right  to  retain 
the  instrument,  or  to  give  a  discharge  therefor,  or  to  enforce 
payment  thereof  against  any  party  thereto,  can  be  acquired 
through  or  under  such  signature  unless  the  party  against  whom 
it  is  sought  to  enforce  such  right  is  precluded  from  setting  up 
the  forgery  or  want  of  authority.*'  *" 

See  text,  §§  138,  44,  SO. 

The  Illinois  act  omits  the  words  "of  the  person  whose  signature  it 
purports  to  be." 


§    23  FORM  AND  INTERPRETATION.  423 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Misrepresentation  as  to  identity.  Boatsman  v  Stockmen's  Nat. 
Bank.  56  Colo.  495,  138  Pac.  764,  50  L.  R.  A.  (N.  S.)  107. 

An  indorsement  with  intent  to  defraud  by  one  who  has  the  same 
name  is  a   forgery.     Beattie  v.   Nat.   Bank.   174   111.   571,   51   N.   E.  602. 

Forgery  by  bookkeeper.  Hamlins  Wizard  Oil  Co.  v.  U.  S.  Express 
Co.,  265  111.  156,  106  N.  E.  623. 

Form  of  using  rubber  stamp  may  put  one  on  inquiry  as  to  forgery. 
Swift  &  Co.  V.  Miller,  62  Ind.  App.  312,  113  N.  E.  447. 

Note  not  necessarily  avoided  as  to  those  whose  signatures  are  genu- 
ine.    Beem  v.  Farrell,  135  Iowa  670,  113  N.  W.  509. 

Plaintiff  being  ignorant  of  prior  forgeries  may  recover.  Grand 
Lodge  V.   State  Bank,  92  Kan.  876.   142  Pac.  974,  L.  R.  A.   1915B,  815. 

If  instruments  in  suit  are  negotiable  notes  it  is  not  material  that  value 
be  expressly  stated.     Goodfellow  v.  Farnham,  —  Mass.  — ,  128  N.  E.  776. 

Forged  endorsement  of  payee's  name.  Miners'  &  Merchants'  Bank 
V.  St.  Louis  Smelting,  etc.,  Co.   (Mo.  App.),  178  S.  W.  211. 

The  burden  of  proof  is  on  the  one  who  claims  that  the  signature  is 
genuine.  German-American  Bank  v.  Barnes  (Mo.  App.),  185  S.  W. 
1194. 

One  estopped  to  set  up  forgery  by  representing  that  everything  was 
all  right  when  shown  the  note.  Gluckman  v.  Darling,  85  N.  J.  L.  457, 
89  Atl.   1016. 

Effect  of  fraudulent  indorsement,  by  one  not  payee,  upon  holder  in 
due  course.  Montgomery  Garage  Co.  v.  Manufacturer's  Liability  Ins. 
Co.,  —  N.  J.  — ,  109  Atl.  296. 

Payment  to  person  intended  although  a  mistaken  identity.  First 
Nat.  Bank  v.  American  Exch.  Nat.  Bank,  49  App.  Div.  39,  63  N.  Y. 
Supp.  58. 

False  representation  as  to  ownership.  Sherman  v.  Corn  Exchange 
Bank,  91  App.  Div.  84,  86  N.  Y.  Supp.  341. 

Indorsement  held  not  to  be  a  forgery.  Salem  v.  Bank,  110  App. 
Div.  636.  97  N.  Y.  Supp.  361. 

Designation  of  payee  by  his  official  title.  Mercantile  Nat.  Bank  v. 
Silverman,  148  App.  Div.  1.  132  N.  Y.  Supp.  1017,  affirmed.  210  N. 
Y.  567. 

Forged  check  deposited  in  bank.  Burden  on  plaintiff  to  prove  bank 
negligent  in  failing  to  collect.  Stein  v.  Empire  Trust  Co.,  148  App. 
Div.  850,  133  N.  Y.  Supp.  517. 

Check  indorsed  without  authority.  Anglo-South  American  Bank  v. 
Nat.  City  Bank,  161  App.  Div.  268,  146  N.  Y.  Supp.  457,  affirmed  217 
N.  Y.  726. 

Guaranty  of  indorsements  when  some  of  them  forged.  Catskill  Nat. 
Bank  v.  Lasher,  84  Misc.  Rep.  523,  147  N.  Y.  Supp.  641. 

Liability  of  bank  repaying  on  discovery  of  forgery.  Geering  v. 
Metropolitan  Bank,  169  App.  Div.  927,  156  N.  Y.  Supp.  582. 

Effect  of  forged  indorsement  signature.  United  Cigar  Stores  Co.  v. 
American  Raw  Silk  Co.,  171  N.  Y.  Supp.  480. 

Intent  of  bank  when  another  person  intended.  First  Nat.  Bank 
v.  American  Exch.  Nat.  Bank,  170  N.  Y.  88,  62  N.  E.  1089. 

Case  of  a  traveler's  check.  Sullivan  v.  Knauth,  220  N.  Y.  216,  115 
N.  E.  4^,  L.  R,  A.  1917F,  554. 


424  NEGOTIABL?:   INSTRUMENTS.  §    2Z 

Authority  to  stamp  with  rubber  stamp  departed  from  may  amount 
to  forgery.  Standard  Steam  Specialty  Co.  v.  Corn  Exchange  Bank, 
220  N.  Y.  478,  116  N.   E.  386. 

Forged  indorsement  does  not  pass  title.  Slattery  &  Co.  v.  National 
City  Bank  of  N.   Y.,   186  N.  Y.   S.  679. 

The  word  "precluded"  held  to  be  synonymous  with  "estoppel."  01s- 
gard  V.  Lernke,  32  N.  D.  551,  156  N.  W.  102. 

Negligence  of  bank  holding  paper  under  forged  indorsement.  Na- 
tional Bank  of  Commerce  v.  First  Bank  of  Coweta  (Okla.),  152  Pac. 
596. 

Secretly  placing  carbon  paper  to  obtain  signature  is  a  forgery. 
Maurmair  v.   Nat.   Bank  of   Commerce    (Okla.),   158  Pac.  349. 

Plaintiff  may  be  liable  if  he  makes  a  mistake  in  addressing  letter 
containing  commercial  paper.  Weisberger  Co.  v.  Barberton  Savings 
Bank,  84  Ohio  St.  21,  95  N.  E.  379,  34  L.  R.  A.   (N.  S.)   1101. 

Imposter.  McHenry  v.  National  Bank,  85  Ohio  St.  203,  97  N.  E. 
395,  38  L.  R.  A.   (N.  S.)   lllln. 

One  obtaining  money  by  representing  himself  to  be  another.  Tol- 
man  v.  American   Exch.  Bank,  22  R.   I.  462,  48  Atl.  480. 

Defendant  precluded  from  setting  up  forgery  by  her  son-in-law  for 
Vifhom  she  had  executed  a  mortgage.  Denison-Gholson  Dry  Goods  Co. 
V    Hill,  135  Tenn.  60,  185  S.  W.  723. 

Wrong  person  but  of  the  same  name.  Heavey  v.  Commercial  Nat. 
Bank,  27  Utah  222,  75  Pac.  727. 

Case  of   a  firm   note.     Pettyjohn   v.   Nat.    Exchange   Bank,    101   Va. 
Ill,  43  S.  E.  203. 
Forgery  on  draft.  Heim  v.   Neubert,  48  Wash.   587,  94  Pac.   104. 

Payment  of  forged  notes  to  save  from  disgrace.  Murphy  v.  Estate 
of  Skinner,   160  Wis.  554,   152  N.  W.  172. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

District  of  Columbia. — Central  Nat.  Bank  v.  Nat.  Met.  Bank,  31  A. 
C.  (D.  C.)  391,  (C.  C.  Dist.  Col.)  35  Wash.  Law  Rep.  621. 

Colorado. — Boatsman  v.  Stockmen's  Nat.  Bank,  56  Colo.  495,  138 
Pac.  764,  50  L.  R.  A.  (N.  S.)  107. 

///inow.— Beatti  v.  Nat.  Bank,  174  111.  571,  51  N.  E.  602,  Hamlin's 
Wizard  Oil  Co.  v.  U.  S.  Express  (1914),  184  111.  App.  493,  265  111.  156, 
106  N.   E.  623. 

Indiana.— Svfih  &  Co.  v.  Miller,  62  Ind.  App.  312,  113  N,  E.  447. 

Iowa.— Beem  v.  Farrell  (1907),  135  Iowa  670,  113  N.  W.  509;  State 
ex  rel.  Carroll  v.  Corning  St.  Sav.  Bk.  (1908),  139  Iowa  338,  115  N. 
W.  937;  Reints  &  DeBuhr  v.  Uhlenhop  (1910),  149  Iowa  284;  Olsgard 
y.  Lernke  (1916),  156  N.  W.  102. 

Kansas.— Grand  Lodge  v.  State  Bank,  92  Kan.  876,  142  Pac.  974, 
L.  R.  A.  1915B,  815. 

Kentucky.— Nat  City  Bank  v.  Third  Nat.  Bank  (1910),  177  Fed. 
136;  Jett  v.  Standafer   (1911),  143  Ky.  787,  137  S.  W.  513. 

Massachusetts.— Mnrphy  v.  Met.  Nat.  Bank  (1906),  191  Mass.  159; 
Elum  Jro  Sons  v.  Whipple    (1907),   194  Mass.  253,    120  Am.   St.   Rep. 


§    23  FORM  AND  INTERPRETATION.  425 

553,  80  N.  E.  501,  13  L.  R.  A.  (N.  S.)  211;  Boles  v.  Harding  (1909), 
201  Mass.  103,  87  N.  E.  481 ;  Jordan  Marsh  Co.  v.  Nat.  Shawmut  Bank 
(1909),  201  Mass.  397,  87  N.  E.  740;  Franklin  Sav.  Bank  v.  Fram- 
ingham  (1912).  212  Mass.  92;  Newburyport  v.  First  Nat.  Bank  of  Bos- 
ton (1914),  216  Mass.  304;  Munroe  v.  Stanley  (1915),  107  N.  E.  1012; 
Goodfellow  V.  Farnham  (1920),  —  Mass.  — ,  128  N.  E.  776. 

Micron.— Lonier  v.  State  Sav.  Bank  (1907),  149  Mich.  483,  112  N. 
W.  1119. 

Missouri.— Rossi  v.  Nat.  Bank,  71  Mo.  App.  150;  Mo.  Lincoln  Tr. 
Co.  V.  Third  Nat.  Bank  of  St.  Louis  (1910),  154  Mo.  App.  89;  Miners 
&  Merch.  Bank  v.  St.  Louis  Smelting  &  Refining  Co.  (1915)  (Mo.  App.), 
178  S.  W.  211;  German-Am.  Bank  v.  Barnes  (1916)  (Mo.  App.),  185  S. 
W.  1194. 

Mon/a«a.— First  Nat.  Bank  of  Miles  City  v.  Barrett  (1916),  57  Pac. 
951. 

Nebraska— UoHman  v.  Am.  Ex.  Nat.  Bank  (1901),  96  N.  W.  112. 

New  Jersey.— G\uckman  v.  Darling  (1914),  85  N.  J.  L.  457,  89  Atl. 
1016;  Montgomery  Garage  Co.  v.  Man,  Liability  Ins.  Co.,  109  Atl.  296. 

New  York. — First  Nat.  Bank  of  Fort  Worth  v.  Am.  Ex.  Nat.  Bank 
(1900),  49  A.  D.  39,  63  N.  Y.  Supp.  58;  Critten  v.  Chemical  Nat.  Bank 
(1902),  171  N.  Y.  219;  Casey  v.  Pilkington  (1903),  83  App. 
Div.  91,  82  N.  Y.  Supp.  529;  Sherman  v.  The  Corn- Ex.  Bank  (1904), 
91  A.  D.  84;  86  N.  Y.  Supp.  341;  Kearny  v.  Met.  Trust  Co.  (1905), 
110  A.  D.  236;  Salen  v.  Bank  of  the  St.  of  N.  Y.  (1906),  110  A.  D. 
636,  97  N.  Y.  Supp.  361;  Oriental  Bank  v.  Gallo  (1906),  112  A.  D. 
360,  98  N.  Y.  Supp.  561;  Trust  Co.  of  Am.  v.  Hamihon  Bank  (1908), 
127  A.  D.  515,  112  N.  Y.  Supp.  84;  Cluett  v.  Couture,  14  A  D.  830, 
125  N.  Y.  Supp.  813;  Seaboard  Nat.  Bank  of  America  (1908),  193 
N.  Y.  26,  85  N.  E.  829;  The  Mercantile  Nat.  Bank  of  the  City  of  N. 
Y.  T.  Silverman  (1911),  148  A.  D.  1,  132  N.  Y.  Supp  1017,  210  N.  Y 
567;  Stein  v.  Empire  Tr.  Co.  (1912),  148  A.  D.  850,  133  N.  Y.  Supp. 
517;  Kobre  v.  Corn  Exchange  Bank  (1913),  139  N.  Y.  Supp.  890;  Hart- 
ford V.  Greenwich  Bank,  157  A.  D.  448,  142  N.  Y.  Supp.  387;  Anglo- 
South  Am.   Bank  v.   Nat.   City   Bank  of  N.  Y.    (1914),   161   A.   D.  268, 

146  N.  Y.  Supp.  457;  Catskill  Nat.  Bank  v.  Lasher,  84  Misc.  Rep.  523, 

147  N.  Y.  Supp.  641 ;  Standard  Steam  Specialty  Co.  v.  Corn  Ex.  Bank. 
(1914),  146  N.  Y.  Supp.  181;  Wolfin  v.  Security  Bank  (1915),  156 
N.  Y.  Supp.  474;  Bergstrom  v.  Ritz-Carlton  Hotel  Co.  (1916),  157  N. 
Y.  Supp.  959;  Standard  Steam  Spec.  Co.  v.  Corn  Exch.  Bank  (1917), 
116  N.  E.  386,  220  N.  Y.  478;  Monk  v.  23d  Ward  Bank  (1917).  165  N. 
Y.  Supp.  1055;  First  Nat.  Bank  v.  American  Exchange  Nat.  Bank,  170 
N.  Y.  88.  62  N.  E.  1089 ;  Geering  vfl  Metropolitan  Bank,  109  App.  D.  927, 
156  N.  Y.  Supp.  582;  Cohen  v.  L.  Rittner,  Inc.  (1918),  171  N.  Y.  Supp. 
312;  United  Cigar  Stores  Co.  v.  American  Raw  Silk  Co.,  171  N. 
Y.  Supp.  480;  Sullivan  v.  Knauth,  220  N.  Y.  216,  115  N.  E.  460,  L.  R.  A. 
1917F,  554 ;  Slattery  &  Co.  v.  National  City  Bank,  186  N.  Y.  Supp.  679 ; 
Gallo  v.  Brooklyn  Savings  Bank,  199  N.  Y.  222,  92  N.  E.  633. 

North  Dakota. — First  Nat.  Bank  of  Lisbon  v.  Bank  of  Wyndemefe 
(1906).  15  N.  Dak.  299,  108  N.  W.  546;  Stutsman  County  Bank  v. 
Jones  (1917),  162  N.  W.  402;  Olsgard  v.  Lemke,  32  N.  D.  551,  156 
N.  W.  102. 

Neiraska. — Hofifman  v.  American  Exchange  Bank,  2  Nebr.  (unoffi- 
cial) 217,  96  N.  W.  112. 


426  NEGOTIABLE    INSTRUMENTS.  §    23 

Ohio— Winters  Nat.  Bank  v.  Roberts  (1909),  20  Ohio  Dec.  690; 
The  S.  Weishberger  Co.  v.  The  Barbeton  Sav.  Bank  Co.  (1911),  84 
Ohio  St.  21.  95  N.  E.  379,  34  L.  R.  A.  (N.  S.)  1101;  McHenry  v.  The 
Old  Citizens  Nat.  Bank  (1911),  85  Ohio  St.  203,  97  N.  E.  395,  38  L. 
R.  A.   (N.  S.)   lllln. 

Oklahoma. — Maurman  v.  Nat.  Bank  of  Commerce  (Okla.),  158  Pac. 
349;  Turner  v.  Kimble  (1913),  130  Pac.  563;  National  Bank  of  Com- 
merce V.  First  National  Bank  of  Coweta  (Okla.),  152  Pac.  596. 

Oregon. — First  Nat.  Bank  of  Cottage  Grove  v.  Bank  of  Cottage 
Grove  (1911),  59  Oreg.  388,  117  Pac.  293. 

Pennsylvania. — States  v.  First  National  Bank,  17  Pa.  Super.  Ct.  256; 
Land  Title  &  Trust  Co.  v.  Northwestern  Bank,  196  Pa.  230,  46  Atl. 
420;  Tibby  Bros.  Glass  Co.  v.  Farmers  &  Mech.  Bank  of  Sharpsburg 
(1908).  200  Pa.  1;  Cunningham  v.  First  Nat.  Bank  of  Indiana  (1908), 
219  Pa.  310;  Falcomi  v.  Magee   (1911),  47  Pa.   Super.  560. 

Rhode  Island.— Tolman  v.  Am.  Nat.  Bank  (1901),  22  R.  I.  462,  48  Atl. 
480. 

T^nM^.yj?^.— Knoxville  Water  Co.  v.  E.  Tenn.  Nat.  Bank  (1910),  123 
Tenn.  364;  Figures  v.  Fly,  137  Tenn.  358,  193  S.  W.  117;  Litchfield 
Shuttle  Co.  v.  Cumberland  Valley  Nat.  Bank  (1916).  134  Tenn.  379,  183 
S.  W.  1006;  Denison-Gholson  Dry  Goods  Co.  v.  Hill,  135  Tenn.  60,  185 
S.  W.  723. 

t7/a/i.— Heavey  v.  Commercial  Nat.  Bank  (1904),  27  Utah  222,  75  Pac. 
727,  101  Am.  St.  Rep.  966;  Warren  v.  Smith  (1909).  35  Utah  455,  100 
Pac.  1069;  Simpson  v.  Denver  &  Rio  Grande  Co.  (1913),  43  Utah  105, 
134  Pac.  883,  46  L.  R.  A.  (N.  S.)  1164. 

Firgt«ta.— Pettyjohn  v.  Nat.  Ex.  Bank  (1903).  101  Va.  111.  43  S.  E. 
203. 

Washington. — Jamieson  &  McFarland  v.  Heim  (1906),  43  Wash.  153, 
86  Pac.  165;  Heim  v.  Neubert  (1908),  48  Wash.  587,  94  Pac.  104;  Good- 
fellow  V.  First  Nat.  Bank  (1913),  129  Pac.  90. 

Wisconsin.— Murphy  v.  Estate  of  Skinner,  160  Wis.  554,  152  N.  W.  172. 

United  .9fa/^.y.— National  City  Bank  v.  Third  National  Bank,  177  Fed. 
Rep.  136,  100  C.  C.  A.  556. 


ARTICLE  II. 


CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 


§  24.  Presumption  of  consideration. 

25.  What     constitutes     considera- 

tion. 

26.  What    constitutes    holder    for 

value. 


§  27.  When  lien  on  instrument  con- 
stitutes holder  for  value. 

28.  Effect   of   want   of   considera- 

tion. 

29.  Liability     of     accommodation 

party. 


Sections  24  to  29  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  Law  in  the  various  states 
and  territories  beginning  on  page  360. 


§  24.  Presumption  of  consideration.  Every  negotiable 
instrument  is  deemed  prima  facie  to  have  been  issued  for  a  valu- 
able consideration ;  and  every  person  whose  signature  appears 
thereon  to  have  become  a  party  thereto  for  value.-**  ^* 

See  text,  §  64. 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

A  renewal  note  is  without  consideration  when  the  original  note  was 
without  consideration.     Hurley  v.  Wilky,  18  Ariz.  45,  156  Pac.  83. 

Indorsement  to  indemnify  against  loss  on  account  existing  liability 
of  third  person  as  consideration.  Griswold  v.  Morrison,  —  Cal.  App.  — , 
200  Pac.  62. 

Maker  is  not  concerned  with  the  consideration  for  the  indorsement. 
Asiatic  Tunnel  Co.  v.  Stephenson  (Colo.),  165  Pac.  773. 

When  presumption  as  to  consideration  disappears.  Holley  v.  Smalley, 
—  D.  C.  —  269  F.  694. 

Delivery  of  check  as  gift  as  affecting  consideration.  Zehner  v.  Zehner's 
Estate,  —  Ind.  App.  — ,  129  N.  E.  244. 

The  presumption  in  this  section  is  overcome  by  showing  control  or 
duress.     Maginnis  v.  McChesney,  179  Iowa  563,  160  N.  W.  50. 

A  renewal  note  is  without  consideration  when  the  original  note  was 
without  consideration,  even  though  such  renewal  note  extends  the  time 
of  payment.     City  Nat.  Bank  v.  Mason  (Iowa),  165  N.  W.  103. 

Negotiable  instrument  deemed  issued  for  valuable  consideration.  Bain 
\.  Ullerich,  —  la.  —    177  N.  W.  61. 

This  section  applied  to  a  bill  of  lading.  Scheuerman  v.  Monarch 
Fruit  Co.,  122  La.  55,  48  So.  647. 

The  signing  and  indorsing  of  a  note  for  his  personal  debt  by  the 
president  of  a  corporation  in  the  name  of  the  corporation  shows  a  prima 

427 


428  NEGOTIABI-F.    INSTRUMENTS.  §    24 

facie  good  consideration.     Bear  Creek  Lumber  Co.  v.  Second  Nat.  Bank, 
120  Md.  566,  87  Atl.  1084. 

Renewal  of  a  previous  note  which  was  without  consideration  is  also 
without  consideration.  Widger  v.  Baxter,  190  Mass.  130,  76  N.  E.  509, 
3  L.  R.  A.  (N.  S.)  436n. 

Every  negotiable  instrument  is  deemed  prima  facie  to  have  been  issued 
for  a  valuable  consideration.  Jennings  v.  Law,  199  Mass.  124,  85  N.  E. 
157. 

Renewal  note  without  consideration  when  original  note  without  con- 
sideration.    Seager  v.  Drayton,  217  Mass.  571,  105  N.  E.  461. 

Presumption  is  of  valid  consideration  of  note.  Long  v.  Conn,  —  Minn. 
— ,  179  N.  W.  644. 

Valid  considertion  presumed  where  note  transferred  before  maturity. 
Despres,  Bridges  &  Noel  v.  Hough  Drug  Co.,  —  Miss.  — ,  86  So.  359. 

Consideration  as  to  one  joint  maker  good  as  to  all.  First  Nat.  Bank 
of  Scribner  v.  Colder,  89  Neb.  377,  131  N.  W.  600. 

Married  woman's  note  for  accommodation  not  validated  by  this  section 
where  statute  prohibits  her  from  becoming  surety.  People's  Nat.  Bank 
V   Schepflin,  73  N.  J.  Law  29.  62  Atl.  333. 

The  import  of  this  section  is  not  weakened  by  the  omission  of  the 
words  "for  value  received."  McLeod  v.  Hunter,  29  Misc.  Rep.  558,  61 
N.  Y.  Supp.  73. 

This  section  does  not  apply  to  non-negotiable  instruments.  Deyo  v. 
Thompson,  53  App.  Div.  9,  65  N.  Y.  Supp.  459. 

"Value  received"  an  acknowledgement  of  a  sufficient  consideration. 
Hamilton  v.  Hamilton,  127  N.  Y.  App.  Div.  871,  112  N.  Y.  Supp.  10. 

The  instrument  itself  is  prima  facie  evidence  of  consideration.  Gilpin 
V.   Savage,  112  N.  Y.  Supp.  802. 

The  Negotiable  Instruments  Law  by  repealing  a  former  statute  in 
New  York  now  makes  non-negotiable  instruments  not  to  import  a  con- 
sideration. Kinsella  v.  Lockwood,  79  Misc.  Rep.  619,  140  N.  Y.  Supp.  513. 
An  allegation  of  the  making  of  a  note  is  sufficient  without  allega- 
tions of  delivery  or  consideration.  First  Nat.  Bank  v.  Stallo,  160  App. 
Div.  702,  145  N.  Y.  Supp.  747. 

The  words  "value  received"  is  an  acknowledgment  of  the  receipt  of  a 
consideration.  Owens  v.  Blackburn,  161  N.  Y.  App.  Div.  827,  146  N.  Y. 
Supp.  966. 

Words  "value  received"  an  acknowledgment  of  consideration.  Du- 
Bosque  V.  Munroe,  168  App.  Div.  821,  154  N.  Y.  Supp.  462. 

Consideration  presumed  between  depositor  and  his  bank  and  want  of 
consideration  moving  from  the  payees  to  the  bank  held  immaterial.  Bob- 
rick  V.  Second  Nat.  Bank,  175  App.  Div.  550,  162  N.  Y.  Supp.  147. 

Allegation  of  consideration  is  not  essential  if  making  is  alleged. 
Abrahamson  v.  Steele,  176  App.  Div.  865,  163  N.  Y.  Supp.  827. 

Words  "value  received"  are  not  necessary  to  raise  presumption  of 
consideration.     Lasher  v.  Rivenburgh,  181  N.  Y.  S.  818. 

Guaranty  held  good  though  consideration  itself  not  expressed  in 
writing.     First  Nat.  Bank  v.  Hawkins,  73  Ore.  186,  144  Pac.  131. 

As  to  binding  party  under  certain  circumstances  where  no  considera- 
tion.   Bank  of  Monticello  v.  Dooly,  113  Wis.  590,  89  N.  W.  490. 

Waiver  or  discharge  of  a  claim  is  a  sufficient  consideration.  Becker 
V.  Noegel,  165  Wis.  73.  160  N.  W.  1055. 

The  burden  is  thrown  upon  the  defendant  not  only  of  introducing 
some  evidence  of  lack  of  consideration,  but  of  ultimately  establishing 
such  lack  of  consideration  by  a  preponderance  of  evidence. 


§    24  CONSIDERATION.  429 

The  above  proposition  is  supported  in  the  following  cases  which  cite 
this  section  of  the  law:  In  re  Estate  of  Chismore,  175  Iowa  495,  157  N. 
W.  139;  First  Presbyterian  Church  v.  Dennis,  178  Iowa  1352,  161  N.  W. 
183,  L.  R.  A.  1917C,  1005;  Shaffer  v.  Bond,  129  Md.  648,  99  Atl.  973; 
Joveshof  V.  Rockey,  58  Misc.  Rep.  559,  109  N.  Y.  Supp.  818;  Finer  v. 
Brittain,  165  N.  C.  401,  81  S.  E.  462 ;  State  Bank  v.  Morrison,  85  Wash. 
182,  147  Pac.  875. 

The  following  cases  are  in  accord  with  the  above  proposition,  but 
do  not  cite  this  section:  Harley  v.  Wilky,  18  Ariz.  45,  156  Pac.  83; 
George  J.  Cooke  Co.  v.  Pisano.  174  111.  App.  609;  Harney  v.  Lee,  175 
111.  App.  250;  Brokaw  v.  McElvov,  162  Iowa  288,  143  N.  W.  1087,  50 
L.  R.  A.  (N.  S.)  841;  Teutonia  Bank  &  Trust  Co.  v.  Buhler,  137  La. 
5,  68  So.  194;  Columbian  Conservatory  v.  Dickinson,  158  N.  C.  207,  7Z 
S.  E.  990. 

The  following  cases  are  contra  to  the  above  proposition  and  it  is  sub- 
mitted that  they  are  incorrect  as  to  the  burden  of  proof:  Lombard  v. 
Byrne,  194  Mass.  236,  80  N.  E.  489;  Seager  v.  Drayton,  217  Mass.  571, 
105  N.  E.  461 ;  Conners  Bros.  v.  Sullivan,  220  Mass.  600,  108  N.  E.  503 ; 
(the  above  three  cases  not  citing  this  section  nor  section  28)  ;  Bringman 
V.  VanGlahn,  71  App.  Div.  537,  75  N.  Y.  Supp.  845 ;  Hardinge  v.  U.  S. 
Zinc  Co.,  171  App.  Div.  742,  157  N.  Y.  Supp.  852;  Abrahamson  v.  Steele, 
176  App.  Div.  865,  163  N.  Y.  Supp.  827;  Spencer  &  Co.  v.  Brown,  143 
N.  Y.  Supp.  994;  (these  four  New  York  cases  cite  this  section,  but  not 
section  28);  Holbert  v.  Weber,  36  N.  D.  106,  161  N.  W.  560;  Ginn  v. 
Dolan,  81  Ohio  St.  121,  90  N.  E.  141,  135  Am.  St.  Rep.  761,  18  Ann.  Cas. 
204;  (the  last  two  cases  not  citing  this  section)  ;  Bank  of  Gorsham  v. 
Welch,  76  Ore.  272,  147  Pac.  534;  (merely  citing  section  28)  ;  First  Nat. 
Bank  v.  Paff.  240  Pa.  513.  87  Atl.  841 ;  Hudson  v.  Moon,  42  Utah  377, 
130  Pac.  774;   (the  last  two  cases  not  citing  section  28). 

*■  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— "ionts  v.  Bell  (1917),  77  So.  918;  Vogler  v.  Manson  (1917), 
76  So.  117. 

Arisom.—Hmlty  v.  Wilky,  18  Ariz.  45,  156  Pac.  83. 

Arkansas.—Sms  v.  Everett  (1914),  168  S.  W.  559;  Buckely  v.  Collins 
(1915),  177  S.  W.  920. 

Ca/iYonn'a.— Molley  v.  Pierson  (1918),  174  Pac  98;  Griswold  v.  Mor- 
rison, —  Cal.  App.  — ,  200  Pac.  62. 

Colorado. — Asiatic  Tunnel  Co.  v.  Stephenson,  —  Colo.  — ,  165  Pac.  77Z. 

Connecticut. — American  Automobile  Co.  v.  Perkins  (1910),  83  Conn. 
520,  77  Atl.  954. 

Delaware.—Stzmhy  Trust  &  Safe  Dep.  Co.  v.  Duross  (1913),  86  Atl. 
209. 

District  of  C olumhia.—RoWcy  v.  Smalley  (D.  C),  269  Fed.  694. 

Florida. — Williams  v.  Peninsular  Grocery  Co.  (1917),  75  So.  517. 

/(fa/to.— MtFarland  v.  Johnson  (1912),  22  Ida.  694,  127  Pac.  908. 


430  NEGOTIABLE   INSTRUMENTS.  §    24 

///i'«.ow.— George  J.  Cooke  Co.  v.  Pisano  (1912),  174  111.  App.  609; 
Harney  v.  Lee  (1912),  175  111.  App.  250. 

Indiana.^Deher  v.  Burke  (1914),  107  N.  E.  304;  Zehner  v.  Zehner's 
Estate,  129  N.  E.  244. 

/owa.— Zimbelman  &  Otis  v.  Finncgan  (1909),  141  Iowa  358,  118  N. 
W  312;  Brokaw  v.  McElvoy  (1913),  143  N.  W.  1087;  In  re  Estate  of 
Chismore,  175  Iowa  495,  496,  157  N.  W.  139,  140;  Perry  Sav.  Bank  v. 
Fitzgerald  (1914),  149  N.  W.  497;  Magcnnis  v.  McChesney,  179  Iowa 
563,  160  N.  W.  50;  First  Presbyterian  Church  of  Mt.  Vernon  v.  Dennis 
(1917),  161  N.  W.  183;  Higby  v.  Bahrenfuss  (1917),  163  N.  W.  247;  City 
Nat.  Bank  v.  Mason,  —  Iowa  — ,  165  N.  W.  103 ;  Bain  v.  Ullcrich,  177 
N.  W.  61. 

Kansas.— Hawkins  v.  Windhorst  (1910),  82  Kans.  522,  108  Pac.  80S. 

Louisiana. — Scheuerman  v.  Monarch  Fruit  Co.  (1909),  122  La.  55,  48 
So.  647 ;  Teutonia  Bank  &  Trust  Co.  v.  Buhler,  137  La.  5,  68  So.  194. 

Maryland.— Black  v.  First  Nat.  Bank  (1903),  96  Md.  399,  54  Atl.  88; 
Louis  Eckels  &  Sons  Ice  Mfg.  Co.  v.  Cornell  Economizer  Co.  (1912),  86 
Atl  38;  Bear  Creek  Lumber  Co.  v.  Second  Nat.  Bk.  of  Cumberland 
(1913),  120  Md.  566,  87  Atl.  1084;  Shaffer  v.  Bond  (1917),  129  Md.  648, 
99  Atl.  972. 

Massachusetts.— Widger  v.  Baxter,  190  Mass.  130,  76  N.  E.  509,  3  L. 
R.  A.  (N.  S.)  436n;  Lombard  v.  Bryne  (1907),  194  Mass.  236,  80  N.  E. 
489;  Jennings  v.  Law  (1908),  199  Mass.  124,  85  N.  E.  157;  Qemons  Elec. 
Mfg.  Co.  V.  Walton  (1910),  206  Mass.  215;  North  Anson  Lumber  Co.  v. 
Smith  (1911),  209  Mass.  333;  Young  v.  Hayes  (1912),  212  Mass.  525; 
Harvey  v.  Squire  (1914),  105  N.  E.  355;  Seager  v.  Drayton  (1914),  217 
Mass.  571,  105  N.  E.  461;  Comers  v.  Sullivan,  220  Mass.  600,  108 
N.  E.  503. 

Minnesota.— BsLXter  v.  Brandenburg  (1917),  163  N.  W.  517;  Long  v. 
Conn,  179  N.  W.  644. 

Mississippi.— Despres,  Bridges  &  Noel  v.  Hough  Drug  Co.,  86  So.  359. 

Missouri. — Rhodes  v.  Guhman  (1911),  156  Mo.  App.  344;  Nelson  v. 
Diffenderffer  (1914),  163  S.  W.  271;  Miller  v.  Chinn  (1917),  195  S.  W. 
552. 

Montana.— Vox  A  v.  Drake  (1912),  46  Mont.  314. 

Nebraska.— F\r?,\.  Nat.  Bank  of  Scribner  v.  Colder  (1911),  89  Neb. 
577,  131  N.  W.  600;  Stannard  v.  Orleans  Flour  &  Oat  Meal  Milling  Co. 
(1913),  93  Neb.  389. 

New  /^rj^y.— People's  Nat.  Bank  v.  Schepflin  (1905),  73  N.  J.  L.  29, 
62  Atl.  333 ;  McCormack  v.  Williams,  88  N.  J.  L.  170,  95  Atl.  978 ;  Marine 
Tr.  Co.  V.  St.  James  African  M.  E.  Church  (1913),  88  Atl.  1075;  Bank 
of  Roselle  v.  Dorvall   (1916),  98  Atl.  476. 

New  York. — Riverside  Bank  v.  Woodhaven  Junction  Land  Co.  (1898), 
34  A.  D.  359;  McLeod  v.  Hunter  (1899),  29  Misc.  558,  61  N.  Y.  Supp. 
73;  Deyo  v.  Thompson  (1900),  53  A.  D.  9,  65  N.  Y.  Supp.  459;  Bring- 
man  v.  Glahn  (1902),  71  A.  D.  537,  75  N.  Y.  Supp.  845;  Karsch  v.  Pottier 
&  Stymers  Mfg.  &  Imp.  Co.  (1903),  81  N.  Y.  782,  82  A.  D.  230;  Packard 


I 


§    24  CONSIDERATION.  431 

V.  Windholz  (1903).  40  Misc.  347,  affirmed  88  A.  D.  365;  Moak  v. 
Stevens  (1904),  45  Misc.  147,  91  N.  Y.  Supp.  903;  The  Royal  Bank  of 
1^.  Y.  V.  Goldschmidt  (1906),  51  Misc.  622,  101  N.  Y.  Supp.  101;  Ward 
V.  City  Tr.  Co.  of  N.  Y.  (1907),  102  N.  Y.  Supp.  50;  Cleary  v.  DeBeck 
Plate  Glass  Co.  (1907),  54  Misc.  537,  104  N.  Y.  Supp.  831;  Colborn  v. 
Arbean  (1907),  54  Misc.  623,  104  N.  Y.  Supp.  968;  Hickok  v.  Bunting. 
92  App.  Div.  167,  86  N.  Y.  Supp.  1059;  Benedict  v.  Kress,  97  A.  D.  65, 
S9  N.  Y.  Supp.  607;  Joveshofif  v.  Rockney  (1908),  109  N.  Y.  Supp.  818, 
58  Misc.  559;  Nat.  Park  Bank  v.  Saitta  (1908),  127  App.  Div.  624,  111 
N.  Y.  Supp.  927;  Hamilton  v.  Hamilton,  127  N.  Y.  App.  Div.  871,  112 
N.  Y.  Supp.  10;  Pfister  v.  Heins  (1910),  136  A.  D.  457;  Ferguson  v. 
Netter  (1910),  141  A.  D.  274;  Ryan  v.  Sullivan  (1911),  143  A.  D.  471; 
Kinsella  v.  Lockwood,  79  Misc.  Rep.  619,  140  N.  Y.  Supp.  513;  Glennan 
V.  Rochester  Tr.  &  Safe  Dep.  Co.  (1912),  136  N.  Y.  Supp.  747;  First 
Nat.  Bank  of  Pittsburg  v.  Stallo  (1914),  160  App.  Div.  702,  145  N.  Y. 
Supp.  747;  Spencer  &  Co.  v.  Brovi^n,  143  N.  Y.  Supp.  994;  Owens  v. 
Blackburn,  161  N.  Y.  App.  Div.  827,  146  N.  Y.  Supp  .966;  Gerli  v.  Doorlv 
(1915),  151  N.  Y.  Supp.  574;  Schultz  v.  Cohen  (1915),  156  N.  Y.  Supp. 
610;  Bobrick  v.  Second  Nat.  Bank,  175  App.  Div.  550,  162  N.  Y.  Supp. 
147  Abrahamson  v.  Steel  (1917),  176  App.  Div.  865.  163  N.  Y.  Supp.  827; 
Hardinge  v.  U.  S.  Zinc  Co.,  157  N.  Y.  Supp.  852,  171  A.  D.  742;  DuBosque 
V.  Munroe,  168  App.  Div.  821,  154  N.  Y.  Supp.  462;  Lasher  v.  Rivcn- 
burgh,  181   N.  Y.  Supp.  818. 

North  Carolina. — Toms  v.  Jones  (1900),  127  N.  Car.  464;  Myers  v. 
Petty  (1910),  153  N.  Car.  462;  Finer  v.  Brittain,  165  N.  C.  401,  81  S.  E. 
462;  Columbian  Conservatory  of  Music  v.  Dickenson  (1912),  758  N.  Car. 
207,  7i  S.  E.  990. 

North  Dakota.— Walters  v.  Rock  (1908),  18  N.  Dak.  45,  115  N.  W. 
511;  Holbert  v.  Weber  (1917),  36  N.  D.  106,  161  N.  W.  560. 

Ohio.— Ginn  v.  Dolen  (1909),  81  Ohio  St.  121,  90  N.  E.  141;  Pierce 
V.  Harper  (1918),  249  Fed.  867. 

Oklahoma.— Rndson  v.  Moore   (1913),  130  Pac.  774. 

Or^gron.— Fassett  v.  Boswell  (1911),  59  Oreg.  288,  117  Pac.  302;  Long 
V.  Hoedle  (1911).  60  Oreg.  377,  119  Pac.  484;  Bank  of  Gresham  v.  Welch, 
76  Ore.  272,  147  Pac.  534;  First  Nat.  Bank  of  Bangor  v.  Paff  (1913),  87 
Atl.  841  ;  Adjustment  Bureau  of  Portland  Assn.  of  Credit  Men  v.  Staats 
(1919),  175  Pac.  847;  First  Nat.  Bank  v.  Hawkins,  73  Ore.  104,  144  Pac. 
131. 

Pennsylvania.— First  Nat.  Bank  v.  Paff,  240  Pa.  513,  87  Atl.  841. 

South  Carolina. — Cannon  v.  Clarendon  Hardware  Co.  (1916),  88  S. 
E.  284. 

Utah.— Cole  Banking  Co.  v.  Sinclair  (1908),  34  Utah  454,  98  Pac.  411; 
Utah  Nat.  Bank  of  Salt  Lake  City  v.  Nelson  (1910).  38  Utah  169,  111 
Pac.  907;  Niles  v.  U.  S.  Ozocinte  Co.  (1911),  38  Utah  367,  113  Pac.  1038; 
Hudson  v.  Moon,  42  Utah  377,  130  Pac.  774. 

Virginia. — Lynchburg  Milling  Co.  v.  Nat.  Ex.  Bank  of  Lynchburg 
(1909),  109  Va.  639,  64  S.  E.  9;  Reid's  Admr.  v.  Windsor  (1911),  111 
Va.  825,  69  S.  E.  1101;  Murphy's  Hotel  Co.  v.  Herndon's  Admrs.  (1917), 
91  S.  E.  634. 


432  NEGOTIABLE   INSTRUMENTS.  §    25 

Washington.— Nichohon  v.  Neavv  (1914),  137  Pac.  492;  State  Bank  of 
Clarkson  v.  Morrison  (1915),  85  Wash.  182,  147  Pac.  875. 

M^cst  Virginia.— DoWar  Sav.  &  Gr.  Co.  v.  Crawford  (1911),  70  S.  E. 
1089. 

Wisconsin.— MonticeWo  v.  Dooley,  113  Wis.  590;  Becker  v.  Noegel, 
165  Wis.  73,  160  N.  W.  1055. 

Wyoming.— HamWion  v.  Diefenderfer  (1913),  21  Wyo.  26,  131  Pac.  37. 

United  States.— Towles  v.  Tanner  (1903),  21  App.  D.  C.  530;  Nalitsky 
V.  Williams  (1917),  237  Fed.  802. 

§  25.  Consideration ;  what  constitutes.  Value  is  any  con- 
sideration sufficient  to  support  a  simple  contract.  An  antecedent 
or  pre-existing  debt  constitutes  value  ;  and  is  deemed  such  whether 
the  instrument  is  payable  on  demand  or  at  a  future  time.^'  ^^ 

See  text,  §§  62,  63. 

In  Illinois  the  second  sentence  is  as  follows:  "An  antecedent  or  pre- 
existing claim,  whether  for  money  or  not,  constitutes  value  where  an 
instrument  is  taken  either  in  satisfaction  therefor  or  as  security  therefor, 
and  is  deemed  such  whether  the  instrument  is  payable  on  demand  or  at 
a  future  time." 

The  Wisconsin  act  (§§1675-51)  inserts  after  "debt,"  "discharged, 
extinguished  or  extended,"  and  adds  at  the  end  of  the  section :  "But 
the  indorsement  or  delivery  of  negotiable  paper  as  collateral  security  for 
a  pre-existing  debt,  without  other  consideration,  and  not  in  pursuance  of 
an  agreement  at  the  time  of  delivery,  by  the  maker,  does  not  constitute 
value." 

The  purpose  of  this  section,  that  is,  section  25,  was  to  settle  the  con- 
flict of  decisions  in  regard  to  the  value  essential  to  constitute  a  transferee 
a  purchaser  for  value  or  holder  in  due  course. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

The  burden  of  showing  insolvency  of  the  husband's  estate  held  to  be 
on  the  maker,  the  wife.     Vaughan  v.  Bass,  10  Ala.  App.  388,  64  So.  543. 

This  part  of  the  section  applies  also  to  collateral  security.  Vogler  v. 
Manson  (Ala.),  76  So.  117. 

As  to  promise  to  deposit  additional  security  if  collateral  should  cease 
to  be  satisfactory.    Zadek  v.  Forchheimer  (Ala.  App.),_  77  So.  941. 

Pre-existing  debt  as  valuable  consideration.  Davies  v.  Simpson,  — 
Ala.  — ,  79  So.  48. 

Marital  rii?hts  in  lands  held  in  trust  is  sufficient  consideration.  Domax 
V.  Colorado  Nat.  Bank.  46  Colo.  229,  104  Pac.  85. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Crys- 
tal River  Lumber  Co.  v.  Consol.  Naval  Stores  Co.,  63  Fla.  119,  58  So.  129. 

Giving  of  a  renewal  note  waives  right  of  defense  as  to  consideration 
when  maker  has  full  knowledge.  Roess  Lumber  Co.  v.  State  Exch. 
Bank,  68  Fla.  324,  67  So.  188,  Ann.  Cas.  1916B,  327. 


§   25  CONSIDERATION.  433 

Credit  and  withdrawal  on  the  books  of  a  bank  as  consideration. 
Bland  V.  Fidelity  Trust  Co.  (Fla.),  71  So.  630,  L.  R.  A.  1916F,  209. 

Cancellation  of  old  note  makes  a  good  consideration.  Fidelity  State 
Bank  v.  Miller,  29  Idaho  W,  162  Pac.  244. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Many 
Blanc  &  Co.  v.  Krueger,  153  111.  App.  327. 

Note  taken  as  collateral  security  is  for  consideration.  Elgin  Nat. 
Bank  V.  Goecke,  —  111.  —   129  N.  E.  149. 

Credit  of  certificate  of  deposit  as  a  consideration.  Commercial  Nat. 
Bank  v.  Citizens'  State  Bank,  132  Iowa  706,  109  N.  W.  198. 

Substitution  and  exchange  of  collaterals  held  to  be  for  value.  Voss 
V.  Chamberlain,  139  Iowa  569,  117  N.  W.  269. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Iowa 
Nat.  Bank  v.  Carter,  144  Iowa  715,  123  N.  W.  237. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  State 
Bank  v.  Bilsted,  162  Iowa  433,  136  N.  W.  204. 

Renewal  note  working  an  extension  of  time  for  payment  of  an  ante- 
cedent debt  is  for  sufficient  consideration.  Mohn  v.  Mohn  (Iowa),  164 
N.  W.  341. 

Note  given  in  payment  of  the  debt  of  a  third  party  has  good  con- 
sideration.   Bridges  v.  Vann,  88  Kan.  98,  127  Pac.  604. 

Money  can  not  be  recovered  from  a  transferer  which  was  received  in 
payment  of  a  pre-existing  debt  although  originally  obtained  by  fraud. 
Benjamin  v.  Welda  State  Bank,  98  Kan.  361,  158  Pac.  65,  L.  R.  A. 
1917A,  704. 

Holder  in  due  course  may  waive  irregularities  and  recover  on  original 
terms  of  note.  Redfield  State  Bank  of  Redfield,  Kans.,  v.  Myrick,  — 
Kan.  — ,  194  P.  648. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value. 
Wilkins  V.  Usher,  123  Ky.  696,  97  S.  W.  37. 

Payee  gave  value  for  a  note  who  had  on  receiving  said  note  paid  a 
debt  of  the  maker  due  to  a  third  person.  Hermann's  Exr.  v.  Gregory, 
131  Ky.  819,  lis  S.  W.  809. 

Payment  or  part  payment  of  a  pre-existing  debt  is  value.  Lovelace  v. 
Lovelace,  136  Ky.  452,  124  S.  W.  400. 

Bank  taking  note  as  collateral  security.  Campbell  v.  Fourth  Nat. 
Bank,  137  Ky.  555,  126  S.  W.  114. 

Notes  given  by  lawyer  for  mistake  of  opinion  supported  by  considera- 
tion. Hyman  v.  Succession  of  Parkerson,  140  La.  249,  72  So.  953,  L.  R. 
A.  1917B,  694. 

Exchange  of  notes  is  supported  by  a  good  consideration.  Mehlinger 
V.  Harriman.  185  Mass.  245. 

Wife's  note  given  as  security  to  a  third  person  in  payment  of  her 
husband's  debt  is  supported  by  a  sufficient  consideration.  Widger  v. 
Baxter,  190  Mass.  130,  76  N.  E.  509,  3  L.  R.  A.   (N.  S.)  436. 

Accommodation  note  is  for  value  under  the  second  part  of  this  section. 
Jennings  v.  Law,  199  Mass.  124,  85  N.  E.  157. 

Taking  a  demand  note  as  collateral  for  the  pre-existing  debt  of  a 
husband  to  a  bank  made  the  bank  a  holder  for  value  of  the  note  as 
against  the  wife,  who  was  an  accommodation  maker.  Lowell  v.  Bickford, 
201  Mass.  543,  88  N.  E.  1. 

Accommodation  check  given  to  make  good  the  overdraft  of  another  is 
supported  by  sufficient  consideration.  Neal  v.  Wilson,  213  Mass.  336,  100 
N.  E.  544. 


434  NEGOTIABLE    INSTRUMENTS.  §    25 

Order  as  to  stopping  payment  and  pertain  entries  on  bank  book  as  a 
consideration.  Usher  v.  A.  S.  Tucker  Co.,  217  Mass.  441,  105  N.  E.  360, 
L.  R.  A.  1916F.  826. 

Note  given  for  the  note  of  a  third  person  when  supported  by  sufficient 
consideration.    Seager  v.  Drayton,  217  Mass.  571,  105  N.  E.  461. 

Payment  of  pre-existing  debt  is  value.  Smith  v.  Johnson,  224  Mass. 
50,  112  N.  E.  644. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Gra- 
ham v.  Smith,  155  Mich.  65,  118  N.  W.  726. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Bank 
of  Montreal  v.  Beecher,  133  Minn.  81,  157  N.  W.  1070. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Snell- 
ing  State  Bank  v.  Clasen,  132  Minn.  404,  157  N.  W.  643. 

A  check  for  a  debt  outlawed  by  a  statute  is  supported  by  a  considera- 
tion.    Baxter  v.  Brandenburg  (Minn.),  163  N.  W.  516. 

Transfer  of  a  collateral  note  a  good  consideration.  First  Nat.  Bank 
v.  John  McGrath  &  Sons,  111  Miss.  872,  72  So.  701. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Nat. 
Bank  of  Commerce  v.  Morris,  156  Mo.  App.  43,  135  S.  W.  1008. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  State 
Bank  v.  Cape  Girardeau  Co.,  172  Mo.  App.  662,  155  S.  W.  1111. 

Extension  of  time  for  the  payment  of  a  debt  of  a  third  person  is  good 
consideration.     Citizens  Bank  v.  Oaks,  184  Mo.  App.  598,  170  S.  W.  679. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Cen- 
tral Bank  v.  Lyda  (Mo.  App.),  191  S.  W.  245. 

Note  transferred  in  payment  of  pre-existing  debt.  Swift  &  Co.  v.  Mc- 
Farland,  —  Mo.  App.  — ,  231  S.  W.  65. 

The  execution  of  a  renewal  note  for  a  pre-existing  debt  is  supported 
by  a  sufficient  consideration  although  containing  some  new  and  different 
stipulations.  Parchen  v.  Chessman,  49  Mont.  326,  142  Pac.  631,  Ann.  Cas. 
'916A,  681. 

Good  consideration  given  by  cancellation  of  old  note.  Travis  v. 
Unkart,  89  N.  J.  L.  571,  99  Atl.  320,  Ann.  Cas.  1917C,  1031. 

Accommodation  note  is  for  value  under  the  second  part  of  this  sec- 
tion. Citizens  Nat.  Bank  v.  Lilienthal,  40  App.  Div.  609.  57  N.  Y.  Supp. 
567. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Brew- 
ster v.  Shrader,  26  Misc.  Rep.  480,  57  N.  Y.  Supp.  606. 

Surrender  of  non-negotiable  note  makes  a  good  consideration.  Petrie 
v.  Miller,  57  App.  Div.  17,  67  N.  Y.  Supp.  1042,  affirmed,  173  N.  Y.  596. 

An  indorsement  by  a  third  person  before  a  note  is  delivered  supported 
by  the  consideration  of  a  sale  of  goods  to  the  maker.  Mohlman  v. 
McKane,  60  App.  Div.  546,  69  N.  Y.  Supp.  1046. 

Promise  not  to  sue  is  good  consideration.  Milius  v.  KauflFmann,  104 
App.  Div.  442,  93  N.  Y.  Supp.  669. 

Payment  of  pre-existing  debt  is  value.  Bigelow  Co.  v.  Automatic 
Gas  Co.,  56  Misc.  Rep.  389,  107  N.  Y.  Supp.  894. 

Payment  of  pre-existing  debt  is  value.  Wallabout  Bank  v.  Peyton, 
123  App.  Div.  727,  108  N.  Y.  Supp.  42. 

Plaintiff  gave  no  value  where  defendant,  by  mistake,  gave  a  check 
to  the  payee,  who  indorsed  it  to  the  plaintiff  as  a  loan.  Rosenthal  v. 
Parsont,  ilO  N.  Y.  Supp.  223. 

Payment  of  pre-existing  debt  is  value.  Mindlin  v.  Appelbaum,  62  Misc. 
Rep.  300,  114  N.  Y.  Supp.  908. 

Payment  of  pre-existing  debt  is  value.  Albert  v.  Hoffman,  64  Misc. 
Rep.  87,  117  N.  Y.  Supp.  1043. 


§    25  CONSIDERATION.  435 

Accommodation  note  for  antecedent  or  pre-existing  note  is  a  transfer 
for  value.     Maurice  v.  Fowler,  78  Misc.  Rep.  357,  138  N.  Y.  Supp.  425. 

Accommodation  note  for  antecedent  or  pre-existing  debt  is  a  transfer 
for  value.     Martin  L.  Hall  Co.  v.  Todd,  139  N.  Y.  Supp.  111. 

Payment  of  pre-existing  debt  is  value.  Broderick,  etc.,  Co.  v.  Mc- 
Grath,  81  Misc.  Rep.  222,  142  N.  Y.  Supp.  49. 

Notes  given  by  the  directors  of  a  bank  in  order  to  maintain  the  value 
cf  their  stock  is  supported  by  sufficient  consideration.  Union  Bank  v. 
Sullivan,  214  N.  Y.  332,  108  N.  E.  558. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value. 
Smathers  v.  Toxoway  Hotel  Co.,  162  N.  C.  346. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value. 
Brooks  V.  Sullivan,  129  N.  C.  190,  39  S.  E.  822. 

Exchange  of  notes  supported  bv  a  good  consideration.  Franklin  Nat. 
Bank  v.  Roberts  Bros.,  168  N.  C  473,  84  S.  E.  706. 

As  to  extension  of  time  by  deposit  of  collateral.  American  Nat. 
Bank  V.  Dew  (N.  C),  94  S.  E.  708. 

Transfer  of  a  collateral  note  for  another  note  is  a  good  consideration. 
Second  Nat.  Bank  v.  Warner,  19  N.  D.  485,  126  N.  W.  100. 

Execution  of  note  to  a  bank  under  threat  of  prosecution.  State  v. 
Hills,  94  Ohio  St.  171,  113  N.  E.  1045,  L.  R.  A.  1917B,  684. 

Payment  of  pre-existing  debt  is  value.  Ogle  v.  Armstrong  (Okla.), 
153  Pac.  1139. 

Promissory  note  taken  as  collateral  security  is  for  consideration. 
Southwest  Nat.  Bank  of  Commerce  of  Kansas  City  v.  Todd,  —  Okl.  — , 
192  P.  1096. 

When  checks  are  exchanged  each  check  is  a  consideration  for  the 
other;  cash  is  an  independent  obligation  and  not  conditional  on  the  pay- 
ment of  the  other.  Matlock  v.  Scheuerman,  51  Ore.  49,  93  Pac.  823,  17 
L.  R.  A.  (N.  S.)  747. 

Holds  contra  lo  the  general  rule  that  a  transfer  as  security  for  an 
antecedent  or  pre-existing  debt  is  not  a  transfer  for  value.  Raken  v. 
Henry,  16  Pa.  Dist.  Reports  207. 

Accommodate  note  is  for  value  under  this  part  of  this  section.  Stein 
v.  Jacobs,  20  Pa.  Dist.  Ct.  48. 

Payee  of  a  note  given  in  payment  of  a  bill  has  given  value.  Wilbor 
V.  Hawkins,  38  R.  I.  119,  94  Atl.  856. 

Rule  held  not  to  apply  where  debt  was  worthless  and  the  obligation 
of  a  third  party.  Citizens  Trust  Co.  v.  McDougald,  132  Tenn.  323,  178 
S.  W.  432,  L.  R.  A.  1917C,  840. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value. 
Figuers  v.  Fly,  137  Tenn.  358,  193  S.  W.  117. 

Note  taken  as  security  for  pre-existing  debt  is  for  consideration. 
Crane  &  Co.  v.  Hall,  —  Tenn.  — ,  213  S.  W.  414. 

Note  given  to  prevent  run  on  a  bank  supported  by  good  consideration. 
Utah  Nat.  Bank  v.  Nelson,  38  Utah  169,  111  Pac.  907. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Felt 
V.  Bush,  41  Utah  462,  126  Pac.  688. 

Note  signed  to  enable  cashier  of  bank  to  borrow  money  to  apply  on 
shortage  is  supported  by  sufficient  consideration.  Helper  State  Bank  v. 
Jackson  (Utah),  160  Pac.  287. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Payne 
v.  Zell,  98  Va.  294,  36  S.  E.  379. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Tru.s- 
tees  of  American  Bank  v,  McComb,  105  Va.  473,  54  S.  E.  14. 


436  NEGOTIABLE   INSTRUMENTS.  §    25 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Ger- 
man-American Bank  v.  Wright,  85  Wash.  460,  148  Pac.  769. 

Taking  of  note  on  deht  is  for  value.  Guaranty  Security  Co.  v.  Coad, 
—  Wash.  — ,  195  Pac.  22. 

Bank  has  given  value  although  failed  to  deduct  amount  of  note  from 
defendant's  balance  on  deposit.  Northfield  Nat.  Bank  v.  Arndt,  132 
Wis.  383,  112  N.  W.  451. 

Promise  to  pay  money  is  a  valuable  consideration  although  money  was 
never  advanced.    Marling  v.  FitzGerald,  138  Wis.  93,  120  N.  W.  388. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Sam- 
son V.  Ward,  147  Wis.  48,  132  N.  W.  629. 

Wisconsin  cases.  See  the  following  two  decisions  in  Wisconsin 
under  the  form  of  the  statute  as  adopted  in  Wisconsin.  Badger  Ma- 
chinery Co,  V.  Columbia  Co.  Electric  Light  &  Power  Co.  (Wis.),  163 
N.  W.  188. 

Holmes  v.  Wisconsin  Grain,  etc.,  Co.  (Wis.),  164  N.  W.  1007. 

Transfer  for  value  must  be  shown.  Jones  v.  Brandt,  —  Wis.  — ,  181 
N.  W.  813. 

Accommodation  note  transferred  as  collateral  security  for  an  ante- 
cedent debt  is  for  value.    In  re  Hopper-Morgan  Co.,  154  Fed.  Rep.  249. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Scherer 
v.  Everest,  168  Fed.  822,  94  C.  C.  A.  346. 

Accommodation  note  is  for  value  under  this  part  of  this  section. 
Trust  Co.  V.  Markee,  179  Fed.  Rep.  764. 

Collateral  security  for  antecedent  or  pre-existing  debt  is  value.  Mel- 
ton V.  Pensacola  Co.,  190  Fed.  126,  111  C.  C.  A.  166. 

Nicholas  v.  Waukesha  Canning  Co.,  195  Fed.  Rep.  807. 

Deposits  of  checks  and  drafts  upon  other  banks  by  one  in  his  bank 
as  consideration.     Security  Nat.  Bank  y.  Old  Nat.  Bank,  241  Fed.  Rep.  1. 

England.  Deposit  of  check  and  drawn  upon.  National  Bank  v.  Silke 
(1891),  1  Q.  B.  435,  439. 

England.  Deposit  of  check.  Royal  Bank  v.  Tottenham  (1894),  2  Q. 
B.  715. 

England.  Deposit  of  check  and  overdrawn.  Gaden  v.  Newfoundland 
Sav.  Bank  (1899),  A.  C.  281. 

England.  Deposit  of  check.  Capital  &  Counties  Bank  v.  Gordon 
(1903),  A.  C.  240. 

England.     Renewal  note.     Edwards  v.  Chancellor,  52  J.  P.  454. 

**The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
tically  by  states,  where  this  section  has  been  construed : 

Alabama.— YdiWQihzn  v.  Bass.  10  Ala.  App.  388,  64  So.  543;  Boatwright 
V.  Scheuer,  Wise  &  Co.  (1914),  66  So.  819;  Anders  v.  Sandlin  (1915), 
67  So.  684;  Orr  v.  Stewart  (1915),  69  So.  649;  Sherril  v.  Merchants, 
etc.,  Bank  (Ala.),  70  So.  723;  Citizens'  Nat.  Bank  v.  Bucheit  (Ala.), 
71  So.  87;  Dilworth  v.  Holmes  Furniture  &  Vehicle  Co.  (1916).  72,  So. 
288;  Peoples'  Bank  &  Trust  Co.  v.  Floyd  (1917),  75  So.  940;  Zadek  v. 
Forchheimer  (Ala.  App.),  77  So.  941;  Vogler  v.  Manson  (Ala.),  76  So. 
117;  Davies  v.  Simpson,  —  Ala.  — ,  790  So.  48. 

Arkansas.— YiooA  v.  Robson  (1916),  187  S.  W.  1059;  Arnwell  v. 
Arnold  &  Co.  (1917),  193  S.  W.  506;  Johnson  v.  Ankrun  (1917),  199 
S.  W.  897. 

Ca/;/orn /cr.—Shoenhair  v.  Jones  (1917),  165  Pac.  971;  Ballou  v.  Avery 
k\9\7),  166  Pac.  1003;  Wetzel  v.  Cole  (1917),  165  Pac.  692;  Perzoni  v. 


§    25  CONSIDERATION.  437 

Greenwell   (1918),  174  Pac.  60;  Mahana  v.  VanAlstyne   (1919),   178  Pac. 
853. 

Colorado.— Domax  v.  Colorado  Nat.  Bank  (1909),  46  Colo.  229,  104 
Pac.  85;  Western  Investment  &  Land  Co.  v.  First  Nat.  Bank  (1918),  172 
Pac.  6;  Western  Slope  Fruit  Growers'  Assn.  v.  Divine  (1918),  173  Pac. 
426. 

Connecticut.— New  Haven  Mfg.  Co.  v.  New  Haven  Pulp  Co.  (1903), 
76  Conn.  126,  55  Atl.  604;  Russell  El.  Co.  v.  Bassett  (1907),  79  Conn. 
709,  66  Atl.  531;  Chittenden  v.  Carter  (1909),  82  Conn.  585;  Fairfield  Co. 
Nat.  Bank  v.  Hammer  (1915),  95  Atl.  31;  Continental  Credit  Co.  v.  Ely 
(1917),  100  Atl.  435. 

F/on'Jo.— Crystal  River  Lumber  Co.  v.  Consolidated  Naval  Stores  Co. 
(1912),  63  Fla.  119.  58  So.  129;  Bland  v.  Fidelity  Tr.  Co.  (Fla.),  71  So. 
630,  L.  R.  A.  1916F,  209 ;  Roess  Lumber  Co.  v.  State  Exch.  Bank,  68  Fla. 
324,  67  So.  188,  Ann.  Cas.  1916B,  327. 

/da/io.— Fidelity  State  Bank  v.  Miller  (1917),  29  Idaho  777,  162  Pac. 
244. 

Illinois.— Many,  Blanc  &  Co.  v.  Krueger  (1910).  153  111.  App.  327; 
McHenry  v.  Croft  (1911),  163  111.  App.  426;  Elgin  National  Bank  v. 
Goecke,  129  N.  E.  149. 

Indiana.— Uerch.  Nat.  Bank  v.  Nees  (1916),  112  N.  E.  904. 

Iowa.— Gooch  v.  Gooch  (1916),  160  N.  W.  333;  Commercial  Nat 
Bank  v.  Citizens  State  Bank  (1906),  132  Iowa  706.  109  N.  W.  198;  Craw- 
ford Co.  State  Bank  v.  Stegman  (1908).  137  Iowa  13,  114  N.  W.  549 
Voss  v.  Chamberlain  (1908),  139  Iowa  569,  117  N.  W.  269;  Iowa  Nat 
Bank  v.  Carter,  144  Iowa  715,  123  N.  W.  237;  Zimbelman  v.  Finnegan 
(1909),  141  Iowa  358;  Robinson  v.  Robinson  (1910),  147  Iowa  615 
Robertson  v.  United  States  Live  Stock  Co.  (1914),  145  N.  W.  535; 
Meginnes  v.  McChesney  (1916),  160  N.  W.  50;  State  Bank  of  Halstad 
V.  Bilstad  (1912),  136  N.  W.  204;  Mohn  v.  Mohn  (1917),  164  N.  W.  341. 

Kansas.— Bkket  v.  Ellward  (1904),  68  Kans.  295.  74  Pac.  1100;  Bridges 
V.  Vann  (1912),  88  Kans.  98,  127  Pac.  604;  Benjamin  v.  Welda  State 
Bank,  98  Kan.  361,  158  Pac.  65,  L.  R.  A.  1917A,  704;  Redfield  State  Bank 
v.  Myrick,  194  Pac.  648. 

Kentucky.— WiMns  v.  Usher  (1906).  123  Ky.  696.  97  S.  W.  37; 
Citizens  Bank  v.  Bank  of  Waddy  (1907),  126  Ky.  169.  103  S.  W.  249; 
Herman's  Excr.  v.  Gregory  (1909),  131  Ky.  819,  115  S.  W.  809;  Lovelace 
v.  Lovelace  (1910),  136  Ky.  452,  124  S.  W.  400;  Campbell  v.  Fourth  Nat. 
Bank  of  Cincinnati  (1910),  137  Ky.  555,  126  S.  W.  114;  Am.  Nat.  Bank 
V.  Minor  &  Son  (1911),  135  S.  W.  278;  Jett  v.  Standafer  (1911),  143 
Ky.  787,  137  S.  W.  513;  Pratt  v.  Rounds  (1914),  169  S.  W.  848;  Overby 
v  Williams  (1916),  185  S.  W.  822;  Receiver  First  Nat.  Bank  of  Loudon 
v.  Boreling  (1916),  190  S.  W.  1106;  Ballard  v.  Ballard  (1917),  197  S.  W. 
661. 

LoMwmnc— Scheuerman  v.  Monarch  Fruit  Co.  (1909),  123  La.  59,  48 
So.  647;  Interstate  Trust  &  Banking  Co.  v.  Irwin  (1915),  70  So.  313; 
Hyman  v.  Parkerson  (1916),  140  La.  249,  72  So.  953,  L.  R.  A.  1917B,  694. 

Maryland.— Black  v.  Bank  of  Westminster,  96  Md.  399,  54  Atl.  88. 


438  NEGOTIABLE   INSTRUMENTS.  §   25 

Massachusetts. — Boston  Steel  &  Iron  Co.  v.  Steuer  (1903),  183  Mass. 
140,  66  N.  E.  646;  Mehlinger  v.  Harriman,  185  Mass.  245;  Widger  v. 
Baxter  (1906),  190  Mass.  130,  76  N.  E.  509,  3  L.  R.  A.  (N.  S.)  436; 
Jennings  v.  Law  (1908),  199  Mass.  124,  85  N.  E.  157;  Lowell  v.  Bick- 
ford  (1909),  201  Mass.  543,  88  N.  E.  1 ;  Shawmut  Commercial  Paper  Co. 
V.  Bripham  (1912),  211  Mass.  72;  Crosier  v.  Crosier  (1913),  215  Mass. 
535;  Neal  v.  Wilson,  213  Mass.  336,  100  N.  R.  544;  Usher  v.  A.  S.  Tucker 
Co.  (1914),  271  Mass.  441,  105  N.  E.  360;  Smith  v.  Johnson  (1916),  224 
Mass.  50,  112  N.  E.  644;  Ajemain  v.  Robinson  (1917),  115  N.  E.  749; 
Seager  v.  Drayton,  217  Mass.  571,  105  N.  E.  461. 

Michigan.— Graham  v.  Smith  (1908),  155  Mich.  65,  118  N.  W.  726;  J. 
D.  Gruber  Co.  v.  Smith  (1917),  162  N.  W.  124. 

Minnesota.— German-Am.  Bank  of  Ritzville  v.  Lyons  (1914),  149  N.  W. 
658;  Security  Nat.  Bank  v.  Pulver  (1915),  155  N.  W.  641;  Snelling  State 
Bank  v.  Clasen,  132  Minn.  404,  157  N.  W.  643;  Am.  Multigraph  Sales  Co. 
V.  Grant  (1916),  160  N.  W.  676;  Bank  of  Montreal  v.  Beecher  (1916), 
157  N.  W.  1070;  Baxter  v.  Brandenburg  (1917),  163  N.  W.  516. 

Mississippi. — First  Nat.  Bank  v.  John  McGrath  &  Sons,  111  Miss.  872, 
72  So.  701;  Sykcs  v.  Moore  (1917),  76  So.  538. 

Missouri.— Wright  v.  Miss.  Valley  Tr.  Co.  (1910),  129  S.  W.  407; 
Reeves  v.  Litts  (1910),  143  Mo.  App.  196,  128  S.  W.  246;  Dorris  v. 
Cronan  (1910),  129  S.  W.  1014;  Nat.  Bank  of  Commerce  in  St.  Louis  v. 
Morris  (1911),  156  Mo.  App.  43,  135  S.  W.  1008;  Golden  City  Banking 
Co.  V  Greisel  (1912),  161  Mo.  App.  477;  State  Bank  of  Freeport  v.  Cape 
Girardeau  &  C.  R.  Co.  (1913),  172  Mo.  App.  662,  155  S.  W.  1111;  Greer 
V.  Orchard  (1913),  161  S.  W.  875;  Citizens  Bank  of  Pomono  v.  Oaks 
(1914),  184  Mo.  App.  598,  179  S.  W.  679;  Citizens  Nat.  Bank  v.  Bom- 
bauer  (1916),  189  S.  W.  651;  Central  Bank  of  Columbia  v.  Lydia  (1917), 
191  S.  W.  245;  Shawhan  v.  Distillery  Co.  (1917),  197  S.  W.  369;  Bank 
of  Greentop  v.  Sloop  (1918),  200  S.  W.  304;  Boatmen's  Bank  v.  St. 
Louis  Union  Trust  Co.  (1918).  205  S.  W.  629;  First  Nat.  Bank  v.  Henry 
(1918),  202  S.  W.  281;  Swift  &  Co.  v.  McFarland,  231  S.  W.  65. 

Montana.— Farchen  v.  Chessman  (1914),  49  Mont.  326,  142  Pac.  631, 
Ann.  Cas.  1916A,  681. 

Nebraska.— Benton  v.  Sikyta  (1909),  84  Neb.  808,  122  S.  W.  60; 
Farmers  Nat.  Bank  of  Lyons  v.  Dixon  (1912),  91  Neb.  652,  136  N.  W. 
845;  Livestock  Nat.  Bank  v.  Bragonier  (1915),  153  N.  W.  504;  Macke  v. 
Jungels   (1918),  166  N.  W.  191. 

New  Jersey.— Travis  v.  Unkart  (1916),  89  N.  J.  L.  571,  99  Atl.  320. 

New  York. — Riverside  Bank  v.  Woodhaven  Junction  Land  Co.  (1898), 
34  A.  D.  359;  Citizens  Nat.  Bank  v.  Lilienthal  (1899),  57  N.  Y.  Supp. 
567,  40  A.  D.  609;  Brewster  v.  Schrader  (1899),  26  Misc.  480;  Rosenwald 
V.  Goldstein  (1899),  27  Misc.  827;  Petrie  v.  Miller  (1901),  57  A.  D.  17,  67 
N.  Y.  Supp.  1042,  173  N.  Y.  596  (1903)  (affirmed  without  an  opinion)  ; 
Sutherland  v.  Mead  (1903),  80  A.  D.  103.  80  N.  Y.  Supp.  504;  Levy  v. 
Huwer  (1903),  80  A.  D.  499;  Roseman  v.  Mahoney  (1903),  86  A.  D.  377, 
83  N.  Y.  Supp.  749;  Bank  of  Am.  v.  Waydell  (1905),  103  A.  D.  25,  92 
N.  Y.  Supp.  666;  Sutherland  v.  Mead,  80  A.  D.  103;  Milius  v.  Kauffman 
(1905),  104  A.  D.  442,  93  N.  Y.  Supp.  669;  Hover  v.  Magley  (1905),  48 
Misc.  430,  96  N.  Y.  Supp.  925;  Nat.  Bank  of  Barre  v.  Foley 
(1907),    54    Misc.    126,    103    N.    Y.    Supp.    553;     Ward   v.    City   Trust 


§    25  CONSIDERATION.  439 

Co.,  102  N.  Y.  Supp.  50,  117  A.  D.  130;  English  v.  Schlesinger 
(1907),  55  Misc.  584,  105  N.  Y.  Supp.  989;  Mohlman  Co.  v. 
McKane  (1901),  69  N.  Y.  Supp.  1046,  60  A.  D.  546;  The  Gansevort  Bank 
of  N  Y.  V.  Gilday  (1907),  110  N.  Y.  Supp.  271,  53  Misc.  107;  Bigclow  v. 
Automatic  Gas  Producer  Co.  (1907),  107  N.  Y.  Supp.  894;  The  Wall- 
about  Bank  V.  Peyton  (1908),  123  A.  D.  727,  108  N.  Y.  Supp.  42;  Joves- 
boff  V.  Rockney  (1908),  109  N.  Y.  Supp.  818,  58  Misc.  559;  Rosenthal  v. 
Parsont  (1908),  110  N.  Y.  Supp.  223;  Valley  Dew  Distilling  Co.  v.  Ritz- 
mann  (1908),  110  N.  Y.  Supp.  917;  Harris  v.  Fowler  (1908),  110  N.  Y. 
Supp.  987,  59  Misc.  523;  Macauley  v.  Holsten  (1909),  114  N.  Y.  Supp. 
611;  Mindlin  v.  Appelbaum  (1909),  62  Misc.  300,  114  N.  Y.  Supp.  908; 
The  VanOrden  Tr.  Co.  v.  L.  Rosenberg,  Inc.  (1909),  62  Misc.  285,  114 
N.  Y.  Supp.  1025;  Albert  v.  Hoffman,  117  N.  Y.  Supp.  1043,  64  Misc. 
Rep.  87;  Uvalde  AsphaU  Paving  Co.  v.  Nat.  Trading  Co.   (1909),  135  A. 

D.  391,  120  N.  Y.  Supp.  11;  King  v.  Bowling  Green  Trust,  129  N.  Y. 
Supp.  977,  145  A.  D.  398;  Lehrenkrauss  v.  Bonnell  (1910),  199  N.  Y. 
240,  92  N.  E.  637;  Rogonski  v.  Brill  (1911),  131  N.  Y.  Supp.  589;  King 
240,  92  N.  E.  637;  Rogonski  v.  Brill  (1911),  131  N.  Y.  Supp.  589;  Maurice 
V.  Fowler  (1912),  138  N.  Y.  Supp.  424;  Broderick  &  Bascom  Rope  Co.  v. 
McGrath  (1913),  142  N.  Y.  Supp.  491,  81  Misc.  222 ;  Martin  L.  Hall  v.  Todd 
(1912),  139  N.  Y.  Supp.  Ill;  Shape  v.  Shape  (1914),  150  N.  Y.  Supp. 
367;  Union  Bank  of  Brooklyn  v.  Sullivan  (1915),  108  N.  E.  558,  214  N. 
Y.  332;  Brown  v.  Rowan  (1915),  154  N.  Y.  Supp.  1098;  McBee  Co.  v. 
Shoemaker  (1916),  174  A.  D.  291,  160  N.  Y.  Supp.  251;  Miller  v.  Camp- 
bell (1916),  160  N.  Y.  Supp.  834;  Stokes  v.  Sanders  (19^8),  168  N.  Y. 
Supp.  409;  Lajani  v.  Abraham  Schdala  &  Sons  Corporation  (1918),  171 
X.  Y.  Supp.  611;  American  Brass  &  Copper  Co.  v.  Pine  (1919),  173  N. 
Y.  Supp.  147. 

North  Carolina.— Brooks  v.  Sullivan  (1901),  129  N.  Car.  190,  39  S. 
E  822;  Singer  Mfg.  Co.  v.  Summers  (1906),  143  N.  C.  102,  55  S.  E.  522; 
Murchison  Nat.  Bank  v.  Dunn  Oil  Mills  Co.  (1909),  150  N.  Car.  718, 
64  S.  E.  885;  J.  L.  Smathers  &  Co.  v.  Toxaway  Hotel  Co.  (1913),  78  S. 

E.  224;  Am.  Ex.  Nat.  Bank  v.  Segroves  (1914),  166  N.  C.  608,  82  S.  E. 
947;  Franklin  Nat.  Bank  v.  Roberts  Bros.  (1915),  168  N.  C.  473,  84  S.  E. 
706;  Am.  Nat.  Bank  of  Richmond  v.  Hill  (1915),  85  S.  E.  209;  Cherokee 
County  v.  Meroney  (1917),  92  S.  E.  616;  Acme  Mfg.  Co.  v.  McCormick 
(1918),  95  S.  E.  555;  A.  B.  Hunter  &  Co.  v.  Sherron  (1918),  97  S.  E.  5. 

North  Daifeofo.— Second  Nat.  Bank  v.  Werner  (1910),  19  N.  D.  485.  126 
N.  W.  100;  Farmers'  Bank  of  Mercer  Co.  v.  Riedlinger  (1914),  146  N. 
W.  556;  Sawyer  State  Bank  v.  Sutherland  (1917),  162  N.  W.  696. 

O/jio.— State  v.  Hills  (1916),  94  Ohio  St.  171,  113  N.  E.  1045,  L.  R.  A. 
1917B,  684;  Hamilton  Mach.  Tool  Co.  v.  Memphis  Nat.  Bank,  84  Ohio 
St.  184,  95  N.  E.  m. 

Oklahoma.— Cam  v.  Munger  (1915),  149  Pac.  1086;  Ogle  v.  Arm- 
strong (1915),  153  Pac.  1139;  State  v.  Soliss  (1915),  152  Pac.  1114; 
Purcell  Mill  &  Elevator  Co.  v.  Canadian  Val.  Const.  Co.  (1916),  160  Pac. 
485;  First  Nat.  Bank  v.  Harkey  (1917),  163  Pac.  273;  Starr  v.  Lone- 
wolf  (1917),  163  Pac.  532;  Chandler  v.  Each  (1918),  170  Pac.  516;  Levy 
v.  Reed  (1918),  170  Pac.  497;  Ogle  v.  Armstrong  (Okla.),  153  Pac.  1139; 
Southwest  National  Bank  of  Commerce  v.  Todd,  192  Pac.  1096. 

Or^yon.— Matlock  v.  Scheuerman  (1908),  51  Oreg.  49,  93  Pac.  823,  17 
L.  R.  A.  (N.  S.)  947;  Anderson  v.  Stayton  State  Bank  ('916),  159  Pac. 
1033;  Wicks  v.  Metcalf  (1917),  163  Pac.  988. 


440  NEGOTIABLE   INSTRUMENTS.  §    26 

Pennsylvania— Stem  v.  Jacobs,  20  Pa.  Dist.  Ct.  48;  Rathfon  v.  Locher 
(1906),  215  Pac.  571;  Allentown  Nat.  Bank  v.  Qay  Product  Supply  Co 
(1907),  217  Pa.  St.  128,  66  Atl.  252;  Morrison  v.  Whitefield  (1912)  46 
Pa.  Super.  103;  Levy  v.  Gilligan  (1914),  90  Atl.  647. 

Rhode  Island.— WUhour  v.  Hawkins  (1915),  38  R.  I.  119,  94  Atl.  856. 

Tennessee.— E\gm  City  Bldg.  Co.  v.  Hall  (1907),  119  Tenn.  548,  108 
S.  W.  1068;  Citizens  Tr.  Co.  v.  McDougald  (1915),  132  Tenn.  323  178 
S.  W.  432;  Crane  &  Co.  v.  Hall,  213  S.  W.  414. 

r^.roj.— Magill  V.  McCamley  (1916),  182  S.  W.  22;  Yantis  v.  Tones 
(1916),  184  S.  W.  572. 

Utah.— Utah  Nat.  Bank  of  Salt  Lake  City  v.  Nelson  (1910),  38  Utah 
169,  111  Pac.  907;  Felt  v.  Bush  (1912),  126  Pac.  688;  Miller  v.  Marks 
(1915),  148  Pac.  412;  Helper  State  Bank  v.  Jackson  (Utah),  160  Pac. 
287;  Smith  v.  Brown  (1917),  165  Pac.  468;  Hanson  v.  Harris  (1918).  170 
Pac.  970. 

FjV^mia.— Payne  v.  Zell  (1900),  98  Va.  294,  36  S.  E.  379;  Am.  Bank 
cf  Orange  v.  McComb  (1906),  105  Va.  473,  54  S.  E.  14;  Saunders  v. 
Bank  of  Mecklenburg  (1911),  71  S.  E.  714;  Ford  v.  Engelman  (1915), 
118  Va.  89,  86  S.  E.  852;  Colley  v.  Summers  Parrott  Hardware  Co. 
(1916),  119  Va.  439,  89  S.  E.  906;  Brenard  Mfg.  Co.  v.  Brown  (1917). 
92  S.  E.  850. 

Vermont.— Bean  v.  Parker   (1916),  96  Atl.  17. 

Washington.— Pin  v.  Little  (1910),  58  Wash.  355,  108  Pac.  941;  Ger- 
man-Am. Bank  of  Seattle  v.  Wright  (1915),  148  Pac.  769;  Guaranty 
Security  Co.  v.  Coad,  195  Pac.  22. 

West  Virginia.— Burner  v.  Nutter  (1915),  87  S.  E.  359. 

^tj(ro;wm.— Hodge  v.  Wallace  (1906),  129  Wis.  84,  108  N.  W.  212, 
116  Am.  St.  R.  938;  Pelton  v.  Spider  Lake  S.  &  L.  Co.  (1907),  132  Wis 
219,  112  N.  W.  29,  122  Am.  St.  963;  Northfield  Nat.  Bank  v.  Arndt,  132 
Wis.  383.  112  N.  W.  451;  Marling  v.  Fitzgerald  (1909),  138  Wis.  93,  120 
N.  W.  388;  Samson  v.  Ward  (1911),  147  Wis.  48,  132  N.  W.  629;  Holmes 
V.  Wisconsin  Grain,  etc.,  Co.  (Wis.),  164  N.  W.  1007;  Becker  v.  Noegel 
(1917),  160  N.  W.  1055,  165  Wis.  73;  Badger  Co.  v.  Columbia  Co.  (1917), 
163  N.  W.  188;  Jones  v.  Brandt,  181  N.  W.  813. 

United  States.— Barnsdall  v.  Waltemeyer  (1905).  142  Fed.  415,  73  C. 
C.  A.  515  (Colo.)  ;  Scherer  &  Co.  v.  Everest  (1909),  168  Fed.  822,  94  C. 
C.  A.  346;  In  re  Hopper-Morgan  Co.  (1907).  154  Fed.  249  (N.  Y.)  ;  Trust 
Co.  of  St.  Louis  Co.  V.  Markee  (1910),  179  Fed.  764;  Milton  v.  Pensa- 
cola  Bank  &  Tr.  Co.  (1911),  190  Fed.  126,  111  C.  C  A.  166;  Nichols  v. 
Waukesha  Canning  Co.,  195  Fed.  Rep.  807;  Smith  v.  Nelson  Land  & 
Cattle  Co.,  212  Fed.  Rep.  56,  122  C.  C.  A.  512;  Security  Nat.  Bank  v. 
Old.  Nat.  Bank,  241  Fed.  Rep.  1 ;  U.  S.  Fidelity  &  Guaranty  Co.  v. 
Walker   (1918),  248  Fed.  42. 

§  26.  What  constitutes  holder  for  value.  Where  value 
has  at  any  time  been  given  for  the  instrument,  the  holder  is 
deemed  a  holder  for  value  in  respect  to  all  parties  who  became 
such  prior  to  that  time,'*'  *■ 


§   26  CONSIDERATION.  441 

See  text,  §  128. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Allegation  as  to  credit  on  books  of  a  bank  and  money  remaining  in 
bank.     Richards  v.  Street,  31  App.  Cas.  D.  C.  427. 

Pledgee  as  holder  for  value.  Harris  v.  Nicholson-Foley  Co.,  179  Ky. 
513,  200  S.  W.  929. 

An  allegation  in  an  -answer  that  an  indorsement  was  without  con- 
sideration is  insufficient  as  against  a  complaint  alleging  consideration. 
Rogers  v.  Morton,  46  Misc.  Rep.  494,  95  N.  Y.  Supp.  49. 

The  surrender  of  an  old  note  and  the  making  of  a  new  one  makes 
the  holder  a  holder  for  value.  Van  Norden  Trust  Co.  v.  L.  Rosenberg, 
62  Misc.  Rep.  285,  114  N.  Y.  Supp.  1025. 

The  crediting  with  amounts  in  accounts  constitutes  one  a  holder  for 
value.    Metzger  v.  Sygall,  83  Wash.  80,  145  Pac.  72. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Alabama. — Bledsoe  v.  City  Nat.  Bank  of  Selma  (1912),  7  Ala.  App. 
195,  60  So.  942;  Miller  v.  Johnson  (1914).  66  So.  486;  Armstrong  v. 
Walker  (1917),  76  So.  280;  Hudson  v.  Repton  State  Bank  (1917),  75  So. 
695;  Wilson  v.  Weaver  (1917),  77  So.  238. 

District  of  Columbia. — Richards  v.  Street,  31  App.  Cas.  D.  C.  427. 

/rfa/io.— Kimpton  v.  Studebaker  Bros.  Co.  (1908),  14  Ida.  552,  94  Pac. 
1039. 

Iowa.— Highy  v.  Bahrenfuss  (1917),  163  N.  W.  247. 

Kentucky.— Utrman's  Excr.  v.  Gregory  (1909),  131  Ky.  819,  115  S. 
W.  809;  Harrison  v.  Nicholson-Foley  Co.,  179  Ky.  513,  200  S.  W.  929. 

Maryland.^Black  v.  First  Nat.  Bank  (1903),  96  Md.  399,  54  Atl.  88. 

Massachusetts.— Jennings  v.  Law  (1908),  199  Mass.  124.  85  N.  E.  157; 
Nat.  Investment  &  Security  Co.  v.  Carey  (1916),  111  N.  E.  357. 

MtV%att.— First  Nat.  Bank  v.  Grand  Rapids  &  I.  Rv.  Co.  (1917).  161 
N.  W.  859;  National  Bank  of  Montreal  v.  Bucher  (1916),  157  N.  W.  1070. 

Missouri.— Coleman  v.  Stocks  (1911),  159  Mo.  App.  43,  139  S.  W.  216; 
Wright  v.  Wayland  (1916),  188  S.  W.  928;  Wurlitzer  Co.  v.  Rossman 
(1916),  190  S.  W.  636;  Howard  v.  Int.  Bank  (1918).  200  S.  W.  91. 

Montana. — State  Bank  of  Moore  v.  Fursythe  (1910),  41  Mont.  249. 

Nebraska. — Nat.  Bank  of  Commerce  v.  Bossemeyer  (1917),  162  N.  W. 
503. 

Nezv  York. — Riverside  Bank  v.  Woodhaven  Junction  Land  Co.  (1898), 
34  A.  D.  350;  Petrie  v.  Miller  (1901),  57  A.  D.  17,  67  N.  Y.  Supp.  1042, 
affirmed  without  an  opinion.  173  N.  Y.  596;  Fleitman  v.  Ashley  (1901), 
60  A.  D.  201;  Sutherland  v.  Mead  (1903),  80  A.  D.  103.  80 
N.  Y.  Supp.  504;  Rogers  v.  Morton  (1905),  46  Misc.  494,  95 
N.  Y.  Supp.  49;  Hover  v.  Magley  (1905).  48  Misc.  430,  96  N.  Y.  Supp. 


442  NEGOTIABLE   INSTRUMENTS.  §    27 

925;  Rosenthal  v.  Freedman  (1907),  ^Z  Misc.  595,  103  N.  Y.  Supp.  714; 
Clearv  v.  DcBeck  Plate  Glass  Co.  (1907),  54  Misc.  537,  104  N.  Y.  Supp. 
831;  VanNordin  Tr.  Co.  v.  L.  Rosenberg,  Inc.  (1909),  62  Misc.  285,  114 
N.  Y.  Supp.  1025;  Heimbach  v.  Doubleday.  Page  Co.  (1909),  130  A.  D. 
34;  King  v.  Bowling  Green  Tr.  Co.  (1911),  145  A.  D.  398;  Broderick  & 
Bascom  Rope  Co.  v.  McGrath  (1913),  143  N.  Y.  Supp.  496,  81  Misc.  222; 
Lich-und-Spakassa  Audorf  v.  Pfizer  (1913),  158  A.  D.  505,  143  N.  Y. 
Supp.  744;  Munnich  v.  Jofife  (1914),  149  N.  Y.  Supp.  338,  164  A.  D.  30; 
Sabine  v.  Paine  (1915),  151  N.  Y.  Supp.  735;  Poshkoff  v.  Bernstein 
(1916),  159  N.  Y.  Supp.  206;  Republican  Art  Printer  v.  David  (1916), 
159  N.  Y.  Supp.  1010. 

North  Carolina. — Toms  v.  Jones  (1900),  127  N.  Car.  464;  Citizens  & 
Marine  Bank  of  Newport  News  v.  Southern  R.  W.  (1910),  153  N.  Car. 
546. 

Pennsylvania.—Sf3iit  Bank  of  Pittsburg  v.  Kirk  (1907),  216  Pa.  St. 
452. 

Utah.—UcCoTmick  v.  Swem  (1909),  36  Utah  6,  102  Pac.  626;  Felt  v. 
Bush   (1912),  126  Pac.  688. 

Washington. — Bradley  Engineering  &  Mfg.  Co.  v.  Hevburn  (1910), 
56  Wash.  628,  106  Pac.  170;  Metzger  v.  Sigall  (1914),  83  Wash.  807,  145 
Pac.  72;  Wash.  Trust  Co.  v.  Keyes  (1915),  132  Pac.  1029;  Skagit  State 
Bank  v.  Moody  (1916),  150  Pac.  425. 

United  6"/of^j.— Richards  v.  Street  (1908).  31  App.  D.  C.  427;  Milton 
V.  Pensacola  Bank  &  Tr.  Co.  (1911),  190  Fed.  126,  111  C.  C.  A.  166;  In 
re  Chas.  R.  Partridge  Lumber  Co.  (1914),  215  Fed.  973. 


§  27.  When  lien  on  instrument  constitutes  holder  for  value. 
Where  the  holder  has  a  lien  on  the  instrument,  arising  either 
from  contract  or  by  implication  of  law,  he  is  deemed  a  holder 
for  value  to  the  extent  of  his  lien.*'  *^ 

See  text,  §  128. 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Note  indorsed  as  collateral  security  held  by  holder  in  due  course  for 
value.     Griswold  v.  Morrison,  —  Cal.  App.  — ,  200  Pac.  62. 

Pledgee  although  a  holder  in  due  course  recovered  amount  of  debt 
cnly  because  a  defense.  Continental  Credit  Co.  v.  Ely  (Conn.),  100  Atl. 
434. 

Full  amount  recovered.    Jett  v.  Standafer,  143  Ky.  787,  137  S.  W.  513. 

Amount  of  debt  for  which  pledged  recovered.  Elk  Valley  Coal  Co. 
v.  Third  Nat.  Bank  of  Lexington,  157  Ky.  617,  163  S.  W.  766. 

Pledgee  as  lien  holder  is  holder  for  value.  Harison  v.  Nicholson- 
Foley  Co.,  179  Ky.  513. 

Assignee  of  notes  as  collateral  after  maturity  subject  to  defenses  by 
maker.     Sparr  v.  Fulton  Nat.  Bank.  179  Ky.  755. 

Full  face  value  of  the  note  recovered.  Burnes  v.  New  Mineral  Fer- 
tilizer Co,,  218  Mass.  300,  105  N.  E.  1074. 


§    27  CONSIDERATION.  443 

Bank's  title  held  subject  to  equities  where  note  left  for  collection  but 
no  assignment  of  note  as  collateral  security.  Schneider  v.  Johnson,  161 
Mo.  App.  375.  143  S.  W.  78. 

Holder  for  value  to  the  entire  amount  of  the  collateral  notes.  State 
Bank  v.  Cape  Girardeau  Co.,  170  Mo.  App.  662,  155  S.  W.  1111. 

No  recovery  on  collateral  note  if  principal  note  is  wholly  invalid. 
Omaha  Loan  &  Bldg.  Assn.  v.  Cocke   (Neb.),  165  N.  W.  146. 

Lien  on  note  constitutes  holder  a  holder  for  value.  Southwest  Nat. 
Bank  of  Commerce  of  Kansas  City  v.  Todd,  —  Okla.  — ,  192  Pac.  1096. 

It  was  held  that  under  the  pleadings  the  defendant,  not  having  raised 
the  question  of  collateral  and  the  amount  of  the  note  for  which  it  was 
pledged,  was  not  entitled  to  rely  on  section  27  and  full  amount  was 
recovered.    Bailey  v.  Inland  Empire  Co..  75  Ore.  309,  146  Pac.  991. 

One  having  lien-  on  note  held  is  holder  for  value.  Crane  &  Co.  v. 
Hall,  —  Tenn.  — ,  213  S.  W.  414. 

Whole  amount  of  collateral  security  recovered.  Hillman  v.  Stanley, 
56  Wash.  320,  105  Pac.  816. 

Interest  at  legal  rate  only  was  recovered  in  the  absence  of  evidence 
as  to  the  rate  which  the  principal  debt  was  to  bear.  Citizens'  Bank  v. 
Limpright,  93  Wash.  361.  160  Pac.  1046. 

Recovery  of  payments  by  maker  where  payee  had  defaulted  and 
indorsed  the  note.    Dyer  v.  International  Banking  Corp.,  262  Fed.  292. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

California. — Griswold  v.  Morrison   (Cal.  App.),  200  Pac.  62. 

Connecticut.— Mersick  v.  Alderman  (1905),  77  Conn.  634,  60  Atl.  109; 
Continental  Credit  Co.  v.  Ely,  —  Conn.  — ,  100  Atl.  434. 

///wou.— Peacock  v.  Phillips  (1910),  155  111.  App.  514. 

Kentucky.— Citizens  Bank  v.  Bank  of  Waddy  (1907),  126  Ky.  169,  103 
S.  W.  249;  Campbell  v.  Fourth  Nat.  Bank  of  Cincinnati  (1910).  137 
Ky  555.  126  S.  W.  114;  Am.  Nat.  Bank  v.  Minor  &  Son  (1911),  135  S.  W, 
278;  Jett  v.  Standafer  (1911).  143  Ky.  787,  13:^  S.  W.  513;  Elk  Valley 
Coal  Co.  V.  Third  Nat.  Bank  of  Lexington  (1914),  157  Ky.  617,  163  S. 
W.  766;  Sparr  v.  Fulton  Bank  (1918),  201  S.  W.  310;  Harrison  V.  Nichol-- 
son-Foley  Co.,  179  Ky.  513 ;  Sparr  v.  Fulton  Nat.  Bank,  179  Ky.  755. 

Massachusetfs.—BvLTms  v.  New  Mineral  Fertil.  Co.  (1914),  218  Mass. 
300,  105  N.  E.  1074. 

Michigan.— Graham  v.  Smith  (1908),  155  Mich.  65,  118  N.  W.  726. 

Missouri.— Nat.  Bank  of  Commerce  in  St.  Louis  v.  Morris  (1911),  156 
Mo.  App.  43,  135  S.  W.  1008 ;  State  Bank  of  Freeport  v.  Cape  Girardeau 
&  C.  R.  Co.  (1913),  170  Mo.  App.  662,  155  S.  W.  1111;  Schneider  v.  John- 
son, 161  Mo.  App.  375,  143  S.  W.  78;  Central  Bank  of  Columbia  v. 
Lyda  (1917),  191  S.  W.  245. 

New  York.— Rogers  v.  Morton,  46  Misc.  Rep.  494,  95  N.  Y.  Supp  49; 
Batterman  v.  Butcher,  95  App.  Div.  213,  88  N.  Y.  Supp.  685;  Petrie  v. 
Miller,  67  N.  Y.  Supp.  1042,  affirmed  173  N.  Y.  596,  57  A.  D.  17. 

Nebraska.— Brown  v.  James,  80  Neb.  475,  114  N.  W.  591  ;  Benton  v. 
Sikyta,  84  Neb.  808,  122  N.  W.  60,  24  L.  R,  A.  (N.  S.)  1057;  Omaha 
"Loan  and  Bldg  Assn.  v.  Cooke,  165  N.  W.  146. 


444  NEGOTIABLE   INSTRUMENTS.  §    28 

North  Carolina.— Brooks  v.  Sullivan  (1901),  129  N.  Car.  190,  39  S. 
E.  822;  Citizens  &  Marine  Bank  of  Newport  News  v.  Southern  R.  W. 
(1910),  153  N.  Car.  346;  J.  L.  Smathers  &  Co.  v.  Toxaway  Hotel  Co. 
(1913),  78  S.  E.  224. 

North  Dakota. — Shuman  v.  Citizen's  State  Bank  of  Rugby  (1914), 
147  N.  W.  388. 

Oklahoma.— Southwest  Nat.  Bank  v.  Todd,  192  Pac.  1096. 

Or^firon.— Bailey  v.  Inland  Empire  Co.  (1915),  75  Ore.  309,  146  Pac. 
991. 

Tennessee.— First  Nat.  Bank  of  Elgin,  III.  v.  Russell  (1911),  139  S. 
W.  734;  Crane  &  Co.  v.  Hall,  213  S.  W.  414. 

Utah.— Felt  v.  Bush  (1912),  126  Pac.  688. 

Virginia.— Payne  v.  Zell  (1900),  98  Va.  294.  36  S.  E.  379. 

Washington. — Bank  of  Montreal  v.  Howard  (1906),  44  Wash.  10,  86 
Pac.  1115;  Hillman  v.  Stanley  (1909),  56  Wash,  320,  105  Pac.  816;  Cana- 
dian Bank  of  Commerce  v.  Sesnon  Co.,  68  Wash.  434,  123  Pac.  602 ; 
German-Am.  Bank  of  Seattle  v.  Wright  (1915),  148  Pac.  769;  Crewdson 
V.  Shultz  (1919),  254  Fed.  24;  Citizens  Bank  v.  Limpright,  93  Wash.  361, 
160  Pac.  1046. 

^FyowMM^r.— George  v.  Emery  (1909),  18  Wyo.  352,  107  Pac.  1. 

United  States.— Trust  Co.  of  St.  Louis  Co.  v.  Markee  (1910),  179 
Fed.  764 ;  Dyer  v.  International  Banking  Corp,  262  Fed.  292. 


§  28.  Effect  of  want  of  consideration.  Absence  or  fail- 
ure of  consideration  is  matter  of  defense  as  against  any  person 
not  a  holder  in  due  course ;  and  partial  failure  of  consideration 
is  a  defense  pro  tanto  whether  the  failure  is  an  ascertained  and 
liquidated  amount  or  otherwise.-**  ^* 

See  text,  §  68. 

Cross-sections :  52. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Parol  evidence  admissible  as  against  one  not  a  bona  fide  holder. 
Jefferson  Co.  Bank  v.  Compton,  192  Ala.  16,  68  So.  261. 

Death  of  a  stallion  making  it  impossible  to  return  him  not  a  failure 
of  consideration.  Monticello  State  Bank  v.  Killiam  (Ark.),  192  S.  W. 
369. 

Extent  to  which  partial  failure  of  consideration  operative.  Ryan  v. 
Security  Savings  &  Commercial  Bank,  —  D.  C.  — ,  271  Fed.  366. 

It  is  error  to  direct  a  verdict  for  the  plaintiff  where  evidence  tends 
to  prove  a  failure  of  consideration.  Gardner  Lumber  Co.  v.  Bank  of 
Commerce    (Fla.),   74  So.  313. 

Accord:     Glass  v.  Virginia-Carolina  Chemical  Co.   (Fla.),  74  So.  981. 

Failure  of  consideration  between  the  drawee  and  the  drawer  is  no 


§   28  CONSIDERATION.  445 

defense  in  an   action  by   the   payee   against   the   acceptor.     Mt.   Vernon 
Nat.  Bank  v.  KelHng-Karel  Co..  189  111.  App.  375. 

Failure  of  consideration  a  defense  as  to  purchaser  after  maturity. 
Sparr  V.  Fulton  Nat.  Bank,  179  Ky.  755. 

Failure  of  consideration  not  a  defense  against  a  bona  fide  holder. 
Franz  v.  Schiro,  136  La.  841,  67  So.  925. 

Holding  in  Maryland  that  under  the  general  issue  failure  of  considx 
eration  may  be  shown.     Morgan  v.  Cleaver   (Md.),   101  Atl.  610. 

Burden  is  on  party  showing  want  of  consideration.  Long  v.  Conn, 
—  Minn.  — ,  179  N.  W.  644. 

Failure  of  consideration  must  be  pleaded.  Indiana  Flooring  Co.  v. 
Rudnick,  —  Mass.  — ,  127  N.  E.  428. 

Defense  by  one  of  two  joint-makers.  Rowe  v.  Bowman,  183  Mass. 
488,  67  N.  E.  636. 

Accord:     Holmes  v.  Farris,  97  Mo.  App.  305,  311,  91  S.  W.  116. 

Burden  of  proving  failure  of  consideration  is  on  the  defendant.  Rhodes 
V.  Guhman,  156  Mo.  App.  344,  362,  137  S.  W.  86. 

Partial  failure  may  be  shown  under  a  plea  of  total  failure.  Nat. 
Tube  Co.  V.  Ice  Machine  Co.,  201  Mo.  30,  98  S.  W.  620. 

Accord;    Lebrecht  v.  Nellist,  184  Mo.  App.  334,  171  S.  W.  11. 

Accord:     Glasse  v.  King  (Mo.  App.),  195  S.  W.  521. 

A  sufficient  consideration  is  delivery  of  goods  to  another.  Rudolph 
Wurlitzer  Co.  v.  Rossman,  196  Mo.  App.  78,  190  S.  W.  636. 

Since  a  note  imports  a  consideration  the  burden  is  thrown  upon  the 
defendant  to  prove  lack  or  failure  of  consideration.  Carter  v.  Butler, 
264  Mo.  306,  174  S.  W.  399,  Ann  Cas.  1917A,  483. 

Trial  judge  erred  in  directing  a  verdict  for  the  defendant,  even  though 
plaintifif  introduced  the  testimony  of  no  witnesses  to  contradict  de- 
fendant witnesses.     McCormack  v.  Williams,  88  N.  J.  L.  170,  95  Atl.  978. 

Defendant  has  burden  of  showing  want  of  consideration.  Citizens 
Nat.  Bank  of  Roswell  v.  Bean,  —  N.  M.  — ,  190  Pac.  1018. 

Want  of  consideration  is  not  a  good  defense  unless  pleaded.  Sprague 
V.  Sprague,  80  Hun,  285,  30  N.  Y.  Supp.  162. 

As  between  remote  parties  a  defense  of  no  consideration  must  be 
sustained  by  a  showing  that  neither  party  gave  or  received  consideration. 
National  Park  Bank  v.  Saitta,  127  App.  Div.  624,  111  N.  Y.  Supp.  927, 
affirmed,  196  N.  Y.  548. 

Defense  on  ground  of  want  of  consideration  but  defense  of  duress 
not  good.    Weiss  v.  Rieser,  62  Misc.  Rep.  292,  114  N.  Y.  Supp.  983. 

Necessary  to  plead  want  of  consideration.  Ryan  v.  Sullivan,  143  App. 
Div.  471,  128  N.  Y.  Supp.  632. 

Want  of  consideration  must  be  pleaded.  Sharp  v.  Sharp,  145  N.  Y 
Supp.  386. 

Burden  of  proving  lack  of  consideration  as  a  defense  is  on  the  de- 
fendant. Gerli  &  Co.  v.  Doorly,  151  N.  Y.  Supp.  574. 

Contra:  Mechanics  &  Metals  Nat.  Bank  v.  Termini,  93  Misc.  Rep. 
1.  156  N.  Y.  Supp.  433. 

Words  in  note  "value  received"  do  not  overcome  plaintiff's  evidence 
which  shows  no  consideration.     Dougherty  v.  Salt,  227  N.  Y.  200. 

Maker  may  urge  failure  of  consideration  against  payee.  Dixon  v. 
Miller,  —  Nev.  — ,  184  Pac.  926. 

Burden  of  proof  to  show  want  of  consideration  is  on  the  defendant. 
Finer  v.  Brittain,  165  N.  C.  401,  81  S.  E.  462. 

Where  two  articles  were  to  be  delivered  and  only  one  was  delivered 
it  shows  a  partial  failure  of  consideration.  International  Harvester  Co. 
V.  Parham  (N.  C),  90  S.  E.  503. 


446  NEGOTIABLE   INSTRUMENTS.  §    28 

Maker  of  note  which  was  given  without  consideration  cannot  recover 
trom  the  payee.     Dickinson  v.  Carroll,  21  N.  D.  271,  130  N.  W.  829. 

Partial  failure  of  consideration  as  between  original  parties.  Sharp 
V.  Sharp,  4  Ohio  App.  418. 

Failure  of  consideration  between  the  maker  and  the  payee  is  no  defense 
to  a  surety  when  sued  for  contribution.  Cummins  v.  Line,  43  Okla. 
575.  143  Pac.  672. 

The  facts  need  not  be  stated.     Zebold  v.  Hurst  (Okla.),  166  Pac.  99. 

Parol  evidence  sometimes  admissible  to  show  absence  or  failure  of 
consideration.     Praes  v.  Vollintine,  53  Wash.  137,  101  Pac.  706. 

Notice  of  failure  of  consideration  is  a  good  defense.  Washington 
Trust  Co.  v.  Keyes,  88  Wash.  287,  152  Pac.  1029. 

Failure  of  consideration  not  a  defense  against  a  bona  fide  holder. 
Interstate  Finance  Co.  v.  Schroeder,  74  W.  Va.  67,  81  S.  E.  552. 

^"  The  follovv^ing  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Jefferson  Co.  Bank  v.  Compton,  192  Ala.  16,  68  So.  261 ; 
United  Brothers  of  Friendship  &  Sisters  of  Mysterious  Ten  v.  C.  S. 
Huffman  Auditing  Co.  (1918),  78  So.  864;  Conwell  v.  Rice  (1919),  80 
So.  406. 

Arisona.— Hurley  v.  Wilky  (1916),  156  Pac.  83. 

Arkansas.— WiWizmson  v.  Miles  (1914),  169  S.  W.  368;  Ozark  Dia- 
mond Mines  Co.  v.  Townes  (1915),  174  S.  W.  515;  Haglin  v.  Friedman 
(1915).  177  S.  W.  429;  Hamburg  v.  Ahrens  (1915),  177  S.  W.  14;  Dodd 
V.  Axle  Nut  Sigh  Co.  (1916).  189  S.  W.  663;  Monticello  State  Bank  v. 
Killiam  (Ark.),  192  S.  W.  369. 

Connecticut. — St.  Paul's  Episcopal  Church  v.  Fields  (1909),  81  Conn. 
670,  72  Atl.  145;  Tice  v  Moore  (1909),  82  Conn.  244,  73  Atl.  133. 

District  of  Columbia. — Ryan  v.  Security,  etc.,  Bank,  271  Fed.  366. 

Delaware. — Security  Tr.  &  Safe  Dep.  Co.  v.  Duross  (1913),  86  Atl. 
209. 

Florida. — Padgett  v.  Lewis,  54  Fla.  177,  45  So.  29;  Roess  Lumber  Co. 
V.  State  Exchange  Bank  (1915),  67  So.  188;  Odlin  v.  Stucky  (1919),  80 
So.  291.;  Gardner  Lumber  Co.  v.  Bank  of  Commerce  (Fla.),  74  So.  313; 
Glass  V.  Virginia-Carolina  Chemical  Co.  (Fla.),  74  So.  981. 

/</a/to.— Daniels  v.  Englehart   (1910).  18  Ida.  548,  111  Pac.  3. 

///ruo/.y.— Peacock   v.    Phillips    (1910),    155    111.   App.    514;    Bechtel   v. 
Marshall    (1918),   119  N.   E.  619,   Mt.   Vernon    Nat.   Bank  v.  Kelling- 
Karel  Co.,  189  111.  App.  375. 

Kansas.— hynds  v.  Van  Valkenburgh  (1908),  77  Kans.  24,  93  Pac. 
615;  McMillan  v.  Gardner  (1912).  88  Kans.  279. 

Kentucky.— Johnson  v.  McMillan  (1918),  199  S.  W.  1070;  Sparr  v. 
Fulton  Nat.  Bank  (1918),  201  S.  W.  310. 

Louisiana. — Dicks  v.  Johnson  (1913),  66  La.  306,  63  So.  700;  Franz 
V.  Schiro  (1915),  136  La.  841,  67  So.  925. 


§    28  CONSIDERATION.  447 

Maryland.— Burke  v.  Smith  (1909),  111  Md.  624,  75  Atl.  114;  Shaffer 
V.  Bond  (1917),  99  Atl.  972;  Herrman  v.  Combs  (1912),  119  Md.  41,  85 
Atl.  1044;  Morgan  v.  Cleaver  (1917),  101  Atl.  610,  130  Md.  617. 

Massachusetts. — Rowe  v.  Bouman,  183  Mass.  488,  67  N.  E.  636;  Lom- 
bard V.  Bryne  (1907),  194  Mass.  236,  80  N.  E.  489;  Centennial  Electric 
Co.  V.  Morse  (1917),  116  N.  E.  901;  Indiana  Flooring  Co.  v.  Rudnick, 
127  N.  E.  428. 

Michigan.— Green  v.  Ostrander  (1910),  160  Mich.  662,  125  N.  W.  735; 
East  Side  Tr.  &  Sav.  Bank  v.  McGinnis  (1917),  163  N.  W.  949. 

Minnesota. — Long  v.  Conn,  179  N.  W.  644. 

Mississippi. — Moore  Dry  Goods  Co.  v.  Ainsworth   (1916),  70  So.  885. 

Missouri. — Jobes  v.  Wilson  (1910),  124  S.  W.  548;  Holmes  v.  Karris, 
97  Mo.  App.  305,  91  S.  W.  116;  Nat.  Bank  of  Commerce  in  St.  Louis 
V.  Morris  (1911),  156  Mo.  App.  43,  135  S.  W.  1008;  Rhodes  v.  Guhman 
(1911),  156  Mo.  App.  344,  137  S.  W.  86;  Link  v.  Jackson  (1911),  158 
Mo.  App.  63,  139  S.  W.  588;  Newburg  St.  Bank  v.  Heflin  (1915),  175 
S.  W.  297;  Citizens  Nat.  Bank  v.  Bombauer  (1916),  189  S.  W.  651; 
Hadley  v.  Greenville  (1916),  187  S.  W.  597;  Glasse  v.  King  (1917),  195 
S.  W.  521;  Sebrecht  v.  NelHst.  184  Mo.  App.  334,  171  S.  W.  11 ;  Rudolph 
Wurlitzer  Co.  v.  Rossman,  196  Mo.  App.  78,  190  S.  W.  636;  Nat.  Tube 
Co.  v.  Ice  Machine  Co.,  201  Mo.  30,  98  S.  W.  620;  Carter  v.  Butler,  264 
Mo.  306,  174  S.  W.  399,  Ann  Cas.  1917A,  483. 

Nebraskd.—Douglzs  v.  Burton   (1915),  154  N.  W.  718. 

New  Jersey.— McCormack  v.  Williams  (1915),  88  N.  J.  L.  170,  95  Atl. 
978;  Bank  of  Roselle  v.  Dorvall  (1916),  98  Atl.  476. 

New  Mexico. — Citizens  etc.,  Bank  v.  Bean,  190  Pac.  1018. 

New  Fory^.— Batterman  v.  Butcher  (1904),  95  A.  D.  213,  88  N.  Y. 
Supp.  685;  Rogers  v.  Morton  (1905),  46  Misc.  494.  95  N.  Y.  Supp.  49; 
Rice  v.  Eisler  (1907),  119  A.  D.  132;  Joveshoff  v.  Rockey  (1908),  109 
N.  Y.  Supp.  818,  58  Misc.  559;  Valley  Dew  Distilling  Co.  v.  Ritzmann 
(1908),  110  N.  Y.  Supp.  917;  Wallabout  Bank  v.  Peyton  (1908),  123 
A.  D.  727,  108  N.  Y.  Supp.  42;  Nat.  Park  Bank  v.  Saitta,  111  N.  Y.  Supp. 
927,  127  A.  D.  624;  Ferguson  v.  Netter  (1910),  126  N.  Y.  Supp.  107,  141 
A.  D.  274;  Ginsberg  v.  Shurman  (1911),  128  N.  Y.  Supp.  653;  Weiss  v. 
Rieser,  114  N.  Y.  Supp.  983,  62  Misc.  Rep.  292;  Newgass  v.  Shulhof 
(1911).  128  N.  Y.  Supp.  644;  Ryan  v.  Sullivan  (1911),  128  N.  Y.  Supp. 
632,  143  A.  D.  471;  Mechan.  &  Metals  Nat.  Bank  v.  Termini  (1915),  156 
N.  Y.  Supp.  433;  Sharp  v.  Sharp,  145  N.  Y.  Supp.  386;  Gerli  &  Co.  v. 
Doorly,  151  N.  Y.  Supp.  574;  Steinberger  v.  Hittelman  (1915),  156  N. 
Y.  Supp.  320;  Miller  vfl  Campbell  (1916),  160  N.  Y.  Supp.  834;  Malone 
V.  Hirsh  (1917),  167  N.  Y.  Supp.  723;  In  re  Wiles  (1918),  168  N.  Y. 
Supp.  940 ;  Daugherty  v.  Salt,  227  N.  Y.  200. 

Nevada.— Divot\  v.  Miller   (Nev.),  184  Pac.  926. 

North  Carolina.— Hardy  v.  Mitchell  (1911).  156  N.  Car.  76,  72  S. 
E.  95,  161  N.  Car.  351  (1913);  Finer  v.  Brittain  (1914),  81  S.  E.  462; 
International  Harvester  Co.  v.  Parham  (N.  C),  90  S.  E.  503. 

North  Dakota.— Walters  v.  Rock  (1908),  18  N.  Dak.  45,  115  N.  W. 
511  ;  Dickinson  v.  Carroll,  21  N.  D.  271,  130  N.  W.  829;  First  State  Bank 
of  Eckman  v.  Kelly  (1915),  152  N.  W.  125;  Holbert  v.  Weber,  36  N.  D. 
106,  161  N.  W.  560. 


448  NEGOTIABLE   INSTRUMENTS.  §    29 

Ohio.— Gmn  v.  Dolan  (1909),  81  Ohio  St.  121,  90  N.  E.  141;  Sharp 
V.  Sharp,  4  Ohio  App.  418. 

Oklahoma. — Cummins  v.  Line,  43  Okla.  575,  143  Pac.  672;  Campbell 
V.  Newton  &  Driskoll  (1915),  152  Pac.  841;  Zebold  v.  Hurst  (1917), 
166  Pac.  99;  Hannon  v.  Fink  (1917).  167  Pac.  1152;  Bank  of  Commerce 
of  Sulphur  V.  Webster,  (1918),  172  Pac.  943. 

Pennsylvania.— Mar r's  Nat.  Bank  v.  Hughes  (1917),  100  Atl.  542. 

Utah.— Smith  v.  Brown   (1917),  165  Pac.  468. 

Vermont. — Parry  &  Jones  v.  Empire  Granite  &  Quarry  Co.  (1916), 
97  Atl.  985. 

Washington.— Vraes  v.  Vollintine  (1909),  53  Wash.  137,  101  Pac.  706; 
Reardon  v.  Cockrell  (1909),  54  Wash.  400,  103  Pac.  457;  Citizens  Bank 
&  Trust  Co.  V.  Limpright  (1916),  160  Pac.  1046;  Hamilton  v.  Mihills 
(1916),  159  Pac.  887;  Washington  Trust  Co.  v.  Keyes,  88  Wash.  287, 
152  Pac.  1029;  Hamilton  v.  Ramage  (1916),  89  Wash.  649,  156  Pac.  151; 
City  Nat.  Bank  v.  Shelton  Elec.  Co.  (1917),  164  Pac.  993;  Hofifman  v.  M. 
Gottstein  Inv.  Co.   (1918).  172  Pac.  573. 

West  Virginia. — Interstate  Finance  Co.  v.  Schroeder  (1914),  74  W. 
Va.  67.  81  S.  E.  552. 

Wisconsin.— MarVmg  v.  Fitzgerald  (1909),  138  Wis.  93. 

United  States.— Mowles  v.  Lorrimer  (1914),  212  Fed.  155  (C.  C.  A., 
3d  Ct);  Taylor  v.  First  Nat.  Bank  of  Aurora  (1914),  212  Fed.  898 
(C.  C.  A.,  6th  Ct.)  ;  Yates  Center  Nat.  Bank  v.  Schaede  (1917),  240 
Fed.  240;  Cutler  v.  Fry   (1917),  240  Fed.  238. 


§  29.  Liability  of  accommodation  party.  An  accommoda- 
tion party  is  one  who  has  signed  the  instrument  as  maker,  drawer, 
acceptor  or  indorser,  without  receiving  value  therefor,  and  for 
the  purpose  of  lending  his  name  to  some  other  person.  Such  a 
person  is  liable  on  the  instrument  to  a  holder  for  value,  not- 
withstanding such  holder  at  the  time  of  taking  the  instrument 
knew  him  to  be  only  an  accommodation  party.^'  ^* 

See  text,  §§    124,  70. 

In  Illinois  the  words,  "without  receiving  value  therefor,  and  "  after 
the  word  "indorser"  are  omitted  and  the  following  comes  at  the  end  of 
the  section :  "and  in  case  a  transfer  after  maturity  was  intended  by  the 
accommodating  party  notwithstanding  such  holder  acquired  title  after 
maturity." 

^  Digest  of  some  of  the  deci.sions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Liability  of  bank  for  failure  to  apply  deposit  of  accommodated  party 
after  notes  become  due  and  held  by  said  bank.  Tatum  v.  Commercial 
Bank  and  Trust  Co.,  193  Ala.  120,  69  So.  508,  L.  R.  A.  1916C,  767. 

Accommodation  maker  liable  to  holder  for  value.  Green  v.  McCord, 
-  Ala.  — ,  85  So.  750. 


§    29  CONSIDERATION.  449 

Plaintiff  must  prove  himself  an  accommodating  party  by  the  pre- 
ponderance of  the  evidence.  Fisher  v.  Rice  Growers  Bank,  122  Ark. 
600.  184  S.  W.  Z6. 

Check  made  by  third  party  is  an  accommodation  check  on  wliich  the 
maker  is  liable.     First  Nat.  Bank  v.  Allen,  —  Ark.  — ,  216  S.  W.  1039. 

Officers  of  bank  signing  as  individuals  are  accommodation  makers. 
Felker  v.  Boatmen's  Bank,  —  Ark.  — ,  225  S.  W.  306. 

Indorsement  to  indemnify  against  loss  on  account  of  existing  liability 
of  third  person  as  accommodation  indorsing.  Griswold  v.  Morrison,  — 
Cal.  App.  — ,  200  Pac.  62. 

Accommodation  indorser's  rights.  Staples  v.  Port  Graham  Coal  Co., 
46  App.  D.  C.  542. 

Transfer  v^rithout  indorsement  gives  the  title  to  transferee  subject  to 
defense  then  existing.     Sanderson  v.  Clark,  —  Idaho  — ,  194  Pac.  472. 

Accommodation  maker  liable  to  indorsee  on  note  when  indorsed  as 
collateral  security  for  a  debt.  Many,  Blanc  &  Co.  v.  Krueger,  153  111. 
App.  Z27. 

Liability  of  accommodation  indorser.  Elgin  Nat.  Bank  v.  Goecke,  213 
111.  App.  559. 

Bank  paid  seller  for  goods.  The  seller  for  bank's  accommodation 
drew  a  draft  on  buyer.  The  bank  is  not  holder  in  due  course.  Sliireman 
v.  Second  Nat.  Bank  of  New  Albany,  —  Ind.  App.  — ,  124  N.  E.  712. 

One  signing  paper  of  another  to  conform  to  rule  of  bank  held  ac- 
commodating party.  German-American  State  Bank  v.  Watson,  99  Kan. 
686,  163  Pac.  637. 

Definition  of  "accommodation."  Sales  v.  Martin,  173  Ky.  616,  191  S. 
W.  480. 

Accommodation  note  deposited  as  collateral  security  and  defenses. 
Black  v.  Bank  of  Westminster,  96  Md.  399,  54  Atl.  88. 

If  payee  knows  one  of  makers  of  a  note  not  the  principal  debtor  he 
does  not  therebv  accept  him  as  surety.  Jamesson  v.  Citizens'  Nat.  Bank 
(Md.),  99  Atl.  994. 

Check  given  to  pay  overdraft  of  a  customer  creates  a  liability  on 
accommodation  paper.   Neal  v.  Wilson.  213  Mass.  336,  100  N.  E.  544. 

Payee's  indorsement  varied  by  parol  to  show  accommodation  paper. 
State  Bank  v.  Pangerl   (Minn.).  165  N.  W.  479. 

Accoramodation  indorser  being  in  effect  a  surety  or  co-indorser  may 
set  up  usury  as  a  defense.  Osborne  v.  Frederick,  134  Mo.  App.  449,  114 
S    W.  1045. 

Note  given  for  auto  purchased  for  A  and  the  maker  of  note  not 
necessariily  accommodation  instrument.  Overland  Auto  Co.  v.  Winter 
(Mo.  App.),  180  S.  W.  561. 

Indorser  of  a  note  for  accommodation  of  the  payee  held  not  liable 
thereon  to  payee  although  indebted  to  him  if  he  signed  under  that  rep- 
resentation.    Cox  V.  Heagy  (Mo.),  184  S.  W.  494. 

Evidence  admissible  to  varj"-  agreement  as  against  one  not  a  bona 
fide  holder.     Schlamp  v.  Maneval   (Mo.  App.),  190  S.  W.  658. 

Accommodation  maker  liable  although  holder  had  knowledge  of  such 
status.     First  State  Bank  of  Hilgcr  v.  Lang.  —  Mont.  — ,  174  Pac.  597. 

When  accommodation  maker  not  released.  Merchants  Nat.  Bank  of 
Billings  V.  Smith,  —  Mont.  — .  196  Pac.  523. 

Accommodation  note  transferred  by  the  accommodated  payee  at  a 
greater  discount  than  the  legal  rate  is  unenforceable  by  the  transferee. 
Strickland  v.  Henry,  66  App.  Div.  23.  7Z  N.  Y.  Supp.  12' 

Corporation  has  no  power  to  make  accommodation  indorsement,  Op- 
penheim  v.  Simon  Reigel  Cigar  Co.,  90  N.  Y.  Supp.  355. 


450  NEGOTIABLE   INSTRUMENTS.  §    29 

One  identifying  payee  and  indorsing  check  at  request  of  bank  teller 
liable  as  accommodation  indorser.  Smith  v.  State  Bank,  54  Misc.  Rep. 
550,  104  N.  Y.  Supp.  750. 

Accommodation  maker  liable  to  indorsee  on  note  in  payment  of  ante- 
cedent debt.  English  v.  Schlesinger.  55  Misc.  Rep.  584,  105  N.  Y.  Supp. 
989. 

Parol  evidence  admissible  to  show  one  an  accommodation  party.  Ryan 
V.  Sullivan,  143  App.  Div.  471,  128  N.  Y.  Supp.  632. 

Wife  making  note  in  payment  for  labor  on  houses  constructed  by 
her  husband  on  her  property  is  not  an  accommodation  maker.  Brayer  v. 
Edell,  163  N.  Y.  Supp.  989. 

When  transferee  is  ignorant  that  paper  is  accommodation  paper  he 
may  recover  although  he  discounts  at  a  greater  rate  than  the  legal  rate. 
Kennedy  v.  Hayman,  167  N.  Y.   Supp.  311. 

Payee  accommodation  indorser  may  buy  the  paper  of  the  holder  and 
sue  the  maker.     Blanchard  v.  Blanchard,  201  N.  Y.  134,  94  N.  E.  630. 

Parol  evidence  as  to  accommodation  party.  Haddock,  Blanchard  & 
Co.  v.  Haddock,  192  N.  Y.  499,  85  N.  E.  682. 

Corporation  has  no  implied  power  to  execute  accommodation  paper. 
Jacobus  v.  Jamestown  Mantel  Co.,  211  N.  Y.  154,  105  N.  E.  210. 

Accommodation  note  transferred  by  the  accommodated  maker  at  dis- 
count greater  than  legal  rate  unenforceable.  Bruck  v.  Lambeck,  63  Misc. 
Rep.  117,  118  N.  Y.  Supp.  494. 

Accord.     Simpson  v.  Hefter,  42  Misc.  Rep.  482,  87  N.  Y.  Supp.  243. 

Accord.  Sabine  v.  Paine,  166  App.  Div.  9,  151  N.  Y.  Supp.  735, 
affirmed  223  N.  Y.  401,  119  N.  E.  849. 

Burden  is  on  holder  to  prove  he  had  no  notice  that  the  corporation 
was  an  accommodation  party.  Durbrow  v.  Swedish  Iron  &  Steel  Corp., 
95  Misc.  Rep.  160.  158  N.  Y.  Supp.  701. 

Accord.  Nat.  Bank  v.  Snyder  Co.,  117  App.  Div.  370.  102  N.  Y.  Supp. 
478. 

Accord.    Abbott  v.  Le  Prevost,  166  App.  Div.  40,  151  N.  Y.  Supp.  616. 

Accord.  Bradley  Engineering  Co.  v.  Heyburn,  56  Wash.  628,  106  Pac. 
170. 

Oral  argument  between  all  parties  not  admissible  to  show  note  to  be 
paid  by  accommodated  party.  Gerli  v.  National  Mill  Supply  Co.,  78 
N.  J.  1,  73  Atl.  252. 

Defendant's  endorsement  for  plaintifiF's  accommodation  held  to  be  a 
question  of  fact  for  the  jury.  Morris  County  Brick  Co.  v.  Austin,  79 
N.  J.  L.  273,  75  Atl.  550. 

Indorsement  for  accommodation  a  good  defense  against  accommodated 
party.     Ladd  v.  Ardmon  State  Bank.  43  Okla.  502,  143  Pac.  170. 

Accommodation  maker  liable  though  principal  maker  may  not  be  on 
account  of  infancy.  Hodgins  v.  N.  W.  Finance  Co.,  46  Okla.  95,  148 
Pac.  717. 

When  extension  of  time  does  not  affect  accommodation  makers.  Okla- 
homa State  Bank  of  Sayer  v.  Seaton,  —  Okla.  — ,  170  Pac.  477. 

Successive  accommodation  parties  as  between  themselves  are  liable 
in  the  order  in  which  their  names  appear.  Noble  v.  Beeman-Spaulding 
Co..  65  Ore.  93.  131  Pac.  1006.  46  L.  R.  A.   (N.  S.)   162. 

Accommodation  maker  liable  even  though  bank  knew  he  was  such 
accommodation  maker.  Farmers  State  Bank  of  North  Powder  v.  Fors- 
strom.  —  Ore.  — .  173  Pac.  935. 

Note  procured  for  an  attornej^'s  accommodation  with  no  payee  named 
after  attorneys  death  under  circumstances  mav  be  recovered  upon.  \(f 
another.     Wolfgang  y,  Shirley,  239  Pa.  408,  86  Atl.  1011. 


§    29  CONSIDERATION.  451 

Corporation  liable  on  accommodation  paper  to  a  holder  in  due  course. 
Cox  &  Sons  Co.  V.  Northampton  Brewing  Co.,  245  Pa.  418,  91  Atl.  859, 
Ann.  Cas.  1916A,  86. 

Wife  signing  note  with  her  husband  and  given  in  payment  for  groceries 
is  liable  on  note  though  not  personally  liable  on  the  account.  Wilbour 
V.  Hawkins,  38  R.  I.  119,  94  Atl.  856. 

Note  to  a  bank  for  overdue  interest  on  the  note  of  another  is  ac- 
commodation paper.  Skagit  State  Bank  v.  Moody,  86  Wash.  286,  150 
Pac.  425,  L.  R.  A.  1916A,  1215. 

Accommodation  note  may  be  negotiated  for  the  first  time  after  ma- 
turity to  one  having  knowledge  of  the  accommodation  and  accommo- 
dation maker  be  liable.  Marling  v.  Jones,  138  Wis.  82,  119  N.  W.  931, 
131  Am.  St.  Rep.  996. 

This  case  is  contrary  to  the  general  rule  that  when  accommodation 
paper  is  given  it  is  the  expectation  and  imderstanding  of  the  parties 
that  it  shall  be  taken  care  of  at  maturity. 

Accord  with  Wisconsin  case.  Mersick  v.  Alderman,  11  Conn.  634,  60 
Atl.  109,  2  Ann.  Cas.  254. 

Contra  to  Wisconsin  case.     Cottrell  v.  Watkins,  89  Va.  801,  817. 

An  accommodation  note  once  negotiated  and  paid  at  maturity  is  ex- 
tinguished and  cannot  be  re-issued  and  bind  the  one  who  signed  for 
accommodation.     Comstock  v.  Buckley,  141  Wis.  228,  124  N.  W.  414. 

Accord.     Cominsky  v.  Coleman,  114  N.  Y.  Supp.  875. 

One  receiving  one-half  the  proceeds  of  the  discount  is  not  an  accom- 
modation maker.  Reyburn  v.  Queen  City  Savings  Bank  &  Trust  Co., 
171  Fed.  609,  96  C.  C.  A.  373. 

Defendant's  indorsement  held  to  be  made  for  accommodation  of  the 
maker  of  a  note  and  not  of  the  bank.  Nalitzky  v.  Williams,  237  Fed. 
Rep.  802,  151  C.  C.  A.  44. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
tically  by  states,  where  this  section  has  been  construed : 

Alabama. — Tatum  v.  Commercial  Bank  &  Trust  Co.  (1914),  185  Ala. 
249,  64  So.  561 ;  Green  v.  McCord,  85  So.  750. 

Arizona. — Cowan  v.  Ramsay   (1914),  140  Pac.  501. 

Arkansas.— V\%\i^x  v.  Rice  Grower's  Bank  (1916),  122  Ark.  600,  184 
S.  W.  36;  Felker  v.  Boatmen's  Bank,  225  S.  W.  306;  First  Nat.  Bank  v. 
Allen,  —  Ark.  —   216  S.  W.  1039. 

Cfl/J/orMta.— Backer  v.  Grunnett  (1919),  178  Pac.  312;  Griswold  v. 
Morrison,  —  Cal.  App.  — ,  200  Pac.  62. 

Connecticut.— )Atrsv:^  v.  Alderman  (1905),  11  Conn.  634.  60  Atl. 
109;  Knapp  Co.  v.  Tidewater  Coal  Co.  (1912),  85  Conn.  147,  81  Atl.  1063. 

Df/awflj-c— Security  Tr.  &  Safe  Dep.  Co.  v.  Duross  (1913),  27  Del. 
Ill,  86  Atl.  209. 

F/onrfa.— Bass  v.  Geiger  (1916),  IZ  So.  796;  Idaho-Sanderson  v. 
Qark,  194  Pac.  472. 

Illinois. — Many,  Blanc  &  Co.  v.  Krueger,  153  111.  App.  327;  Graves 
V.  Neeves  (1913),  183  111.  App.  235;  Biossat  v.  Louis  (1913),  184  111. 
App.  436;  Burr  v.  Beckler  (1914),  106  N.  E.  206,  264  111.  230;  Elgin  Nat. 
Bank  v.  Goecke,  213  111.  App.  559. 


452  NEGOTIABLE    INSTRUMENTS.  §    29 

Indiana. — Shireman  v.  Second  Nat.  Bank  of  New  Albany,  —  Ind.  App. 
— ,  124  N.  E.  712. 

lozva. — Banker's  Iowa  State  Bank  v.  Mason  Hand  Leather  Co.  (1902), 
90  N.  W.  612,  121  Iowa  570;  Farmers  Loan  &  Tr.  Co.  v.  Brown  (1917), 
165  N.  W.  70. 

Kansas. — Lill  v.  Gleason  (1914),  142  Pac.  287;  German- American 
State  Bank  v.  Watson  (1917),  163  Pac.  637,  99  Kans.  686;  First  Nat. 
Bank  v.  Stroup  (1919),  177  Pac.  836. 

Kentucky.—Sales  v.  Martin,  173  Ky.  616,  191  S.  W.  480;  Owensboro 
Sav.  Bank  &  Tr.  Co.'s  Receiver  v.  Haynes  (1911),  136  S.  W.  1004  Yomig 
V.  Exchange  Bank  of  Ky.,  152  Ky.  293,  153  S.  W.  444,  Ann  Cas.  1915B, 
148. 

Louisiana. — N.  &  C.  Newman,  Limited  v.  Pellerin  (1910),  125  La. 
67,  51  So.  70;  Commercial  Nat.  Bank  v.  Sanders  (1916),  71  So.  891; 
First  State  Bank  v.  Davis  (1916).  139  La.  723,  72  So.  185;  Schafifter  v. 
Irwin  (1916),  139  La.  92,  71  So.  241. 

Mal}ie.— Kerr  v.  Dyer    (1917),   102  Atl.   178. 

Maryland.— Weant  v.  Southern  Tr.  &  Dep.  Co.  (1910),  112  Md.  463, 
77  Atl.  289;  Jamesson  v.  Citizen's  Nat.  Bank  (1917),  99  Atl.  994,  130 
Md.  75;  Bergen  v.  Tremble  (1917),  101  Atl.  137;  Black  v.  Bank  of 
Westminster,  96  Md.  399,  54  Atl.  88. 

Massachusetts.— Rowe  v.  Bowman  (1903),  183  Mass.  488,  67  N.  E. 
636;  East  Bridgewater  Sav.  Bank  v.  Bates  (1906),  191  Mass.  110;  Lowell 
v.  Bickford  (1909),  201  Mass.  543,  88  N.  E.  1 ;  Nesson  v.  Miller  (1910), 
205  Mass.  515;  Neal  v.  Scherber  (1911),  207  Mass.  323,  39  N.  E.  628; 
Union  Tr.  Co.  v.  McGinty  (1912),  212  Mass.  205,  98  N.  E.  679;  Neal  v. 
Wilson  (1913),  213  Mass.  336,  100  N.  E.  544;  Conners  v.  Sullivan  (1915), 
108  N.  E.  503;  Miller  v.  Levitt  (1917),  115  N.  E.  431;  Middleborough 
Nat.  Bank  v.  Cole,  191  Mass.  168,  77  N.  E.  781. 

Michigan.— Ensign  v.  Dunn  (1914),  148  N.  W.  343;  East  Side  Tr.  & 
Sav.  Bank  v.  McGinnis   (1917),  163  N.  W.  949. 

Minnesota.— Bank  of  Montreal  v.  Bucher  (1916),  157  N.  W.  1070. 

Missouri. — Osborne  v.  Frederick,  134  Mo.  App.  449,  114  S.  W.  1045; 
First  Nat.  Bank  of  Jefiferson  City  v.  Asel  (1910),  154  Mo.  App.  228; 
Lehnhard  v.  Sedway  (1911),  160  Mo.  App.  83,  141  S.  W.  430;  Citizen's 
Bank  of  Senath  v.  Douglass  (1913),  161  S.  W.  601;  Golden  Banking  Co. 
v.  Munn,  184  Mo.  App.  515,  170  S.  W.  448;  Golden  City  Banking  Co.  v. 
Morrow  (1914),  179  S.  W.  448;  Overland  Auto  Co.  v.  Winter  (Mo. 
App.),  180  S.  W.  561;  Cox  v.  Hagy  (1916),  184  S.  W.  494;  Eaves  v. 
Keeton  (1917),  193  S.  W.  629;  Bank  of  Dexter  v.  Simmons  (1918),  204 
S.  W.  837;  Kage  v.  Oates  (1919),  208  S.  W.  126;  Bank  of  Melyville  v. 
Lee  (1919).  208  S.  W.  143. 

Montana.— Firsi  Nat.  Bank  of  Hilger  v.  Lang  (1918),  174  Pac.  597; 
Merchants,  etc.,  Bank  v.  Smith,  196  Pac.  523. 

Nchraska.—C\i\zcns  Bank  v.  Frederickson  (1909),  83  Neb.  755;  State 
Bank  of  Omaha  v.  Huffman   (1916),  160  N.  W.  115. 

Neiv  Jersey.— G&rW  v.  Nat.  Mill  Supply  Co.  (1909),  78  N.  J.  L.  1, 
73  Atl.  252;  Morris  Co.  Brick  Co.  v.  Austin   (1910).  79  N.  J.  L.  27Z,  75 


§    29  CONSIDERATION.  453 

Atl.  550;   Clark  v.  Barthold    (1915),  87  N.  J.  L.  255,  93  Atl.  699;   First 
Nat.  Bank  v.  Dorvall,  89  N.  J.  L.  298,  98  Atl.  476. 

Nczv  York.— Pryor  v.  Storke  (1899),  37  A.  D.  364;  Citizens  Nat. 
Bank  v.  Lilienthal  (1899),  40  A.  D.  609;  Howard  v.  Van  Gieson  (1900), 
56  A.  D.  217;  Fleitman  v.  Ashley  (1901),  60  A.  D.  201;  Strickland  v. 
Henry  (1901),  66  A.  D.  23,  73  N.  Y.  Supp.  121;  Nat.  Citizens  Bank  v. 
Toplitz  (1903).  81  A.  D.  593,  81  N.  Y.  Supp.  422;  Roseman  v.  Mahoney 
(1903),  86  A.  D.  377,  83  N.  Y.  Supp.  749;  Packard  v.  Windholf  (1903). 
40  Misc.  347,  84  N.  Y.  Supp.  666;  affirmed  88  A.  D.  365  (1902)  ;  Simp- 
son V.  Hefter  (1904),  42  Misc.  482,  87  N.  Y.  Supp.  243;  Batterman  v. 
Butcher  (1904),  95  A.  D.  213,  88  N.  Y.  Supp.  685;  Oppenheim  v.  Reigal 
Cigar  Co.  (1904),  90  N.  Y.  355;  Blag  &  Eng.  Co.  v.  Nor.  Bank,  206  N. 
Y.  400;  Met.  Pr.  Co.  v.  Springer  (1904),  90  N.  Y.  Supp.  376;  Hover  v. 
Magley  (1905),  48  Misc.  430;  96  N.  Y.  Supp.  925;  Westheimer  v.  Helm- 
bold  (1905),  109  A.  D.  854;  Schlesinger  v.  Kelly  (1906).  114  A.  D.  546, 
9'j  N.  Y.  Supp.  1083;  Nat.  Bank  of  Newport  v.  Snyder  Mfg.  Co.  (1907), 
117  A.  D.  370,  102  N.  Y.  Supp.  478;  Smith  v.  State  Bank  (1907).  104 
N.  Y.  Supp.  750,  54  Misc.  550,  104  N.  Y.  Supp.  750;  English  v.  Schlesinger 
(1907).  55  Misc.  584,  105  N.  Y.  Supp.  989;  The  Gansevort  Bank  of  N.  Y. 
V.  Gilday  (1907),  104  N.  Y.  Supp.  271,  53  Misc.  107;  Sabine  v.  Paine. 
151  N.  Y.  Supp.  735.  161  A.  D.  9,  affirmed  223  N.  Y.  401.  119  N.  E.  849; 
Durbrow  v.  Swedish  Iron  &  Steel  Corp.  158  N.  Y.  Supp.  701,  95  Misc. 
Rep.  160;  Haddock,  Blanchard  &  Co.  v.  Haddock  (1908),  192  N.  Y.  Supp. 
499,  82  N.  E.  682,  103  N.  Y.  Supp.  584;  Cominsky  v.  Coleman,  114  N.  Y. 
Supp.  875;  Witteman  v.  Glass  (1909),  117  N.  Y.  Supp,  940:  Bruck  v. 
Lambeck,  118  N.  Y.  Supp.  494,  63  Misc.  Rep.  117;  Uvalde  Asphalt  Pav- 
ing Co.  V.  Nat.  Trading  Co.  (1909),  135  A.  D.  391,  120  N.  Y.  Supp.  11; 
Easton  Furniture  Mfg.  Co.  v.  Caminez  (1911),  131  N.  Y.  Supp.  157; 
Blanchard  v.  Blanchard  (1911),  201  N.  Y.  134,  94  N.  E.  630,  133  A.  D.  937, 
affirming  s.  c,  133  A.  D.  937  (1909),  without  opinion;  Easton  Mfg.  Co. 
V.  Caminez  (1911),  146  A.  D.  436;  Martin  L.  Hall  v.  Todd  (1912),  139 
N.  Y.  Supp.  Ill ;  Building  &  Engineering  Co.  v.  Northern  Bank  of  N.  Y. 
(1912),  206  N.  Y.  400;  Jacobus  v.  Jamestown  Mantel  Co.,  211  N.  Y.  154, 
105  N.  E.  210;  Spencer  &  Co.  v.  Brown  (1913),  143  N.  Y.  Supp.  994; 
Neponset  Nat.  Bank  v.  Dunbar  (1913),  143  N.  Y.  Supp.  174,  158  A.  D.  5 ; 
Cleary  v.  Dvkeman  (1914).  146  N.  Y.  Supp.  611;  Abbott  v.  LeProvost 
(1915),  151  N.  Y.  Supp.  616;  Grannis  v.  Stevens  (1916),  111  N.  E.  263, 
216  N.  Y.  Supp.  583;  Braver  v.  Edell  (1917),  163  N.  Y.  Supp.  989;  Ken- 
nedy V.  Heyman   (1918),  167  N.  Y.  Supp.  311. 

New  Mexico. — First  Sav  Bank  &  Tr.  Co.  v.  Flowinoy  (1918),  171 
Pac.  793. 

North  Carolina. — Brown  Carriage  Co.  v.  Dowd   (1911),  71  S.  E.  721. 

North  Dakota.— First  St.  Bank  of  Eckman  v.  Kelly  (1915),  152  N. 
W.  125;  First  Nat.  Bank  of  McClukly  v.  Meyer   (1915),  152  N.  W.  567. 

0/n'o.— Richards  v.  Market  Ex.  Bank  (1910),  81  Ohio  St.  348,  55  Ohio 
Law  Bull.  20. 

Oklahoma. — Bank  of  Carrollton,  Miss.,  v.  Latting  (1913),  130  Pac. 
144;  Ladd  v.  Ardmore  State  Bank,  43  Okla.  502,  143  Pac.  170;  Hodgins 
V.  N.  W.  Finance  Co..  46  Okla.  95,  148  Pac.  717 ;  Fue  v.  Peoples  Bank  & 
Trust  Co.  (1916),  156  Pac.  683;  Oklahoma  Bank  v.  Seaton  (1918),  170 
Pac.  477. 


454  NEGOTIABLE   INSTRUMENTS.  §    29 

Oregon.— White  v.  Savage  (1906),  48  Oreg.  604,  87  Pac.  1040;  Cellers 
V.  Meachem  (1907),  49  Oreg.  186,  104  L.  R.  A.  (N.  S.)  133;  Lumbermen's 
Nat.  Bank  of  Portland  v.  Campbell  (1912),  61  Oreg.  123,  121  Pac.  427; 
Hunter  v.  Harris  (1912),  63  Oreg.  505,  127  Pac.  786;  Noble  v.  Beeman- 
Spaulding-Woodwar  Co.  (1913),  65  Ore.  93,  131  Pac.  1006;  Farmers* 
State  Bank  of  North  Powder  v.  Forsstroni   (1918),  173  Pac.  935. 

Pennsylvania. — Chambers  v.  McLean  (1903),  24  Pa.  Super  Ct.  567; 
Diflfenbacher's  Estate  (1906),  31  Pa.  Super.  Ct.  35;  Federal  Nat.  Bank  v. 
Cross  Creek  Co.  (1908),  220  Pa.  St.  39,  68  Atl.  1018;  Ott  v.  Seward 
(1908),  221  Pa.  630;  Wolfgang  v.  Shirley  (1913),  239  Pa.  408;  86  Atl. 
1011;  Manlini  v.  Serrano  (1914),  28  Phil.  Rep.  640;  Cox  &  Sons  Co.  v. 
Northampton  Brewing  Co.,  245  Pa.  418,  91  Atl.  859,  Ann  Cases  1916A. ; 
Ross  V.  Eyre  (1918),  103  Atl.  894;  Edward  E.  Buhler  Co.  v.  Childester 
(1919),  105  Atl.  52. 

Rhode  Islatid.—Wilhour  v.  Hawkins  (1915),  38  R.  L  119,  94  Atl.  856; 
Lee  V.  Benjamin  (1918),  102  Atl.  713. 

Tennessee. — Farmers  &  Merchants  Bank  v.  Bank  of  Rutherford 
(1905,)  115  Tenn.  64,  88  S.  W.  939;  Nolan  v.  H.  E.  Wilcox  Motor  Co. 
(1917),  195  S.  W.  581;  Noelan  v.  Wilcox  Motor  Co.  (1917),  195  S.  W. 
581. 

Texas.— Houston  Trans.  Co.  v.  Paine  (1917),  193  S.  W.  188. 

t/ffl/i.— Wostenholme  v.  Smith  (1908),  34  Utah  300,  97  Pac.  329. 

Virginia.-^CottTcW  v.  Watkins,  89  Va.  801. 

Washington. — Bradley  Engineering  &  Mfg.  Co.  v.  Heyburn  (1910), 
56  Wash.  628,  106  Pac.  170;  Gleeson  v.  Lichty  (1911),  62  Wash.  656, 
114  Pac.  518;  Handsaker  v.  Pederson  (1912),  71  Wash.  218;  Metzger 
V.  Sigall  (1914),  145  Pac.  72;  Northern  Bank  &  Trust  Co.  v.  Graves 
(1914),  79  Wash.  411,  140  Pac.  328;  Pease  v.  Syler  (1914),  138  Pac.  310; 
Skagit  State  Bank  v.  Moody  (1916),  86  Wash.  286,  150  Pac.  425. 

West  Virginia.— First  Nat.  Bank  of  Hinton  v.  Plumley  (1915),  87  S. 
E.   94. 

Wisconsin.— Bank  of  Monticello  v.  Dooly  (1902),  113  Wis.  590;  Pel- 
ton  v.  Spider  Lake  S.  &  L.  Co.  (1903),  117  Wis.  569;  Welch  v.  Kukuk 
(1906),  128  Wis.  419,  107  N.  W.  301;  Marling  v.  Jones  (1909),  138 
Wis.  82,  119  N.  W.  931;  German  Nat.  Bank  v.  Barber  (1914),  149  N. 
W.  767;  Comstock  v.  Buckley  (1910),  141  Wis.  227,  124  N.  W.  414; 
Schoenwetter  v.  Schoenwetter  (1916),  164  Wis.  131,  159  N.  W.  737. 

United  States. — In  re  Troy  &  Cohoes  Shirt  Co.,  136  Fed.  Rep.  420; 
In  re  Hopper-Morgan  Co.,  156  Fed.  525;  Willard  v.  Crook  (1903), 
21  App.  D.  C.  237;  Reyburn  v.  Queen  City  Sav.  Bank  &  Trust  Co. 
(1909),  171  Fed.  609,  96  C.  C.  A.  373;  In  re  McCord  (1909),  174  Fed. 
72;  Trust  Co.  of  St.  Louis  Co.  v.  Markee  (1910),  179  Fed.  764  (Pa.); 
Bluthenthal  &  Bickart  v.  Carson  (1911),  37  A.  C.  (D.  C.)  118;  La 
Normandie  Hotel  Co.  v.  Security  Trust  Co.  (1912),  38  A.  C.  (D.  C.) 
187;  Howell  v.  Commercial  Nat.  Bank  (1913),  40  A.  C.  (D.  C.)  370; 
Wilson  V.  Knowles  (1914),  213  Fed.  782  (C.  C.  A.,  2d  Ct.)  ;  Leonard 
v.  State  Exch.  Bank  of  Elk  City  (1916),  236  Fed.  316;  Nalitzky  v.  Wil- 
liams, 237  Fed.  Rep.  802,  151  C  .C.  A.  44. 


ARTICLE  III. 


NEGOTIATION. 


§30.  What   constitutes   negotiation. 

31.  Indorsement;  how  made. 

32.  Indorsement   must  be   of  entire 

instrument. 

33.  Kinds   of  indorsement. 

34.  Special     indorsement;     indorse- 

ment in  blank. 

35.  Blank   indorsement  ;    how- 

changed    to     special     indorse- 
ment. 

36.  When    indorsement    restrictive. 

37.  Effect     of    restrictive     indorse- 

ment ;   rights  of  indorsee. 

38.  Qualified  indorsement. 

39.  Conditional  indorsement. 

40.  Indorsement  of  instrument  pay- 

able to  bearer. 

41.  Indorsement    where    payable    to 

two  or  more  persons. 


§42.  Effect  of  instrument  drawn  or 
indorsed  to  a  person  as 
cashier. 

43.  Indorsement  where  name  is  mis- 

spelled, et  cetera. 

44.  Indorsement     in     representative 

capacity. 

45.  Time     of     indorsement;     pre- 

sumption. 

46.  Place     of 

sumption. 

47.  Continuation  of  negotiable 

character. 

48.  Striking    out    indorsement. 

49.  Transfer   without   indorsement ; 

effect  of. 

50.  When  prior  party  may  negotiate 

instrument. 


indorsement ;     pre- 


Sections  30  to  50  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  law  in  the  various  states  and 
territories  beginning  on  page  360. 

§  30.  What  constitutes  negotiation.  An  instrument  is 
negotiated  when  it  is  transferred  from  one  person  to  another  in 
such  manner  as  to  constitute  the  transferee  the  holder  thereof. 
If  payable  to  bearer  it  is  negotiated  by  delivery;  if  payable  to 
order  it  is  negotiated  by  the  indorsement  of  the  holder  completed 
by  delivery.*'  *' 

See  text,  §   13. 

Cross  sections  191,  8,  9,  17  subd.  6. 


*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Transferee  must  plead  the  provisions  of  note  as  to  whether  payable 
to  order  or  bearer.  German-Am.  Nat.  Bank  v.  Lewis,  9  Ala.  App.  352, 
63  So.  741. 

Note  is  negotiated  when  delivered  to  payee  or  indorsee.  Ex  Parte 
Goldberg  &  Lewis,  191  Ala.  356,  67  So.  839,  L.  R.  A.  1915F,  1159. 

455 


456  NEGOTIABLE   INSTRUMENTS.  §    30 

Note  indorsed  in  blank  passes  by  delivery  and  need  not  be  indorsed. 
Davis  V.  First  Nat.  Bank,  192  Ala.  8,  68  So.  261. 

Indorsement  imports  delivery.  Sherrill  v.  Merchants,  etc.,  Bank 
(Ala.),  70  So.  723. 

Pleading  must  show  how  transfer  to  plaintiflF  made.  Wilson  v. 
Weaver   (Ala.  App.),  77  So.  238. 

Note  assigned  by  separate  writing  and  payable  to  bearer  is  negotiated 
in  hands  of  indorsee.     Davis  v.  Florcy  (Ala.  App.),  77  So.  413. 

Instruments  payable  to  order  must  be  indorsed.  Jones  v.  Bell,  —  Ala. 
— ,  77  So.  998. 

Transfer  of  note  and  mortgage  with  indorsement  on  mortgage. 
Slaughter  v.  Green,  —  Ala.  — ,  87  So.  358. 

Pleading  alleging  that  payee  "indorsed  and  transferred  a  note"  is 
sufificient.  Louisville  Co.  v.  International  Trust  Co.,  18  Colo.  App.  345, 
71  Pac.  898. 

Delivery  not  affected  by  after  endorsement  and  guaranty  of  pay- 
ment. McKee  v.  District  Nat.  Bank,  38  App.  Cas.   (D.  C),  465. 

Where  defendant  gave  a  cashier  authority  to  collect  notes  he  is  bound 
if  the  latter  abstracts  them  and  delivers  them  to  a  bona  fide  purchaser. 
Irwin  V.  Deming,  142  Iowa  299,  120  N.  W.  645. 

A  note  indorsed  by  payee  to  his  principal  and  held  by  payee  until 
death  is  not  delivered.    Young  v.  Hayes  (Iowa).  165  N.  W.  391. 

Indorsement  by  rubber  stamp.  State  Savings  Bank  of  Leavenworth  v. 
Krug,  —  Kan.  — ,  193  Pac.  899. 

Note  negotiated  before  delivery  to  payee.  Liberty  Trust  Co.  v. 
Tilton,  217  Mass.  462,  105  N.  E.  605,  L.  R.  A.  191 5B,  144. 

Delivery  to  an  agent  with  authority  to  borrow  money  is  sufficient 
delivery  even  if  agent  borrows  money  for  himself.  Sublette  v.  Brew- 
ington,  139  Mo.  App.  410,  122  S.  W.  1150. 

When  holder  is  not  agent  of  pavee  but  payee  of  note  payable  to  order. 
Scotland  County  Nat.  Bank  v.  Hohn,  146  Mo.  App.  699,  125  S.  W.  539. 

One  to  whom  note  is  indorsed  for  collection,  who  in  turn  indorses  it 
to  another  may  successfully  prosecute  the  claim'  thereon  after  his  indorsee 
has  returned  the  note  to  him.  Carter  v.  Butler,  264  Mo.  306,  174  S.  W. 
399,  Ann.  Cas.  1917A,  483. 

Indorsement  and  delivery  constitutes  negotiation.  American  Forest 
Co.  V.  Hall.  —  Mo.  — ,  216  S.  W.  740. 

Notes  payable  to  X  or  bearer  will  pass  by  delivery.  J.  I.  Case  Thresh- 
ing Machine  Co.  v.  Simpson,  54  Mont.  316. 

When  bill  of  exchange  or  note  is  transferred  in  due  course.  Mer- 
chants Nat.  Bank  of  Billings  v.  Smith,  —  Mont.  — ,  196  Pac.  523. 

Oral  agreement  not  to  negotiate  note  is  inadmissible  in  evidence. 
Benton  v.  Sikyta,  84  Neb.  808,  122  N.  W.  61,  24  L.  R.  A.  (N.  S.)   1057n. 

Check  paid  by  drawee  bank  not  thereafter  negotiable.  Aurora  State 
Bank  v.  Hayes-Eames  Elevator  Co.,  88  Neb.  187,  129  N.  W.  279. 

Evidence  explaining  indorsement  does  not  bring  holder  within  due 
course  rule.  First  Nat.  Bank  of  Shenandoah  v.  Kelgord,  91  Neb.  178, 
135  N.  W.  548. 

Denial  of  transfer  for  value  in  a  pleading  is  allegation  of  fact.  Rogers 
V.  Morton,  46  Misc.  Rep.  494,  95  N.  Y.  Supp.  49. 

A  check  made  payable  to  who  indorses  it  to  Y  and  is  to  deliver  same 
to  Y  is  delivered  in  so  far  as  the  maker  is  interested.  Wolfin  v.  Security 
Bank  of  N.  Y.,  170  App.  Div.  519,  156  N.  Y.  Supp.  474,  affirmed,  218 
N.  Y.  709. 

Holder  has  onlv  equitable  interest  where  payee  failed  to  sign  indorse- 
ment.   Critcher  v."  Ballard,  —  N.  C.  — ,  104  S.  E.  134. 


§    30  KEGOTIATION.  457 

Note  payable  to  specified  pavee  must  be  indorsed  by  payee.  Stevens  v. 
Pierce,  —  Okla.  —    193  Pac.  417. 

When  evidence  explains  indorsement  and  plaintiff  is  holder  in  due 
course.     Gardner  v.  Wiley,  46  Ore.  96,  79  Pac.  341. 

Essentials  of  negotiation  of  a  cashier's  check.  Seaman  v.  Muir,  72 
Ore.  583,   144  Pac.   121. 

Indorsement  in  blank  renders  instrument  payable  to  bearer.  Dominion 
Trust  Co.  V.  Hildner,  243  Pa.  253,  90  Atl.  69. 

Witnesses's  statement  that  note  was  negotiated  is  not  sufficient  to 
rebut  plea  of  non-indorsement.  Capitol  Hill  State  Bank  v.  Rawlins 
>rat.  Bank,  24  Wyo.  423,  160  Pac.  1170. 

^"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
tically  by  states,  where  this  section  has  been  construed : 

Alabama. — Wilson  v.  Weaver  (Ala.  App.),  77  So.  238;  Davis  v. 
Florey  (Ala.  App.),  77  So.  413;  Stone  v.  Goldberg  &  Lewis  (1912),  6 
Ala.  App.  249,  60  So.  744;  Ger.-Am.  Nat.  Bank  v.  Lewis  (1913),  9  Ala. 
App.  352,  63  So.  741;  Goldberg  &  Lewis  v.  Stone  (1914),  65  So.  454; 
Ex  parte  Goldberg  &  Lewis,  191  Ala.  356,  67  So.  839,  L.  R.  A.  1915F, 
1159;  Davis  v.  First  Nat.  Bank  of  Blakely  (1915),  192  Ala.  8,  68  So. 
261;  Sherrill  v.  Merch.  &  Mech.  Tr.  &  Sav.  Bank  (1916),  70  So.  723; 
Jones  V.  Bell  (1917),  77  So.  998;  Slaughter  v.  Green,  87  So.  358. 

Arkansas— Tancred  v.  First  Nat.  Bank  (1916),  187  S.  W.  160. 

Colorado. — Louisville  Co.  v.  International  Trust  Co.,  18  Colo.  App. 
545,  71  Pac.  898. 

Florida. — Camp  Lumber  Co.  v.  State  Sav.  Bank  (1910).  59  Fla.  455, 
51  So.  543;  Williams  v.  Peninsula  Grocery  Co.   (1917),  75  So.  517. 

Illinois.— First  Nat.  Bank  of  Chadwick  v.  Mackey  (1910),  157  111. 
App.  408;  Burr  v.  Beckler  (1914),  106  N.  E.  206,  264  111.  230;  Trego  v. 
Cunningham  Est.   (1915),  108  N.  E.  350,  267  111.  367. 

Iowa.— Irwin  v.  Deming  (1909),  142  Iowa  299,  120  N.  W.  645;  Roy 
V.  Duff  (1915),  152  N.  W.  606;  Young  v.  Hayes  (1917),  165  N.  W.  391. 

Kansas. — State  Savings  Bank  v.  Krug,  193  Pac.  899. 

Kentucky.— Foster's  Admr.  v.  Metcalf  (1911),  138  S.  W.  314. 

Massachusetts. — Johnson-Kettell  Co.  v.  Longley  Luncheon  Co.  (1910), 
207  Mass.  52 ;  Liberty  Trust  Co.  v.  Tilton,  217  Mass.  462,  105  N.  E.  605, 
L.  R.  A.  1915B,  144. 

M/womW.— Sublette  v.  Brewington  (1909),  139  Mo.  App.  410,  122  S. 
W.  1150;  Scotland  Co.  Nat.  Bank  v.  Hohn  (1910),  146  Mo.  App.  699, 
125  S.  W.  539;  Cantrell  v.  Davidson  (1914),  168  S.  W.  271;  Long  v. 
Shafer,  185  Mo.  App.  646,  171  S.  W.  690;  Chandler  v.  Hedrick  (1915), 
173  S.  W.  93;  Miners  &  Merch.  Bank  v.  St.  Louis  Smelting  &  Refining 
Co.  (Mo.  App.)  (1915),  178  S.  W.  211;  Am.  Union  Tr.  Co.  v.  Never 
Break  Range  Co.  (1917),  190  S.  W.  1045;  Davis  v.  McColl  (1916),  184 
S.  W.  920;  Carter  v.  Butler,  264  Mo.  306,  174  S.  W.  399,  Ann.  Cas. 
1917  A,  483;  American  Forest  Co.  v.  Hall  (Mo.),  216  S.  W.  740. 

Mon^ano.— Case  Medicine  Co.  v.  Simpson  (1918),  170  Pac.  12;  Mer- 
chants National  Bank  of  Billings  v.  Smith.  196  Pac.  523;  J.  I.  Case 
Threshing  Mach.  Co.  v.  Simpson,  54  Mont.  316. 


458  NEGOTIABLE   INSTRUMENTS.  §    31 

iV^fcrojJbfl.— Benton  v.  Sikyta,  84  Neb.  808,  122  N.  W.  61,  24  L.  R.  A. 
(N.  S.)  1057n;  Nat.  Bank  of  Commerce  v.  Farmers  &  Merchants  Bank 
0910),  87  Neb.  P41,  843,  128  N.  W.  522;  Aurora  State  Bank  v.  Hayes- 
Fames  Elevator  Co.  (1911),  88  Neb.  187,  129  N.  W.  279;  Bank  of  She- 
nandoah V.  Kelgord,  91  Neb.  178,  135  N.  W.  548. 

New  Mexico.— RiW  v.  Hart  (1917),  167  Pac.  710. 

New  For/^.— Schlesinger  v.  Kurzvok  (1905),  94  N.  Y.  Supp.  442,  47 
Misc.  634;  Rogers  v.  Morton  (1905),  46  Misc.  Rep.  494,  95  N.  Y.  Supp. 
49;  Seaboard  Nat.  Bank  v.  Bank  of  America  (1908),  193  N.  Y.  26,  85 
N.  E.  829;  Manufacturer's  Commercial  Co.  v.  Blitz  (1909),  131  A.  D. 
17,  115  N.  Y.  Supp.  402;  Smith  v.  Dixon  (1912),  150  A.  D.  571;  Bark- 
ley  V.  Muller  (1914),  149  N.  Y.  Supp.  620,  164  A.  D.  351;  Sabine  v. 
Paine  (1915),  151  N.  Y.  Supp.  735;  Wolfin  v.  Security  Bank  of  N.  Y. 
(1915),   170  A.   D.   519,   156  N.   Y.    Supp.   474;    Dalrymple   v.    Schwartz 

(1917),  164  N.  Y.  Supp.  496. 

• 

North  Coro/ma.— Steinhilper  v.  Basinght  (1910),  153  N.  Car.  293,  69 
S  E.  222;  Meyers  v.  Petty  (1910),  153  N.  Car.  462;  Woods  v.  Finley 
(1910),  153  N.  Car.  497,  69  S.  E.  502;  Elgin  City  Banking  Co.  v. 
McEacheon   (1913),  79  S.  E.  680;  Critcher  v.  Ballard,  10'  S.  E.  134. 

North  Dakota.— l^at.  Bank  of  Commerce  v.  Pick  (1904),  13  N.  Dak. 
74,  99  N.  W.  63;  Viets  v.  Silver  (1905),  15  N.  Dak.  51,  106  N.  W.  35; 
Emerson-Brantingham  Co.  v.  Brennan,  35  N.  D.  94,  159  N.  W.  700. 

O/tto.— Thompson  v.  Citizens  Nat.  Bank  of  Adams,  N.  Y.  (1909),  32 
O.  C.  C.  131. 

Oklahoma. — Stevens  v.  Pierce,  193  Pac.  417. 

Oregon. — ^Gardner  v.  Wiley,  46  Ore.  96,  79  Pac.  341 ;  Seaman  v.  Muir, 
72  Ore.  583,  144  Pac.  121. 

Pennsylvania. — Flanders  v.  Snare  (1908),  37  Pa.  Super  Ct.  28;  Do- 
minion Trust  Co.  V.  Hildner  (1914),  243  Pa.  253,  90  Atl.  69;  Lincoln 
Nat.  Bank  of  Pittsburg  v.  Miller  (1917),  100  Atl.  269,  255  Pac.  467; 
Johnston  v.  Knipe  (1918),  103  Atl.  957. 

South  Dakota.— Fiper  v.  Hagen  (1914),  146  N.  W.  692. 

Washingtori.—Swenson  v.  Stoltz,  36  Wash.  318,  78   Pac.  999. 

Wyomnng.— Capitol  Hill  St.  Bank  v.  Rawlins  Nat.  Bank  (1916),  24 
Wyo.  423,  160  Pac.  1171. 

United  States.— McKee  v.  District  Nat.  Bank  (1912),  38  A.  C.  (D. 
C.)  465. 


§31.  Indorsement;  how  made.  The  Indorsement  must 
be  written  on  the  instrument  itself  or  upon  a  paper  attached 
thereto.  The  sig-nature  of  the  indorser,  without  additional  words, 
is  a  sufficient  indorsement.^'  ^* 

See  text,  §  97. 

Cross  sections:     18,  49,  42. 


R    31  NEGOTIATION.  459 

The  Illinois  Act  adds  a  clause  as  follows :  "and  the  addition  of  words 
of  assignment  or  guaranty  shall  not  negative  the  additional  effect  of  the 
signature  as  an  indorsement,  unless  otherwise  expressly  stated." 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states  : 

A  written  indorsement  on  mortgage  to  which  note  is  pinned  is  an 
assignment,  not  indorsement  of  note.     Clark  v.  Thompson,  194  Ala.  504, 

69  So.  925.  .    ,  T  r-       . 

Assigning  and  guaranteeing  payment  is  mdorsement.  Jones  County 
Trust  &  Savings  Bank  v.  Kurt,  —  Iowa  — ,  182  N.  W.  409. 

Words  "hereby  assign"  on  back  of  negotiable  instrument  do  not  affect 
the  indorsement.     Farnsworth  v.  Burdick,  94  Kan.  749,  147  Pac.  863.^ 

Authority  to  indorse  for  another  by  rubber  stamp.  State  Savings 
Bank  of  Leavenworth  v.  Krug,  —  Kan.  — ,  193  Pac.  899. 

Contract  by  officers  of  company  as  to  note  indorsed  by  one  of  them 
is  not  an  indorsement  of  note.  First  Nat.  Bank  of  Doherty,  156  Ky. 
586,  161  S.  W.  211. 

Evidence  of  indorsement  must  be  given.  Whitman  v.  Fournier 
(Mass.),  117  N.  E.  3. 

Rubber  stamp  indorsement  by  corporation  is  good  if  shown  to  be 
ratified.  American  Union  Trust  Co.  v.  Never  Break  Range  Co.  (Mo. 
App.),  190  S.  W.  1045. 

General  indorsement  passes  all  title.  American  Forest  Co.  v.  Hall, 
—  Mo.  — ,  216  S.  W.  740. 

Proof  of  indorsement,  what  sufficient.  Congress  Tucking  Co.  v. 
Alton  Dress  &  Waist  Co.,  154  N.  Y.  Supp.  156. 

Sufficiency  of  evidence  to  prove  indorsement.  Donahue  v.  Bank  of 
America,  161  N.  Y.  Supp.  232. 

Rubber  stamp  indorsement  sufficient  where  shown  to  be  intention  ^of 
indorser.  Mayers  v  .McRimmon,  140  N.  C.  640,  53  S.  E.  447,  111  Am. 
St.  Rep.  879. 

Words  guaranteeing  payment  on  back  of  negotiable  instrument  are 
not  words  of  indorsement.  Ireland  v.  Floyd,  42  Okla.  609,  142  Pac.  401, 
L.  R.  A.  1915C,  661. 

Indorsement  by  rubber  stamp  sufficient.  Flanders  v.  Snare,  37  Pa. 
Sup.  Ct.  28. 

*■  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
tically  by  states,  where  this  section  has  been  construed: 

^/a&a«tc.— Clark  v.  Thompson  (1915),  194  Ala.  504,  69  So.  925. 

Co/ora  Jo  .—Marks  v.  Munson  (1915),  59  Colo.  440,  Ann.  Cas.  1917A, 
766,  149  Pac.  440. 

District  of  Columbia.— McKee  v.  District  Nat.  Bank,  38  App.  Cas. 
465. 

Iowa— Jones  County  Trust,  etc..  v.  Kurt,  182  N.  W.  409. 

J^an^^a^.— Offenstein  v.  Wevgandt  (1913),  89  Kans.  739.  132  Pac.  991; 
Farmsworth  v.  Burdick  (1915),  94  Kan.  749,  147  Pac.  863;  State,  etc., 
Bank  v.  Krug,  193  Pac.  899. 

Kentucky.— First  Nat.  Bank  v.  Doherty.  156  Ky.  386,  161   S.  W.  211. 


460  NEGOTIABLE    INSTRUMENTS.  §    32 

Massachusetts. — Whitman  v.  Fournier  (Mass.),  117  N.  E.  3;  May- 
berry  V.  Sprague  (1908),  199  Mass.  301. 

Missouri. — Am.  Union  Tr.  Co.  v.  Never  Break  Range  Co.  (Mo.  App.), 
(1916),  190  S.  W.  1045;  American  Forest  Co.  v.  Hall  (Mo.),  216  S.  W. 
740. 

New  York. — Manufacturer's   Commercial  Co.  v.   Blitz    (1909),  131   A. 

D.  17,  115  N.  Y.  Supp.  402;  People  v.  Fowler  (1914),  152  N.  Y.  Supp. 
672;  Congress  Tucking  Co.  v.  Alton  Dress  &  Waist  Co.,  154  N.  Y.  Supp. 
156;  Donahue  v.  Bank  of  America,  161  N.  Y.  Supp.  232. 

North  Carolina. — Commercial  Security  Co.  v.  Main  St.  Pharmacy 
(1917),  91  S.  E.  298,  94  S.  E.  208;  Tyson  v.  Joyner,  139  N.  C.  69,  51  S. 

E.  803;  Mayers  v.  McRimmon,  140  N.  C.  640,  53  S.  E.  447,  111  Am.  St. 
Rep.  879. 

OM'o.— Thompson  v.  Citizens  Nat.  Bank  of  Adams,  N.  Y.  (1909),  32 
O.  C.  C.  131. 

Oklahoma,— Ireland  v.  Flovd.  42  Okla.  609,  142  Pac.  401,  L.  R.  A. 
1915  C,  661;  Howard  v.  Kincaid  (1916),  156  Pac.  628;  Mangold  &  Glandt 
Bank  v.  Utterback  (1916),  160  Pac.  713;  Met.  Discount  Co.  v.  Davis 
(1918),  170  Pac.  707. 

Oregon. — First  Nat.  Bank  of  Pomeroy  v.  McCullough  (1908),  SO 
Oreg.  508,  93  Pac.  366,  17  L.  R.  A.   (N.  S.)   1105,  126  Am.  St.  Rep.  758. 

Pennsylvania. — Flanders  v.   Snare   (1908),  37  Pa.   Super.  Ct.  28. 

Virginia.— Colonsi  v.  Parksley  Nat.  Bank  (1917),  92  S.  E.  979. 

Washington.— Swenson  v.  Stoltz,  36  Wash.  318,  78  Pac.  999. 

Wisconsin.— Thorpe  v.  Mindeman,  123  Wis.  149,  101  N.  W.  417,  68 
L.  R.  A.  146,  107  Am.  St.  Rep.  1003. 

United  States.— WoU  v.  Am.  Tr.  &  Sav.  Bank  (1914),  214  Fed.  761 
(C.  C.  A.,  7th  Ct.) 


§  32.     Indorsement    must  be  of   entire    instrument.     The 

indorsement  must  be  an  indorsement  of  the  entire  instrument. 
An  indorsement  which  purports  to  transfer  to  the  indorsee  a 
part  only  of  the  amount  payable  or  which  purports  to  transfer 
the  instrument  to  two  or  more  indorsees  severally,  does  not 
operate  as  a  negotiation  of  the  instrument.  But  where  the  in- 
strument has  been  paid  in  part,  it  may  be  indorsed  as  to  the 
residue.  ^'  -^* 

See  text,  §100. 
.    Corresponding  provision  of  English  Bills  of  Exchange  Act:     32  (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Part  interest  assignments  do  not  amount  to  negotiation.    Offenstein  v. 
Weygandt,  89  Kan.  739,  132  Pac.  991. 


§    33  NEGOTIATION.  461 

Assignment  of  half  interest  is  not  an  indorsing.  Berkley  v.  Muller, 
164  App.  Div.  351,  149  N.  Y.  Supp.  620. 

A  bona  fide  indorsee  is  entitled  to  recover  although  he  holds  part  as 
trustee  for  another.    Fleshman  v.  Bibb,  118  Va.  582,  88  S.  E.  64. 

^'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Kansas.— OHenstem  v.  Weygandt  (1913),  89  Kans.  739,  132  Pac.  991. 

New  For/^.— Barkley  v.  Muller  (1914),  149  N.  Y.  Supp.  620,  164  A. 
D.  351. 

Tennessee.— Ahrens  &  Ott  Co.  v.  Moore  &  Sons  (1915),  174  S.  W.  270. 

FtV^mio.— Fleshman  v.  Bibb,  118  Va.  582,  88  S.  E.  64. 

§  33.  Kinds  of  indorsement.  An  indorsement  may  be 
either  special  or  in  blank ;  and  it  may  also  be  either  restrictive 
or  qualified  or  conditional. 

See  text,  §  101. 

Arkansas  has  the  word  "instrument"  instead  of  "indorsement"  in  the 
first  line,  which  is  a  clerical  mistake. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  Sec. 
32  (6),  34. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Pleading  sufficient  if  alleges  indorsement  to  plaintiff.  Cleveland  Co. 
V.  Chittenden,  81  Conn.  667,  71  Atl.  935. 

Any  holder  may  not  sue.  Nokomis  Nat.  Bank  v.  Hendricks,  205  111. 
App.  54. 

When  assignment  and  guaranty  of  payment  becomes  indorsement. 
Jones  County  Trust  &  Savings  Bank  v.  Kurt,  —  la.  — ,  182  N.  W.  409. 

Indorsement  which  passes  all  title  is  not  restricted  or  conditional. 
American  Forest  Co.  v.  Hall,  —  Mo.  —   216  S.  W.  740. 

^"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Connecticut.— Cleveland  Co.  v.  Chittenden,  81  Conn.  667,  71  Atl.  935. 

Illinois. — Nokomis  Nat.  Bank  v.  Hendricks,  205  111.  App.  54. 

Iowa.— Jones  County,  etc.,  Bank  v.  Kurt,  182  N.  W.  409. 

/:^n/Mc/fe3;.— Goolrick  v.  Wallace  (1913),  157  S.  W.  920. 

Missouri.— Miller  v.  People's  Sav.  Bank  (1916),  186  S.  W.  547;  Amer- 
ican Forest  Co.  v.  Hall  (Mo.),  216  S.  W.  740. 

New  York. — Standard  Steam  Spec.  Co.  v.  Corn  Exch.  Bank  (1917), 
116  N.  E.  386,  220  N.  Y.  478. 


462  NEGOTIABLE   INSTRUMENTS.  §    34 

§  34.  Special  indorsement ;  indorsement  in  blank.  A  special 
indorsement  specifies  the  person  to  whom,  or  to  whose  order, 
the  instrument  is  to  be  payable ;  and  the  indorsement  of  such 
indorsee  is  necessary  to  the  further  negotiation  of  the  instru- 
ment. An  indorsement  in  blank  specifies  no  indorsee,  and  an 
instrument  so  indorsed  is  payable  to  bearer,  and  may  be  ne- 
gotiated by  delivery.*-  *^ 

See  text,  §  112,  102. 

Cross  sections:    8,  40,  9. 

In  the  Massachusetts  act  the  words  "does  not  specify  any  indorsee" 
are  used  in  place  of  the  words  "specifies  no  indorsee." 

In  the  Wyoming  act  the  word  "made"  is  placed  between  the  words 
"be"  and  "payable." 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  34  (1), 
(2),   (3).  31    (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states  : 

Blank  indorsement  not  varied  by  parol  evidence.  Torbert  v.  Mon- 
tague, 38  Colo.  325,  87  Pac.  1145. 

Proof  of  indorsement  in  blank  is  not  a  variance  where  allegation  is 
that  of  indorsement.  Howell  v.  Commercial  National  Bank,  40  App.  Cas. 
D.  C.  370. 

Note  indorsed  "pay  to  order  of,"  leaving  name  blank,  is  payable  to 
bearer.  The  legal  effect  of  such  indorsement  is  for  court.  State  v. 
Hinton,  56  Ore.  428,  109  Pac.  24. 

Note  indorsed  in  blank  is  transferable  by  delivery  and  the  purchaser 
is  not  obligated  to  require  indorsement.  First  Nat.  Bank  v.  Gerli,  232 
Pa.  465,  81  Atl.  540. 

Indorsement  in  blank  is  not  nullified  by  guaranty  following  it.  Elgin 
City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108  S.  W.  1068. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Co/ora Jo.— Wedge  Mines  Co.  v.  Denver  Nat.  Bank  (1903),  19  Colo. 
App.  182,  IZ  Pac.  873;  Torbert  v.  Montague,  38  Colo.  325,  87  Pac.  1145. 

District  of  Columbia. — Jerman  v.  Edwards.  29  App.  D.  C.  535 ;  Howell 
V.  Commercial  National  Bank,  40  App.  Cas.  D.  C.  370. 

Missouri. — Simpson  v.  Van  Laningham  (1916),  183  S.  W.  324;  Miller 
V  People's  Sav.  Bank,  193  Mo.  App.  499,  186  S.  W.  547;  Priest  v.  Garnet 
(1917),  191  S.  W.  1048. 

New  /^r.ycy.— Mackintosh  v.  Gibbs  (1909),  79  N.  J.  L.  40,  74  Atl.  708. 

New  ForJt.— Seaboard  Nat.  Bank  v.  Bank  of  America  (1908),  193  N. 
Y.  26,  85  N.  E.  829;  Standard  Steam  Spec.  Co.  v.  Corn  Exch.  Bank 
(1917),  116  N.  E.  386,  220  N.  Y.  478. 


§§    35-36  NEGOTIATION.  463 

Oregon.—Stztc  v.  Hinton  (1910),  56  Oreg.  428,  109  Pac.  24. 

Pennsylvania— First  Nat.  Bank  v.  Gerli,  232  Pa.  465,  81  Atl.  540; 
Lincoln  Nat.  Bank  of  Pittsburg  v.  Miller  (1917),  100  Atl.  269,  255 
Pac.  467. 

Tennessee.— E]g\n  City  Bldg.  Co.  v.  Hall  (1907),  119  Tenn.  548,  108 
S.  W.  1068;  First  Nat.  Bank  of  Garner  v.  Smith  (1916),  183  S.  W.  862; 
Kanaman  v.  Gahagan  (1916),  185  S.  W.  619. 

Vermont.— Hale  v.  Windsor  Sav.  Bank  (1917),  98  Atl.  993. 

United  States.— J erman  v.  Edwards  (1907),  29  A.  C.  (D.  C)  535; 
Howell  V.  Commercial  Nat.  Bk.  (1913),  40  A.  C.  (D.  C.)  370. 


§  35.  Blank  indorsement;  how  changed  to  special  indorse- 
ment. The  holder  may  convert  a  blank  indorsement  into 
a  special  indorsement  by  writing  over  the  signature  of  the  in- 
dorser  in  blank  any  contract  consistent  v^ith  the  character  of 
the  indorsement.*'  ** 

See  text,  §112. 

Cross  section:    48. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Indorsement  on  mortgage  as  indorsement  of  note  secured.  Slaughter 
V.  Green,  —  Ala,  — ,  87  So.  358. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— Davis  v.  First  Nat.  Bank  of  Blakeley,  192  Ala.  8,  68  So. 
261;  Bank  of  Tallassee  v.  Jordan  (1917),  75  So.  930;  Slaughter  v.  Green, 
87  So.  358. 

California. — Santa  Marina  Co.  v.  Canadian  Bank  of  Commerce  (1919), 
254  Fed.  391;  In  re  Jarmulowsky  (1918),  249  Fed.  319. 

District  of  Columbia. — Jerman  v.  Edwards,  29  App.  D.  C.  535. 

Oklahoma.— Keisd  v.  Baldock  (1915),  154  Pac.  1194. 

United  States.— Jerman  v.  Edwards  (1907),  29  A.  C.  (D.  C.)  535. 

§  36.  When  indorsement  restrictive.  An  indorsement  is 
restrictive,  which  either : 

1.  Prohibits   the   further   negotiation   of   the   instrument;  or 

2.  Constitutes  the  indorsee  the  agent  of  the  indorser;  or 

3.  Vests  the  title  in  the  indorsee  in  trust  for  or  to  the  use  of 
some  other  person. 


464  NEGOTIABLE    INSTRUMENTS.  §    36 

But  the  mere  absence  of  words  implying  power  to  negotiate 
does  not  make  an  indorsement  restrictive.  *•  ** 

See  text,  §  105. 

In  Montana  the  word  "future"  is  used  for  "further"  in  subdivision  1. 
This  is  doubtless  a  clerical  error. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
35  (1). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Indorsement  pay  to  order  of  A  for  credit  of  account  of  B  charges 
purchaser  with  notice  of  inquiry  of  defenses.  Werner  Piano  Co.  v. 
Henderson  &  Rees^.  121  Ark.  165.  180  S.  W.  495. 

Indorsement  for  collection  and  remittance  is  restrictive  and  creates 
trusteeship.     Lippitt  v.  Thames  Loan  &  Trust  Co.,  88  Conn.  185,  90  Atl. 

369.  .  ^     , 

"Pay  to  any  bank  or  banker"  is  indorsement  for  collection,  but  bank 
may  sue  if  it  sends  the  money  to  the  remitter.  Citizens  Trust  Co.  v. 
Ward,  195  Mo.  App.  223,  190  S.  W.  364. 

"Pay  to  any  bank  or  banker"  is  not  restrictive  indorsement.  National 
Bank  of  Commerce  v.  Bossemeyer  (Neb.),  162  N.  W.  503. 

Notes  transferred  for  collection  and  application  of  funds  collected  to 
debt  are  held  in  due  course  as  against  transferor  and  payee.  Guaranty 
Security  Co.  v.  Coad,  —  Wash.  — ,  197  Pac.  326. 

Indorsement  "for  credit  account  of"  payee's  creditor  is  restrictive  in- 
dorsement. Gulbranson-Dickinson  Co.  v.  Hopkins,  —  Wis.  — ,  175  N. 
W.  93. 

Indorsement  "pay  to  the  order  of  any  bank  or  banker"  is  not  mdorse- 
ment  for  rediscount  and  sale.  First  Nat.  Bank  v.  Weitzel,  239  Fed.  Rep. 
497,  152  C  C.  A.  375. 

*»  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— Haas  v.  Commerce  Trust  Co.  (1915),  69  So.  894;  Bank  of 
Tallassee  v.  Jordan,  —  Ala.  — ,  75  So.  930. 

Arkansas.— Werner  Piano  Co.  v.  Henderson  &  Reese  (1915),  121 
Ark.  165,  180  S.  W.  495. 

Connecticut.— Lippitt  v.  Thames  Loan  &  Trust  Co.  (1914),  88  Conn. 
185.  90  Atl.  369. 

Missouri.— Citizens  Trust  Co.  v.  Ward,  195  Mo.  App.  223  (1916),  190 
S.  W.  364. 

Nebraska.— Antdope  Co.  Bank  v.  Wright  (1912).  90  Neb.  621.  134  N. 
W.  1123;  Nat.  Bank  of  Commerce  v.  Bossemeyer  (1917),  162  N.  W.  503. 

New  Korii;.— Standard  Steam  Spec.  Co.  v.  Corn  Exch.  Bank  (1917) 
116  S.  E.  386,  220  N.  Y.  478. 

North  Carolina.— Murchison  Nat.  Bank  v.  Dunn  Oil  Mills  Co.  (1909), 
150  N.  Car.  718.  64  S.  E.  885. 


R    37  NEGOTIATION.  465 

North  Dakota.—Smith  v.  Show  (1907),  16  N.  Dak.  306,  112  N.  W. 
1062. 

Ohio. —Peoples,  etc.,  Bank  v.  Craig,  63  Ohio  St.  374,  59  N.  E.  102. 
WashingtOM.— Guaranty  Security  Co.  v.  Coad,  197  Pac.  326. 

IViscoHsin.—Gulhra.nson-Dickinson  Co.  v,  Hopkins  (Wis.),  175  N. 
W.  93. 

United  States.— First  Nat.  Bank  v.  Weitzel,  239  Fed.  Rep.  497,  152 
C.  C.  A.  375. 


§37.     Effect  of  restrictive  indorsement;  rights  of  indorsee. 
A  restrictive  indorsement  confers  upon  the  indorsee  the  right : 

1.  To  receive  payment  of  the  instrument;  or 

2.  To  bring  any  action  thereon  that  the  indorser  could  bring ; 
or 

3.  To  transfer  his  rights  as  such  indorsee,  where  the  form  of 
the  indorsement  authorizes  him  to  do  so. 

But  all  subsequent  indorsees  acquire  only  the  title  of  the  first 
indorsee  under  the  restrictive  indorsement.^'  ** 

See  text,  §  105. 

Cross  section :    48. 

In  Illinois  the  following  changes  are  made :  At  the  end  of  subdivision 
2  the  following  is  added:  "Except  in  case  of  a  restrictive  indorsement 
specified  in  section  36,  sub-section  2,  any  action  against  the  indorser  or 
any  prior  party  that  a  special  indorsee  would  be  entitled  to  bring."  In 
subdivision  3  the  word  "instrument"  is  substituted  for  the  words  "his 
rights  as  such  indorsee";  and  at  the  end  of  the  section  the  following  is 
added :  "Specified  in  section  36,  sub-section  1,  and  as  against  the  prin- 
cipal or  cestui  que  trust  only  the  title  of  the  first  indorsee  under  the 
restrictive  indorsements  specified  in  section  36  and  sub-sections  2  and  3, 
respectively." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states  : 

Terms  of  indorsement  without  recourse.  Hammond  Lumber  Co.  v. 
Kearsley,  —  Cal.  App.  — ,  172  Pac.  404. 

Indorsement  for  collection  does  not  destroy  the  negotiability  of  instru- 
ment.   Fawsett  v.  Nat.  Life  Ins.  Co.,  97  111.  11. 

Indorsement  not  restrictive  which  indicates  intention  to  negotiate. 
Jones  County  Trust  &  Savings  Bank  v.  Kurt,  —  la.  — ,  182  N.  W.  409. 

Indorsement  for  collection  gives  indorsee  privilege  of  demanding, 
receiving  and  suing  for  money.  Freeman's  Nat.  Bank  v.  Nat.  Tube 
Works,  151  Mass.  413. 

Authority  given  by  indorsement  for  collection  is  not  affected  by  death 
of  owner.    Moore  v.  Hall,  48  Mich.  143. 


466  NEGOTIABLE    INSTRUMENTS.  §    37 

General  indorsement  and  the  giving  of  credit  to  depositor  transfers 
the  title  to  the  instrument.  National  Bank  of  Commerce  v.  Bossemeyer 
(Neb.),  162  N.  W.  503. 

Holder  of  negotiable  paper  held  as  collateral  for  payment  of  debt  due 
may  sue  in  his  own  name.  Third  Nat.  Bank  v,  Exum,  163  N.  C.  199, 
79  S.  E.  498. 

Indorsee  for  collection  takes  subject  to  all  defenses  against  indorser 
and  maker.  Smith  v.  Bayer,  46  Ore.  143,  79  Pac.  497,  114  Am.  St.  Rep. 
858. 

Check  indorsed  without  restriction,  but  understood  to  be  deposited  for 
collection,  remains  the  property  of  indorser.  Morris-Miller  Co.  v.  Von 
Pressentin,  63  Wash.  74.  114  Pac.  912. 

Indorsement  of  note  for  collection  indorsee  can  sue  in  own  name. 
Metzer  v.  Segall,  83  Wash.  80,  145  Pac.  72. 

Checking  privilege  allowed  upon  check  deposited  for  collection  only  w 
gratuity  privilege  only.  American  Sav.  Bank  &  T.  Co.  v.  Dennis,  90 
Wash.  547,  156  Pac.  559. 

Efifect  of  unrestricted  indorsement  upon  check  deposited  for  collection 
only.     American  Sav.,  etc..  Bank  v.  Dennis,  90  Wash.  547,  156  Pac.  559. 

Words  "for  credit  account  of"  renders  indorsement  restricted.  Gul- 
branson-Dickinson  Co.  v.  Hopkins,  —  Wis.  — ,  175  N.  W.  93. 

^'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

California. — Hammond  Lumber  Co.  v.  Kearsley  (Cat.  App.),  172  Pac. 
404. 

District  of  Columbia. — Jerman  v.  Edwards,  29  App.  D.  C.  535. 

///jwoij.— Fawsett  v.  Nat.  Life  Ins.  Co.,  97  111.  11. 

Iowa.— Jones  County  Trust,  Co.  v.  Kurt,  182  N.  W.  409. 

Massachtsetts.—Uaskdl  v.  Avery,  181  Mass.  106,  63  N.  E.  15;  Free- 
man's Nat.  Bank  v.  Nat.  Tube  Works,  151  Mass.  413. 

Michignn.— Moore  v.  Hall,  48  Mich.  143. 

Nebraska.— Ante\ope  Co.  Bank  v.  Wright  (1912),  90  Neb.  621,  134 
N.  W.  1123;  National  Bank  of  Commerce  v.  Bossemeyer  (Neb.),  162 
N.  W.  503. 

Nczv  York.— Baruch  v.  Buckley  (1915),  151  N.  Y.  Supp.  853. 

North  Carolina. — Abrams  v.  Caveton,  74  N.  C.  523;  Murchison  Nat. 
Bank  V.  Dunn  Oil  Mills  Co.  (1909),  150  N.  C.  718,  64  S.  E.  885;  Third 
Nat.  Bank  v.  Exums,  163  N.  C.  199,  79  S.  E.  498. 

0 /no .—Peoples,  etc..  Bank  v.  Craig,  63  Ohio  St.  374,  59  N.  E.  102. 

Oregon.— Smith  v.  Bayer  (1905),  46  Ore.  143,  79  Pac.  497,  114  Am. 
St.  858. 

Washington. — Morris-Miller  Co.  v.  VonPressentin,  63  Wash.  74,  114 
Pac.  912;  Metzger  v.  Sigall  (1914),  83  Wash.  80,  145  Pac.  72;  American 
Sav.,  &c.,  Bank  v.  Dennis,  90  Wash.  547,  156  Pac.  559. 

Wisconsin. — Gulbranson-Dickinson  Co.  v.  Hopkins  (Wis.),  175  N. 
W.  93. 


§   38  NEGOTIATION.  467 

United  States.— McKec  v.  District  Nat.  Bank  (1912),  38  A.  C.  (D.  C.) 
465 ;  First  Nat.  Bank  v.  Weitzel,  239  Fed.  Rep.  497,  152  C  C.  A.  375. 

§  38.  Qualified  indorsement.  A  qualified  indorsement  con- 
stitutes the  indorser  a  mere  assignor  of  the  title  to  the  instru- 
ment. It  may  be  made  by  adding  to  the  indorser's  signature  the 
words  "without  recourse"  or  any  words  of  similar  import.  Such 
an  indorsement  does  not  impair  the  negotiable  character  of  the 
instrument.-^'  ** 

See  text,  §  106. 

Cross  section :    65. 

The  Michigan  act  states:  "Such  an  instrument,"  instead  of  "such 
an  indorsement,"  a  clerical  error. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Assignment  of  note  is  indorsement.  Farnsworth  v.  Burdick,  94  Kan. 
749.  147  Pac.  863. 

Where  words  "without  recourse"  followed  signature  parol  evidence 
admissible  to  show  to  whom  intended  to  apply.  Leahmer  v.  McCollough, 
99  Kan.  451,  162  Pac.  297. 

Oral  evidence  permissible  to  show  to  whom  without  recourse  provision 
applies.  Goolrick  v.  Wallace,  154  Ky.  596,  157  S.  W.  920,  49  L.  R.  A. 
(N.  S.)  789. 

Oral  evidence  is  inadmissible  to  show  non-recourse  agreement.  Aron- 
son  V.  Nuremburg,  218  Mass.  376,  105  N.  E.  1056. 

When  assignee  of  note  can  not  sue  in  own  name.  Gale  v.  Mayhew, 
161  Mich.  96,  125  N.  W.  781,  29  L.  R.  A.  (N.  S.)  648. 

Indorsement  without  recourse  or  warranty  to  the  order  of  A  is  a 
qualified  indorsement.    Schmidt  v.  Pegg,  172  Mich.  159,  137  N.  W.  524. 

Indorsement  in  blank  not  controlled  by  oral  proof  of  without  recourse 
intention.     Lake  Harriet  State  Bank  v.  Miller  (Minn.),  164  N.  W.  989. 

Where  payee  guarantees  payment  of  note  he  is  indorser  with  enlarged 
liability.     First  Nat.  Bank  v.  Baldwin.  100  Neb.  25,  158  N.  W.  371. 

Assignment  of  right,  title  and  interest  is  indorsement  without  recourse. 
Evans  v.  Freeman,  142  N.  C.  61,  54  S.  E.  847. 

Without  recourse  indorsement  may  show  indorsee  not  good  faith 
holder.    Merchants  Nat.  Bank  v.  Bransom.  165  N.  C.  ,344,  81  S.  E.  410.  _ 

When  cause  of  action  arises  on  an  indorsement  "By  agreement,  with 
recourse  after  security  exhausted."  Smith  v.  Show,  16  N.  D.  306,  112 
N.  W.  1062. 

Qualified  indorsement  relieves  indorser  as  to  indorsee.  Bedcrman  v. 
Otisville  State  Bank,  5  Ohio  App.  178. 

Transfer  of  right,  title  and  interest  bv  payee  is  ordinary  indorsement. 
Copeland  v.  Burke  (Okla.),  158  Pac.  1162,  L.  R.  A.  1917A,  1165. 

When  owner  has  title  as  against  all  parties.  Murphy  v.  Estle,  — 
Okla.  — ,  182  Pac.  83. 

Indorsement  without  recourse  is  a  qualified  indorsement.  Cressler 
V.  Brown,  —  Okla.  — ,  192  Pac.  417. 


468  NEGOTIABLE   INSTRUMENTS.  §    38 

Without  recourse  indorsement  to  order  of  two  or  more  persons  does 
not  render  instrument  non-negotiable.  Page  v.  Ford,  65  Ore.  450,  131 
Fac.  1013,  45  L.  R.  A.  (N.  S.)  247,  Ann.  Cas.  1915A,  1048. 

"Without  recourse"  indorsement  does  not  put  purchaser  upon  notice 
of  equities.  Elgin  City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108  S.  W. 
1068. 

Indorsement  without  recourse  is  not  evidence  against  indorsee's  good 
faith.    Leavitt  v.  Thurston,  38  Utah  351,  113  Pac.  11. 

Parol  evidence  not  admissible  to  shov/  transfer  without  recourse. 
Holt  Mfg.  Co.  V.  Brotherton,  91  Wash.  354.  157  Pac.  849. 

Sell,  transfer  and  assign  held  an  indorsement.  Thorp  v.  Mindeman, 
123  Wis.  149,  101  N.  W.  417,  68  L.  R.  A.  146,  107  Am.  St.  Rep.  1003. 

*■  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

/i/a&a«!o.— People's  Bank  of  Mobile  v.  Moore   (1918),  78  So.  789. 

Arkansas.— \iox(t\\(t^A  v.  Harris   (1916),  182  S.  W.  521. 

California. — Hammond  Lumber  Co.  v.  Kearsley  (1918),  172  Pac.  404. 

/wrf/awa.— Colvert  v.  Harrington  (1916),  61  Ind.  App.  600,  112  N.  E. 
249. 

/owa.— Higby  v.  Bahrenfuss  (1917),  163  N.  W.  247. 

Kansas— Lt?L\m\tx  v.  McCollough,  99  Kan.  451,  162  Pac.  297;  Farns- 
worth  V.  Burdick,  94  Kan.  749,  147  Pac.  863 ;  Nelson  v.  Southworth,  93 
Kan.  532,  144  Pac.  835. 

Kentucky.—<:,oo\r\z\i  v.  Wallace  (1913),  154  Ky.  596,  157  S.  W.  920, 
L.  R.  A.  (N.  S.)  789. 

LoMWtanc— Puckett  v.  Fox  Grocer  Co.  (1910),  127  La.  151,  53  So.  475. 

Massachusetts. — Aronson  v.  Nurenburg  (1914),  218  Mass.  376,  105 
N.  E.  1056. 

Michigan.— Gale  v.  I\Iavhew  (1910),  161  Mich.  96.  125  N.  W.  781,  29 
L.  R.  A.  (N.  S.)  648;  Schmidt  v.  Pegg  (1912),  172  Mich.  159,  137  N.  W. 
524. 

MinM^.ro/a.— Slimmer  v.  St.  Bank  of  Halstad  (1916),  159  N.  W.  795; 
Lake  Harriet  State  Bank  v.  Miller,  —  Minn.  — ,  164  N.  W.  989. 

Nebraska.— First  Nat.  Bank  v.  Baldwin,  100  Neb.  25,  158  N.  W.  371. 

North  Carolina.— Evans  v.  Freeman  (1906).  142  N.  Car.  61,  54  S.  E. 
847;  Bank  of  Sampson  v.  Hatcher  (1909),  151  N.  Car.  359,  66  S.  E.  308; 
Merchants  Nat.  Bank  of  Indianapolis  v.  Branson  (1914),  165  N.  Car.  344, 
81  S.  E.  410. 

North  Dakota.—Smhh  v.  Show,  16  N.  D.  306.  112  N.  W.  1062. 

Ohio. — Bederman  v.  Otisville  State  Bank,  5  Ohio  App.  178. 

0^/a/t<7M!a.— Copeland  v.  Burke  (1916),  158  Pac.  1165,  L.  R.  A.  1917A; 
Howard  v.  Kincaid  (1916),  156  Pac.  628;  Murphy  v.  Estle,  182  Pac.  83; 
Crcssler  v.  Brown,  192  Pac.  417. 


I 


§§    39-40  NEGOTIATION.  469 

Irfgon.— Page  v.  Ford  (1913),  65  Ore.  450,  131  Pac  1013,  45  L.  R.  A. 
(N.  S.)  247,  Ann.  Cas.  1915A,  1048. 

Tennessee.— Elgin  City  Banking  Co.  v.  Hall  (1907),  119  Tcnn.  548, 
108  S.  W.  1068. 

:7/a/i.— Leavitt  v.  Thurston  (1911),  38  Utah  351,  113  Pac.  77. 

Washington.— Holt  Mfg.  Co.  v.  Brotherton,  91  Wash.  354.  157  Pac.  849. 

West  Virginia.— Dollar  Sav.  &  Tr.  Co.  v.  Crawford  (1911),  69  W.  Va. 
109,  70  S.  E.  1089,  33  L.  R.  A.  (N.  S.)  587;  Marion  Nat.  Bank  v. 
Harden  (1918),  97  S.  E.  600. 

Wisconsin.— Thorpe  v.  Mindeman  (1904),  123  Wis.  149,  101  N.  W.  417, 
107  Am.  St.  1003,  68  L.  R.  A.  146. 


§  39.  Conditional  indorsement.  Where  an  indorsement  is 
conditional,  a  party  required  to  pay  the  instrument  may  disre- 
gard the  condition,  and  make  payment  to  the  indorsee  or  his 
transferee,  whether  the  condition  has  been  fulfilled  or  not.  But 
any  person  to  whom  an  instrument  so  indorsed  is  negotiated, 
will  hold  the  same,  or  the  proceeds  thereof,  subject  to  the  rights 
of  the  person  indorsing  conditionally.^' 

See  text,  §  104. 

Construing  corresponding  provision  of  the  EngHsh  Bills  of  Exchange 
Act :    33. 

■^"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— Bank  of  Tallassee  v.  Jordan  (1917),  75  So.  930. 

Florida. — Williams  v.  Peninsula  Grocery  Co.  (1917),  75  So.  517. 

Afmo«n.— Gumby  v.  Hayden  (1914),  168  S.  W.  899. 

New  Mexico. — First  Nat.  Bank  of  Albuquerque  v.  Stover  (1916),  155 
Pac.  905. 

New  York.— Finto  v.  Pulidora  (1917),  162  N.  Y.  Supp.  736. 

North  £>a)5;o/a.— Smith  v.  Bradley  (1907),  16  N.  Dak.  306,  112  N.  W. 
1062. 

South  Dakota.— Holhart  v.  Lauritson  (1914),  148  N.  W.  19. 

Tennessee— Cohn  v.  Lunn  (1916),  182  S.  W.  584. 

Utah. — Farmers  &  Stotck  Growers'  Bank  v.  Palivant  Valley  Land  Co. 
(1917),  165  Pac.  462. 

§  40.  Indorsement  of  instrument  payable  to  bearer.  Where 
an  instrument,  payable  to  bearer,  is  indorsed  specially,  it  may 
nevertheless  be  further  negotiated  by  delivery;  but  the  person 


470  NEGOTIABLE  INSTRUMENTS.  §   41 

indorsing  specially  is  liable  as  indorser  to  only  such  holders  as 
make  title  through  his  indorsement.^' 

See  text,  §  112. 

Cross  sections:    See  66,  67. 

The  Illinois  act  changes  this  section  by  substituting  for  "payable  to 
bearer,"  in  line  1,  the  words  "originally  payable  to  or  indorsed  specially 
to  bearer." 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Texas. — ^Johnson  v.  Mitchell,  50  Tex.  212. 

United  5"/a^^.y.— Mechanics- Am.  Nat.  Bank  v.  Coleman  (1913),  204 
Fed.  24. 

§  41.  Indorsement  where  payable  to  two  or  more  persons. 
Where  an  instrument  is  payable  to  the  order  of  two  or  more 
payees  or  indorsees  who  are  not  partners,  all  must  indorse,  un- 
less the  one  indorsing  has  authority  to  indorse  for  the  others.*'  ■^* 

See  text,  §98. 

Cross  sections :    36. 

Missouri  states  "where  such  an  instrument." 

The  Wisconsin  Act  (Sec.  1676-11)  inserts  before  "indorsees,"  "joint." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Note  payable  to  one  payee  or  another  payee  can  be  negotiated  by 
either  payee.    Union  Bank  v.  Spies,  151  Iowa  178,  130  N.  W.  928. 

Assignment  by  joint  payee  to  another  payee  carries  authority  to  in- 
dorse. Kaufman  v.  State  Sav.  Bank.  151  Mich.  65,  114  N.  W.  863,  18 
L.  R.  A.  (N.  S.)  630,  123  Am.  St.  Rep.  259. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

lozva.—The  Union  Bank  of  Bridgewater  v.  Spies  (1911),  151  Iowa 
178,  130  N.  W.  928. 

Kansas.— Voris  v.  Schoonover  (1914),  138  Pac.  607. 

ATiV/n^an.— Kaufman  v.  State  Sav.  Bank  (1908),  151  Mich.  65,  114  N 
Vv^.  863,  18  L.  R.  A.  (N.  S.)  630,  120  Am.  St.  Rep.  259;  Worden  Grocer 
Co.  V.  Blanding  (1910).  126  N.  W.  212. 

Missouri— Market  &  Fulton  Nat.  Bank  v.  Ettenson's  Estat  (1913), 
158  S.  W.  448. 


§    42  NEGOTIATION.  471 

New  York. — First  Nat.  Bank  of  the  City  of  Brooklyn  v.  Gridley 
(1906),  112  A.  D.  398,  98  N.  Y.  Supp.  445;  Martz  v.  State  Nat.  Bank  of 
N.  Tonawanda  (1911),  131  N.  Y.  Supp.  1045,  147  A.  D.  250. 

Pennsylvania. — Neyens  v.  Port  (1911),  46  Pa.  Super.  Ct.  428. 

Rhode  Island.— OdksAaXt  Mfg.  Co.  v.  Clarke  (1908),  29  R.  I.  192,  69 
Atl.  681. 


§  42.  Effect  of  instrument  drawn  or  indorsed  to  a  person 
as  cashier.  Where  an  instrument  is  drawn  or  indorsed  to 
a  person  as  "cashier"  or  other  fiscal  officer  of  a  bank  or  cor- 
poration, it  is  deemed  prima  facie  to  be  payable  to  the  bank  or 
corporation  of  which  he  is  such  officer ;  and  may  be  negotiated 
by  either  the  indorsement  of  the  bank  or  corporation,  or  the 
indorsement  of  the  officer.-^'  ^^ 

See  text,  §  98. 

Cross  section :     18. 

In  South  Dakota  the  words  "the  indorsement  of"  are  omitted  before 
the  words  "the  bank"  in  the  last  part  of  the  section. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

President  of  bank  performing  duties  of  bank  cashier,  a  note  payable 
to  him  as  "Pt"  is  payable  to  bank.  Griffin  v.  Erskine,  131  Iowa  444, 
109  N.  W.  13. 

Indorsement  of  certificate  of  deposit  made  to  cashier  of  the  bank  by 
the  cashier  is  indorsement  of  bank.  Johnson  v.  Buffalo  Bank,  134  Iowa 
731,  112  N.  W.  165. 

Note  payable  only  to  cashier  is  not  negotiable,  but  bank  may  sue 
thereon.    Eades  v.  Muhlenberg  Co.  Sav.  Bank,  157  Ky.  416,  163  S.  W.  494. 

"Corporation"  does  not  include  towns  and  cities  so  that  treasurer  may 
act  as  indorser.  Franklin  Savings  Bank  v.  Framingham,  212  Mass,  92, 
98  N.  E.  925. 

Instrument  payable  to  treasurer  of  town  is  payable  to  the  town  named. 
Quincy  Mut.  Fire  Ins.  Co.  v.  International  Trust  Co.,  217  Mass.  370,  104 
N.  E.  845,  L.  R.  A.  (N.  S.)  1915B,  725. 

Oral  evidence  is  not  admissible  to  show  an  indorsement  to  A  to  be 
one  to  bank  of  which  he  was  cashier.  First  Nat.  Bank  v.  McCuUough,  50 
Ore.  508,  93  Pac.  366,  17  L.  R.  A.  (N.  S.)  1105,  126  Am.  St.  Rep.  758. 

Note  unindorsed  payable  to  A,  who  is  cashier  of  B  bank,  is  not  proven 
to  belong  to  bank  because  of  its  possession  of  same.  Swanby  v.  Northern 
State  Bank,  150  Wis.  572,  137  N.  W.  763. 

When  treasurer  of  town  or  city  may  not  bind  corporation  as  indorser. 
Capital  Savings,  etc.,  Bank  v.  Framingham,  246  Fed.  Rep.  553,  158  C.  C. 
A.  523. 

**The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 


472  NEGOTIABLE    INSTRUMENTS  §§    43-44 

//Knozj.— McClenathan  v.  Davis  (1909),  243  III.  87,  90  N.  E.  265. 

Iowa.— Grimn  v.  Erskine  (1906),  131  Iowa  444,  109  N.  W.  13;  John- 
son V.  Buffalo  Bank,  134  Iowa  731,  112  N.  W.  165;  Watts  v.  Savings 
Bank  (1917),  165  N.  W.  897. 

Kentucky. — Eades  v.  Muhlenberg  Co.  Sav.  Bank  (1914),  157  Ky.  416, 
163  S.  W.  494. 

Massachusetts. — Quincy  Mutual  Fire  Insurance  Co.  v.  International 
Trust  Co.,  217  Mass.  370,  104  N.  E.  845,  L.  R.  A.  (N.  S.)  1915B,  725; 
Franklin  Sav.  Bank  v.  Framingham,  212  Mass.  92,  98  N.  E.  925. 

Missouri.— Gage  v.  Bank  of  Holcomb  (1917),  196  S.  W.  1077. 

Oregon. — First  Nat.  Bank  of  Pomeroy  v.  McCullough  (1908),  SO  Oreg. 
508,  93  Pac.  366,  17  L.  R.  A.  (N.  S.)  1105,  126  Am.  St.  Rep.  758. 

Pennsylvania. — Neyens  v.  Port  (1911),  46  Pa.  Super.  Ct.  428. 

Washington.— Hanson  v.  Northern  Bank  &  Tr.  Co.  (1917),  167  Pac.  97. 

Wisconsin.—Swar\y  v.  Northern  State  Bank,  150  Wis.  572,  137  N. 
W.  763. 

United  States. — Capital  Savings  Bank  v.  Framingham,  246  Fed.  Rep. 
553,  158  C.  C.  A.  523. 


§  43.  Indorsement  where  name  is  misspelled,  et  cetera. 
Where  the  name  of  a  payee  or  indorsee  is  wrongly  designated 
or  misspelled,  he  may  indorse  the  instrument  as  therein  de- 
scribed, adding,  if  he  thinks  fit,  his  proper  signature.^* 

See  text,  §  110. 

Construing  corresponding  provision  of  English  Bills  of  Exchange 
Act:    32  (4). 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Arkansas.— Soekland  v.  Storch  (1916),  185  S.  W.  262. 

§  44.  Indorsement  in  representative  capacity.  Where 
any  person  is  under  obligation  to  indorse  in  a  representative 
capacity,  he  may  indorse  in  such  terms  as  to  negative  personal 
liability.  *•  i* 

See  text,  §  110. 

Cross  sections :    20,  38. 

Construing  corresponding  provision  of  English  Bills  of  Exchange 
Act:    31  (5). 


§    45  NEGOTIATION.  473 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Form  of  indorsement  on  note  to  negative  personal  liability  as  indorser. 
Chelsea  Exchange  Bank  v.  First  U.  P.  Church,  89  Misc.  Rep.  616,  152 
N.  Y.  Supp.  201. 

^*  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Nezv  ForJ^.— Chelsea  Bank  v.  First  Un.  Presby.  Church  (1915),  80 
Misc.  Rep.  616,  152  N.  Y.  Supp.  201. 


§45.  Time  of  indorsement;  presumption.  Except  where 
an  indorsement  bears  date  after  the  maturity  of  the  instrument, 
every  negotiation  is  deemed  prima  facie  to  have  been  effected 
before  the  instrument  was  overdue.^-  ^* 

See  text,  §110. 

Cross  section :     52. 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Indorsing  after  maturity.  Seaboard  Nat.  Bank  v.  Belden,  —  Cal. 
App.  — ,  190  P.  1045. 

Undated  indorsement  presumed  made  before  maturity.  Metropolitan 
Discount  Co.  v.  Davis,  —  Okla.  —    170  Pac.  707. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Alabama.— E\tdsoe  v.  City  Nat.  Bank  of  Selma  (1912),  7  Ala.  App. 
195,  60  So.  942. 

California. — Seaboard  Nat.  Bank  v.  Belden,  190  Pac.  1045. 
District    of    Columbia. — Catholic    Unixersity   v.    Waggaman,    2)2    App. 
D.  C.  307. 

New  York. — German-Am.  Bank  v.  Cunningham  (1904),  97  App.  Div. 
244,  89  N.  Y.  Supp.  836;  Colborn  v.  Arbecon  (1907),  54  Misc.  Rep.  623,  104 
N.  Y.  Supp.  968;  Lanning  v.  Trust  Co.  of  Am.  (1910),  122  N.  Y.  Supp. 
485. 

0/n"o.— Wehrman  v.  Beech  (1906),  28  O.  C.  C.  128. 
Oklahoma. — Cedar  Rapids  Nat.  Bank  v.  Bashara,  39  Okla.  482,  35  Pac. 
1051;  Met.  Dis.  Co.  v.  Davis  (1918),  170  Pac.  707. 

Wyoming.— RoldsyiorXh.  v.  Blyth  &  Fargo  (1915),  146  Pac.  603. 


474  NEGOTIABLE   INSTRUMENTS.  §§    46-47 

§  46.  Place  of  indorsement ;  presumption.  Except  where 
the  contrary  appears  every  indorsement  is  presumed  prima  facie 
to  have  been  made  at  the  place  where  the  instrument  is  dated.*'  *• 

See  text,  §110. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Indorsement  is  presumed  prima  facie  to  be  made  at  place  where  instru- 
ment dated.    Walling  v.  Cushman,  —  Mass.  — ,  130  N.  E.  175. 

Presumption  as  to  place  of  indorsement.  Finch  v.  Calkins,  183  Mich. 
298,  149  N.  W.  1037. 

Accommodation  indorser  estopped  as  to  holder  in  due  course  to  vary 
the  presumed  place  of  indorsement.  Chemical  Nat.  Bank  v.  Kellogg.  183 
N.  Y.  92,  75  N.  E.  1103,  2  L.  R.  A.   (N.  S.)  299.  Ill  Am.  St.  Rep.  717. 

When  indorsement  must  be  before  maturity.  Jones  v.  Brandt,  — 
Wis.  — ,  181  N.  W.  813. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Massachusetts. — Walling  v.  Cushman,  130  N.  E.  175. 

Michigan.— Finch  v.  Calkins,  183  Mich.  298,  149  N.  W.  1037. 

New  For/t.— Chemical  Nat.  Bank  v.  Kellogg  (1905),  183  N.  Y.  92,  75 
N.  E.  1103,  2  L.  R.  A.  (N.  S.)  299,  111  Am.  St.  Rep.  717. 

Wisconsin. — Jones  v.  Brandt,  181  N.  W.  813. 

§  47.  Continuation  of  negotiable  character.  An  instru- 
ment negotiable  in  its  origin  continues  to  be  negotiable  until  it 
has  been  restrictively  indorsed  or  discharged  by  payment  or 
otherwise.  *'  ** 

See  text,  §§  13,  110. 

Cross  sections:    36,  37,  119,  et  seq. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  36 
(1).  (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Plea  of  non-indorsement  for  value  before  maturity  is  insufficient  where 
no  equity  shown  against  maker.     Barnes  v.  Carr,  65  Fla.  87.  61  So.  184. 

Transfer  for  value  without  indorsement.  Sanderson  v.  Clark,  —  Ida. 
— ,  194  Pac.  472. 

Indorsees  after  maturity  are  not  relieved  from  defenses  of  maker  and 
prior  indorsers.  Ohio  Vallev,  etc.,  Co.  v.  Great  Southern  Fire  Ins.  Co. 
(Ky.).  197  S.  W.  399. 

Effect  of  transfer  without  indorsement  signature.  Critcher  v.  Ballard, 
-  N.  C.  — ,  104  S.  E.  134. 


§    48  NEGOTIATION.  475 

Note  continues  negotiable  until  restrictively  indorsed.  Union  Nat. 
Bank  of  Massillon,  Ohio,  v.  Mayfield,  —  Okla.  — ,  179  Pac.  1034. 

Negotiable  instrument  continues  as  such  until  restricted  by  indorse- 
ment or  payment  although  overdue.  Oakdale  Mfg.  Co.  v.  Clarke,  29 
R.  I.  192,  69  Atl.  681. 

Restrictive  indorsement  gives  indorsee  instrument  restricted  as  to  per- 
son or  use.  Gulbranson-Dickinson  Co.  v.  Hopkins,  —  Wis.  — ,  175  N. 
W.  93. 

*^  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Connecticut.— Cent  Nat.  Bank  v.  Stoddard  (1910),  83  Conn.  330,  76 
Atl.  472;  Lippitt  v.  Thomas  Loan  &  Trust  Co.  (1914),  90  Atl.  369. 

Florida. — Barnes  v.  Carr,  65  Fla.  87,  61  So.  184. 

Idaho. — Sanderson  v.  Clark,  194  Pac.  472. 

Kentucky. — Ohio  Valley,  etc.,  Co.  v.  Great  Southern  Fire  Ins.  Co. 
(Ky.),  197  S.  W.  399. 

Missouri.— Lane  v.  Hyder  (1912),  163  ^lo.  App.  688,  147  S.  W.  514. 

New  Jersey.— Gihh-.  v.  Allen   (1915),  94  Atl.  61. 

New  York.— McBee  Co.  v.  Shoem.aker  (1916),  160  N.  Y.  Supp.  251; 
Crusins  v.  Siegman  (1913),  142  N.  Y.  Supp.  348;  McMill  v.  Shellito 
(1919),  173  N.  Y.  Supp.  810. 

North  Carolina.— Critcher  v.  Ballard.  104  S.  E.  134. 

Oklahoma. — Union  Nat.  Bank  of  Massillon,  Ohio,  v.  Mayfield  (1918), 
174  Pac.  1034. 

Rhode  Island.— Oa.ksd2i\c  Mfg.  Co.  v.  Clarke  (1908),  29  R.  I.  192,  69 
Atl.  681. 

Wisconsin. — Gulbranson-Dickinson  Co.  v.  Hopkins  (Wis.),  175  N. 
W.  93. 

United  States.— Chmch  v.  Sweetland  (1917),  243  Fed.  289;  Emerson 
V.  Fisher  (1917),  246  Fed.  642. 


§  48.  Striking  out  indorsement.  The  holder  may  at 
any  time  strike  out  any  indorsement  which  is  not  necessary  to 
his  title.  The  indorser  whose  indorsement  is  struck  out,  and  all 
indorsers  subsequent  to  him,  are  thereby  relieved  from  liability 
on  the  instrument.^'  ^* 

See  text,  §  110. 

In  the  Kentucky  Act  "owner"  is  used   for  "holder"  in   the  first  line, 
v/hich  is  doubtless  a  clerical  error. 

*  Digest  of  some  of  the  decisions  m  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 


476  NEGOTIABLE  INSTRUMENTS.  §   49 

Possession  of  note  by  indorsee,  to  whom  a  note  indorsed  by  him  had 
been  returned,  can  sue  without  striking  out  his  name  as  indorser.  New 
Haven  Mfg.  Co.  v.  New  Haven  Pulp  Co.,  76  Conn.  126,  55  Atl.  604. 

Words  "to  account  of  A"  after  indorsement  in  blank  by  payee  may 
be  stricken  out  in  suit  by  plaintiff.    Jcrman  v.  Edwards,  29  App.  D.  C.  535. 

Holder  of  note  indorsed  in  blank  by  payee  may  strike  out  all  subse- 
quent indorsements.    Howell  v.  Commercial  Nat.  Bank,  40  App.  D.  C.  370. 

When  indorsement  in  blank  on  note  is  controlled  by  erasure  of 
assignment  to  another  on  mortgage.  King  v.  Bellamy,  82  Kan.  301,  108 
Pac.  117. 

Holder  may  at  any  time  strike  out  unnecessary  indorsement.  Leavitt 
V.  Wintman,  —  Mass.  — ,  125  N.  E.  390. 

^*  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Connecticut. — New  Haven  Mfg.  Co.  v.  New  Haven  Pulp  Co.  (1903), 
76  Conn.  126,  55  Atl.  604. 

District  of  Columbia. — Jerman  v.  Edwards  (1907),  29  A.  C.  (D.  C.) 
535;  Howell  v.  Commercial  Nat.  Bank  (1913),  40  A.  C.  (D.  C.)  370. 

Kansas.— King  v.  Bellamy  (1910),  82  Kans.  301,  108  Pac.  117. 

Massachusetts. — Leavett  v.  Wintman  (Mass.),  125  N.  E.  390. 

Michigan.— Ensign  v.  Fogg  (1913),  143  N.  W.  82. 

Missouri.— Klliott  v.  Quails  (1910),  130  S.  W.  474;  Nance  v.  Hay  ward 
(1914),  170  S.  W.  429;  Carter  v.  Butler  (1915),  174  S.  W.  399. 

New  Jersey. — Pohlemus  v.  Prudential  Realty  Co.  (1907),  74  N.  J.  L. 
570,  67  Atl.  303;  Mackintosh  v.  Gibbs  (1909),  79  N.  J.  L.  40,  74  Atl.  708. 


§  49.  Transfer  without  indorsement ;  effect  of.  Where 
the  holder  of  an  instrument  payable  to  his  order  transfers  it 
for  value  without  indorsing  it,  the  transfer  vests  in  the  transferee 
such  title  as  the  transferrer  had  therein,  and  the  transferee  ac- 
quires, in  addition,  the  right  to  have  the  indorsement  of  the  trans- 
ferrer. But  for  the  purpose  of  determining  whether  the  trans- 
feree is  a  holder  in  due  course,  the  negotiation  takes  effect  as 
of  the  time  when  the  indorsement  is  actually  made.-^'  ^^ 

See  text,  §  113. 

Cross  sections:     125,  30,  31.  18,  187,  59. 

In  Alabama  the  words  "said  holder"  are  used  in  place  of  "transferrer" 
in  the  first  paragraph,  and  the  words  "for  the  purpose  of  transferring 
title  only"  are  added  at  the  end  of  said  paragraph. 

In  Colorado  the  words  "if  omitted  by  mistake,  accident  or  fraud"  are 
added  at  the  end  of  the  first  sentence. 

In  Illinois  and  Missouri  the  words  "to  have  the  indorsement  of  the 
transferrer"  are  struck  out  and  the  following  used  in  place  thereof: 
"To  enforce  the  instrument  against  one,  who  signed  for  the  accommoda- 


§    49  NEGOTIATION.  477 

tion  of  the  transferrer,  and   the  right   to   have  the  indorsement   of  the 
transferrer  if  omitted  by  accident  or  mistake." 

In  Wisconsin  the  following  is  added  at  the  end  of  the  section :  "When 
the  indorsement  was  omitted  by  mistake,  or  there  was  an  agreement  to 
indorse  made  at  the  time  of  the  transfer,  the  indorsement  when  made 
relates  back  to  the  time  of  transfer." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Transferee  bound  by  payment  to  payee  where  he  received  unindorsed 
rote  and  gave  no  notice  of  transfer.  Vann  v.  Marbury,  100  Ala.  438,  14 
So.  273,  23  L.  R.  A.  325,  46  Am.  St.  Rep.  70. 

Transfer  without  indorsement  does  not  cut  off  equities  before  notice 
of  transfer.    Barker  v.  Barth,  192  111.  460,  61  N.  E.  388. 

Evidence  necessary  to  make  prima  facie  showing  of  transfer  without 
indorsement  to  possessor.    Roy  v.  Duff,  170  Iowa  319,  152  N.  W.  606. 

When  possessor  is  prima  facie  owner  of  unindorsed  note.  Callahan  v, 
Louisville  Dry  Goods  Co.,  140  Ky.  712,  715,  137  S.  W.  995. 

When  payment  to  payee  of  unindorsed  instrument  binds  transferee. 
Jones  v.  Witter,  13  Mass.  304. 

Possession  of  unindorsed  note  not  prima  facie  evidence  of  ownership. 
Van  Eman  v.  Stanchfield,  10  Minn.  255. 

Negotiation  of  an  unindorsed  instrument  in  hands  of  holder  for  value 
takes  effect  when  transferrer  indorses  same.  Kiefer  v.  Tolbert,  128 
Minn.  519,  151  _N.  W.  529. 

Possession  is  not  prima  facie  evidence  of  ownership  of  unindorsed 
rote  payable  to  order.    Dorn  v.  Parsons,  56  Mo.  601. 

Plaintiff  must  prove  indorsement  where  general  denial  filed ;  possession 
proof  insufficient.    Nance  v.  Hayward,  183  Mo.  App.  217,  170  S.  W.  429. 

Legal  title  passes  without  indorsement.  Townsend  v.  Alewel,  —  Mo. 
App.  — ,  202  S.  W.  447. 

Burden  of  proving  indorsement  is  on  the  plaintiff  under  plea  of  gen- 
eral denial.    Peoples  Trust,  etc..  Bank  v.  Rook,  96  Neb.  415,  148  N.  W.  95. 

When  transferee  bound  by  payment  to  payee.  Dunn  v.  Meserve,  58 
N.  H.  429. 

Transferee  of  note  payable  to  order  without  indorsement  is  not  holder 
in  due  course.  Mayers  v.  McRimmon,  140  N.  C.  640,  53  S.  E.  447,  111 
Am.  St.  Rep.  879. 

When  transferee  without  indorsement  is  not  holder  in  due  course  of 
note  payable  to  order.    Steinhilper  v.  Basnight,  153  N.  C.  293,  69  S.  E.  220. 

Possession  of  unindorsed  note  pa3'able  to  order  is  not  prima  facie 
evidence  of  ownership.     Shepard  v.  Hanson,  9  N.  D.  249,  83  N.  W.  20. 

Transferee  may  be  vested  with  equitable  or  legal  title  without  being 
holder  in  due  course.  Simpson  v.  First  Nat.  Bank  of  Roseburg,  —  Ore. 
— ,  185  Pac.  913. 

Mere  fact  of  possession  is  not  evidence  of  ownership  of  unindorsed 
note  payable  to  order.  Escamilla  v.  Pingree,  44  Utah  421,  141  Pac.  103, 
L.  R.  A.  1915B,  475. 

Payment  to  payee  is  effective  where  made  before  notice  of  transfer 
without  indorsement.     Campbell  v.  Day,  16  Vt.  558. 

Title  vests  in  transferee  without  indorsement.  Swenson  v.  Soltz,  Z6 
Wash.  318,  78  Pac.  999. 

Maker  estopped  to  set  up  equities  where  note  transferred  for  value 
although  payee  did  not  indorse  it.  Marling  v.  Fitzgerald,  138  Wis.  93, 
120  N.  W.  388. 


478  NEGOTIABLE   INSTRUMENTS.  §    47 

Note  payable  to  order  unindorsed  is  not  prima  fade  property  of 
holder.  Capitol  Hill  State  Bank  v.  Rawlins  Nat.  Bank,  24  Wyo.  423, 
160  Pac.  1171. 

Transferee  of  unindorsed  instrument  entitled  to  have  indorsement 
made  and  sue  thereon.    Walters  v.  Neary,  21  T.  L.  R.  146. 

When  transferrer  for  value  without  indorsement  need  not  have  in- 
dorsement made.    Hood  v.  Stewart,  17  Session  Cases  (4th  Series)  749. 

Possessor  of  unindorsed  instrument  entitled  to  have  same  indorsed 
where  he  purchased  for  value  before  maturity.  Day  v.  Longhurst, 
Weekly  Notes  (1893)  3. 

*■  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Alabama. — German-American  Nat.  Bank  v.  Lewis,  9  Ala.  App.  352, 
63  So.  741 ;  Vann  v.  Marbury,  100  Ala.  438,  14  So.  273,  23  L.  R.  A.  325, 
46  Am.  St.  Rep.  70. 

Arkansas.— Wmiamson  Bank  &  Tr.  Co.  v.  Miles  (1914),  169  S.  W. 
368. 

Ca/j/orm"o.— Shoenhair  v.  Jones  (1917),  165  Pac.  971. 

Colorado.— Bank  of  Bromfield  v.  McKinlev,  53  Colo.  279,  125  Pac.  493 ; 
Lane  v.  Lane  (1914),  57  Colo.  419,  140  Pac.  804. 

Connecticut.— GoodseU  v.  The  McElroy  Bros.  Co.  (1912),  86  Conn. 
402,  85  Atl.  509. 

F/oncfa.— Barnes  v.  Carr  (1913),  61  So.  184. 

Illinois— Barker  v.  Barth,  192  111.  460,  61  N.  E.  388. 

lozva.—Roy  v.  Duff  (1915),  170  Iowa  319.  152  N.  W.  606. 

Kentucky.— CaWahan  v.  Louisville  Dry  Goods  Co.  (1910),  140  Ky. 
712,  715.  131  S.  W.  993;  Foster's  Admr.  v.  Metcalf  (1911),  144  Ky.  385, 
138  S.  W.  314. 

Minnesota. — VanEman  v.  Stanchfield,  10  Minn.  255 ;  Kiefer  v.  Tolbert 
(1915),  128  Minn.  519,  151  N.  W.  529. 

Missouri. — Cavitt  v.  Thorp,  30  Mo.  App.  131 ;  Market  &  Fulton  Nat. 
Bank  v.  Ettenson's  Estate  (1913),  158  S.  W.  448;  Dorn  v.  Parsons,  56 
Mo.  601;  Townsend  v.  Alwel  (1918).  202  S.  W.  447;  Richardson  v.  Drug 
Co.,  92  Mo.  App.  515;  Hair  v.  Edwards,  104  Mo.  App.  213,  77  S.  W.  1089; 
Wade  V.  Boone,  184  Mo.  App.  88,  168  S.  W.  360;  Carter  v.  Butler,  264 
Mo.  306.  174  S.  W.  399;  Cantrell  v.  Davidson,  180  Mo.  App.  410,  168 
S.  W.  271;  Nance  v.  Havward,  183  Mo.  App.  217.  170  S.  W.  429;  First 
Nat.  Bank  v.  Stam.  186  Mo.  App.  439,  171  S.  W.  567;  Wright  v.  Way- 
land  (Mo.  App.),  188  S.  W.  928. 

New  Hampshire. — Dunn  v.  Meserve,  58  N.  H.  429. 

A/'^&roj^a.— Peoples  Trust,  etc..  Bank  v.  Rook,  96  Neb.  415,  148  N. 
W.  95. 

New  York. — Manufacturer's  Commercial  Co.  v.  Blitz  (1909).  131  A. 
D.  17,  115  N.  Y.  Supp.  402;  Meuer  v.  Phoenix  Nat.  Bank   (1904),  94  A. 


§    50  NEGOTIATION.  479 

D.  331,  88  N.  Y.  Supp.  83;  Brown  v.  James  (1911),  130  N.  Y.  Supp.  333; 
Martz  V.  State  Nat.  Bank  of  N.  Tonawanda  (1911),  131  N.  Y.  Supp. 
1045  147  A.  D.  250;  Hathaway  v.  Co.  of  Delaware,  185  N.  Y.  368, 
78  N.  E.  153.  13  L.  R.  A.  (N.  S.)  273,  113  Am.  St.  Rep.  909. 

North  Carolina.— Mayers  v.  McRimmon  (1906),  140  N.  Car.  640,  53 
S.  E.  447,  111  Am.  St.  Rep.  879;  Keel  v.  Construction  Co.  (1906),  143 
N.  Car.  429,  55  S.  E.  826;  Johnson  Co.  Sav.  Bank  v.  Scoggin  Drug  Co. 
(1910),  67  S.  E.  253;  Steinhilper  v.  Basnight  (1910),  153  N.  Car.  293, 
69  S.  E.  220;  Myers  v.  Petty,  153  N.  Car.  462,  464,  69  S.  E.  417,  418;  Elgin 
City  Banking  Co.  v.  McEachern,  163  N.  C.  333  (1913),  79  S.  E.  680. 

North  Dakota.—Shepard  v.  Hanson,  9  N.  D.  249,  83  N.  W.  20. 

Oregon.— First  Nat.  Bank  of  Pomeroy  v.  McCuIlough  (1908),  50  Oreg. 
508,  93  Pac.  366;  Baker  v.  Moran  (1913),  136  Pac.  30;  Witt  v.  Campbell- 
Lakin  Soap  Co.  (1913).  134  Pac.  316;  Simpson  v.  First  Nat.  Bank  of 
Roseburg  (Ore.),  185  Pac.  913. 

Pennsylvania.— Nat.  Bank  of  Pittsburg  v.  Miller   (1917),  100  Atl.  269. 

South  Dakota.— Fiper  v.  Hagen  (1914),  33  S.  D.  491,  146  N.  W.  692. 
Tennessee.— Landis  v.  White  Bros.   (1913),  127  Tenn.  504,  152  S.  W. 
1031;  Allen  v.  Hayes  (1918),  201  S.  W.  135. 

t7<a;t.— Escamilla  v.  Pingree  (1914),  44  Utah  421,  141  Pac.  103,  L.  R. 
A.  1915B,  475. 

Vermont. — Campbell  v.  Day,  16  Vt.  558. 

Washington.— Swensorx  v.  Stoltz,  36  Wash.  318,  78  Pac.  999;  O'Connor 
V.  Slatter  (1908),  48  Wash.  493,  93  Pac.  1078;  First  Nat.  Life  Assurance 
See.  of  Am.  V.  Farquhar  (1913),  135  Pac.  619;  Puget  Sound  State  Bank 
V.  Washington  Paving  Co.  (1917),  162  Pac.  870. 

Wisconsin.— Lavfless  v.  State  (1902),  114  Wis.  189,  89  N.  W.  891; 
Marling  v.  Fitzgerald  (1909),  138  Wis.  93,  120  N.  W.  388;  Swanby  v. 
Northern  St.  Bank  (1912),  150  Wis.  572,  137  N.  W.  763. 

Wyoming.— Capita]  Hill  St.  Bank  v.  Rawlings  Nat.  Bank  (1916),  24 
Wyo.  423,  160  Pac.  1171,  50  L.  R.  A.  581. 

United  States.—Smith  v.  Nelson  Land  &  Cattle  Co.,  212  Fed.  Rep. 
56,  128  C.  C.  A.  512. 


§  50.  When  prior  party  may  negotiate  instrument.  Where 
an  instrument  is  negotiated  back  to  a  prior  party,  such  party 
may,  subject  to  the  provisions  of  this  act,  reissue  and  further 
negotiate  the  same.  But  he  is  not  entitled  to  enforce  payment 
thereof  against  any  intervening  party  to  whom  he  was  personally 
liable.!'  ^^ 

See  text,  §  110. 

Cross  sections:     119,  121. 

**The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 


480  NEGOTIABLE   INSTRUMENTS.  §    50 

Alabama. — German-Am.  Nat.  Bank  v.  Lewis  (1913),  9  Ala.  App.  352; 
Britnell  v.  Smith  (1914),  66  So.  569;  Owings  Lumber  Co.  v.  Marlowe 
(1917),  76  So.  926. 

Illinois.— Trcsd)  v.  Cunningham's  Est.  (1915),  108  N.  E.  350,  267  111. 
367. 

Kansas.— Security  State  Bank  v.  Clark  (1916),  160  Pac.  1149. 

Massachusetts.— Quimhy  v.  Varmum  (1906),  190  Mass.  211,  76  N.  E. 
671. 

Mississippi.— Adair  v.  Bank  of  Hickory  Flat  (1917),  75  So.  758;  Miller 
V.  Chinn  (1917),  195  S.  W.  552. 

New  Forit.— Steinberger  v.  Hittelman   (1915),  156  N.  Y.  Supp.  320. 

Tennessee. — Nolan  Bros.  Lumber  Co.  v.  Dudley  Lumber  Co.,  128 
Tenn.  11,  156  S.  W.  465. 


ARTICLE  IV. 


RIGHTS  OF  HOLDER. 


§51.    Right  of  holder  to  sue;  pay- 
ment. 

52.  What  constitutes  a  holder  in 

due  course. 

53.  When     person     not     deemed 

holder  in  due  course. 

54.  Notice    before    full    amount 

paid. 


§  55.    When  title  defective. 

56.  What    constitutes    notice    of 

defect. 

57.  Rights     of     holder     in     due 

course. 

58.  When  subject  to  original  de- 

fenses. . 

59.  Who   deemed   holder   in   due 

course. 


Sections  51  to  59  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  Law  in  the  various  states 
and  territories  on  page  360. 

§51.  Right  of  holder  to  sue;  payment.  The  holder  of  a 
negotiable  instrument  may  sue  thereon  in  his  own  name ;  and 
payment  to  him  in  due  course  discharges  the  instrument.^'  ^' 

See  text,  §  182. 

Cross  sections:     Sec.  37,  subd.  2,  88,  119. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Assignment  of  note  by  separate  writing  as  affecting  holders.  Davis 
V.  Florey,  —  Ala.  App.  — ,  77  So.  413. 

Holder  for  collection  only  may  sue.  Craig  v.  Palo  Alto  Stock  Farm, 
16  Idaho  701,  102  Pac.  393. 

Holder  for  collection  may  sue  although  not  beneficially  a  real  party. 
Utah  Implement  Co.  v.  Kenyon,  30  Idaho  407,  164  Pac.  1176. 

When  holder  for  collection  may  sue.  Harrison  ;V.  Pearcy,  174  Ky. 
485,  192  S.  W.  503. 

Defense  of  fraud  against  assignee  of  notes  after  maturity.  Sparr  v. 
Fulton  Nat.  Bank,  179  Ky.  755. 

Holder  may  sue  in  his  own  name.  McGowan  v.  People's  Bank,  — 
Ky.  — ,  213  S.  W.  579. 

One  having  no  interest  may  sue.  Fay  v.  Hunt,  190  Mass.  378,  77  N. 
E.  502. 

Holder  may  sue  in  own  name  any  party  liable  on  note.  Leavitt  v. 
Wintman,  —  Mass.  —   125  N.  E.  390. 

Suit  by  holder  of  note  payable  to  bearer.  J.  I.  Case  Threshing  Ma- 
chine Co.  v.  Simpson,  54  Mont.  316. 

481 


482  NEGOTIABLE    INSTRUMENTS.  §    51 

Payee  or  indorsee  in  possession  may  sue  and  strike  out  subsequent 
indorsers.  R.  M.  Owen  &  Co.  v.  Storms  &  Co.,  78  N.  J.  L.  154,  72 
Atl.  441. 

When  holder  mav  sue  although  not  a  real  party  in  interest.  Curtis 
V.  Douglas,  130  N.  Y.  Supp.  1054. 

Indorsee  for  collection  cannot  sue.  Third  Nat.  Bank  v.  Exum,  163 
N.  C.  199,  79  S.  E.  498. 

Indorsee  of  note  as  collateral  security  mav  sue.  Farmers'  Bank  v. 
Riedlinger,  27  N.  D.  318,  146  N.  W.  556.  ' 

Holder  may  sue  in  his  own  name,  although  others  hencficially  inter- 
ested.    Chaffee  v.  Shartel,  46  Okla.  199,  148  Pac.  686. 

Promissory  note  attached  and  sold  by  sheriff  may  be  sued  on  by  holder 
although  no  indorsement  by  sheriff.  Fishburn  v.  Londershausen,  SO  Ore. 
363,  92  Pac.  1060,  14  L.  R.  A.  (N.  S.)  1234. 

Collateral  security  note  may  be  sued  on  bv  indorsee.  Melton  v.  Pen- 
sacola  Bank,  190  Fed.  Rep.  126,  111  C.  C.  A.  "l66. 

Holder  not  in  due  course.  Wortlen  v.  Gillett,  275  Fed.  654 

One  with  no  interest  may  sue.  Harris  v.  Johnson,  75  Wash.  291,  134 
Pac.  1048. 

•^*  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Darden  v.  Holloway  (1911),  1  .A.la.  App.  661,  56  So.  32; 
Coats  V.  Mut.  Alliance  Co.  (1911),  174  Ala.  565,  56  So.  915;  Jefferson 
Co.  Sav.  Bk.  V.  Interstate  Sav.  Bk.  (1912),  4  Ala.  App.  363,  59  So.  348; 
Davis  V.  Florey,  77  So.  413. 

Arizona. — Leon  v.  Citizen's  BIdg.  &  Loan  Assn.    (1912),  14  Ariz.  294. 

Arkansas.— Pinson  v.  Cobb  (1914),  166  S.  W.  943;  Keahtley  v.  Hol- 
land Banking  Co.  (1914),  166  S.  W.  953;  Little  v.  Arkansas  Nat.  Bk. 
(1914),  16^1  S.  W.  75. 

Colorado.— mierv  v.  Brohm  (1905),  20  Colo.  App.  389,  79  Pac.  180; 
Sykes  v.  Kruse  (1911).  49  Colo.  560.  113  Pac.  1013;  Bank  of  Bromfield 
V.  McKinley  (1912),  125  Pac.  493. 

Connccfkut. — New  Haven  Mfg  .  Co.  v.  New  Haven  Pulp  Co.  (1903), 
76  Conn.  126,  55  Atl.  604. 

Idaho.— Craig  v.  Palo  Alto  Stock  Farm  (1901),  16  Ida.  701,  102  Pac. 
393;  Home  Land  Co.  v.  Osborn  (1910).  19  Ida.  75,  112  Pac.  764;  Utah 
Implement  Vehicle  Co.  v.  Kenyon  (1917),  30  Ida.  407,  164  Pac.  1177. 

///mow.— Stitzel  v.  Miller  (1910),  157  111.  App.  390  (No.  2);  Wood- 
ward V.  Donovan  (1912),  167  111.  App.  503;  Harney  v.  Lee  (1912),  175 
111.  App.  250;  W.  A.  Fov/ler  Paper  Co.  v.  Best  Jones  Sales  Book  Co. 
(1913),  183  111.  App.  310. 

/ozffl.— Vander  Ploev  v.  Van  Zunk  (1907),  135  Iowa  350,  112  N. 
W.  807. 

Kansas.— BoWne  v.  Wilson  (1907),  75  Kans.  829,  89  Pac.  678;  King  v. 
Bellamy  (1910).  82  Kans.  310;  Larner  v.  Shorthill   (1919).  176  Pac.  107. 

Kentucky.— Chateau  Tr.  &  Banking  Co.  v.  Smith  (1909).  133  Ky. 
418.  J18  S.  W.  279;  Callaghan  v.  Louisville  Dry  Goods   Co.    (1910),  14 


§    51  RIGHTS   OF    HOLDER.  483 

Ky.  712.  131  S.  W.  995;  Harrison  v.  Pearcy  (1917),  174  Ky.  485,  192 
S.  W.  503;  Harrison  v.  Nicholson-Foley  Co.  (1918),  200  S.  W.  929; 
Sparr  v.  Fulton  Bank  (1918),  201  S.  W.  310,  179  Ky.  755;  McGowan  v. 
People's  Bank,  213  S.  W.  579. 

Massachusetts.— Fay  v.  Hunt  (1906),  190  Mass.  378,  77  N.  E.  502; 
Jump  V.  Leon  (1906),  192  Mass.  511;  Eddy  v.  Fogg  (1906),  192  Mass. 
543;  Lowell  v.  Bickford  (1909),  201  Mass.  543,  88  N.  E.  1 ;  Whiddon  v. 
Sprague  (1909),  203  Mass.  526;  Perry  v.  Pye  (1913),  102  N.  E.  653: 
Harvey  v.  Squire  (1914),  105  N.  E.  355;  Leavitt  v.  Wintman,  125  N. 
E.  390. 

Michigan.— Gale  v.  Mayhew  (1910),  161  Mich.  96,  125  N.  W.  781; 
Gen.  Conf.  Assn.  &  Co.  v.  Mich.  Sanitarium  (1911),  166  Mich.  504;  Ree'd 
V.  McReady  (1912),  136  N.  W.  488;  Schmidt  v.  Pegg  (1912),  172  Mich. 
159,  137  N.  W.  524. 

Missouri.— 'Rhodes  v.  Guhman  (1911),  156  Mo.  App.  344;  Milbank- 
Scampton  Milling  Co.  v.  Parkwood  (1911),  133  S.  W.  667;  Lipscomb  v. 
Talbott  (1912),  147  S.  W.  798. 

Mo«/ana.— Case  Medicine  Co.  v.  Simpson  (1918),  170  Pac.  12;  J.  L 
Case  Threshing  Machine  Co.  v.  Simpson,  54  Mont.  316. 

Nebraska.— Antelope  Co.  Bk.  v.  Wright  (1912),  90  Neb.  621,  134 
N.  W.  1123;  Ostenberg  v.  Havka  (1914),  145  N.  W.  713. 

New  Jersev.—nm  v.  Buchanan  (1905),  71  N.  J.  L.  301 ;  R.  M.  Owen  & 
Co.  V.  Storms  &  Co.  (1909).  78  N.  J.  L.  154,  72  Atl.  441. 

New  York.— Foess  v.  Twelfth  Ward  Bk.  (1904),  43  Misc.  45,  86 
N.  Y.  Supp.  857;  Hunter  v.  Allen  (1905),  106  A.  D.  557;  Schlesinger 
V.  Kurzvok  (1905),  94  N.  Y.  Supp.  442,  47  Misc.  634;  Cleary  v.  Dyke- 
man  (1914),  146  N.  Y.  Supp.  611;  Rogers  v  Morton  (1905),  46  Misc. 
494,  95  N.  Y.  Supp.  49;  Curtis  v.  Douglas  (1911),  130  N.  Y.  Supp. 
1054;  Czernev  v.  Hass  (1911),  144  A.  D.  430;  Martz  v.  State  Nat.  Bk 
of  N.  Tonowanda  (1911),  131  N.  Y.  Supp.  1045,  147  A.  D.  250;  Peo- 
ple's Nat.  Bk.  of  Hackensack  v.  Rice  (1912),  133  N.  Y.  Supp.  622; 
Schwartz  v.  Coin  (1912),  149  A.  D.  496;  Mazur  v.  Urback  (1913). 
142  N.  Y.  Supp.  323,  81  Misc.  133;  Dalrymple  v.  Schwartz  (1917),  164 
N.  Y.  Supp.  496. 

North  CaroUna.-'Roller  v.  McKinney  (1912),  74  S.  E.  966;  Park 
V.  Exam.  (1911),  156  N.  Car.  228;  Martin  &  Garrett  v.  Mask  (1912), 
158  N.  Car.  436;  Vaughan  v.  Exam.  (1913).  161  N.  Car.  492,  77  S.  E. 
679;  First  Nat.  Bk.  v.  Warsaw  Drug  Co.  (1914),  81  S.  E.  993;  Third 
Nat.  Bk.  V.  Exum,  163  N.  Car.  199.  79  S.  E.  498. 

North  Dakota. — Am.  Soda  Fountain  Co.  v.  Hogue  (1908),  17  N. 
Dak.  375,  116  N.  W.  339:  Grover  v.  Muratt  (1912),  23  N.  Dak.  577, 
137  N.  W.  830;  Farmer's  Bank  of  Mercer  Co.  v.  Riedlinger  (1914),  27 
N.  Dak.  318,  146  N.  W.  556. 

Ohio— Wehrman  v.  Beech  (1906),  28  O.  C.  C.  128;  Moore  v.  Central 
Nat  Bk.  of  Cleveland  (1910),  31  O.  C.  C.  614. 

Oklahoma.— Chaffee  v.  Shartel,  46  Okla.  199,  148  Pac.  686. 


484  NEGOTIABLE    INSTRUMENTS.  §    52 

Oregon. — Fishburn  v.  Londershausen  (1907),  50  Oreg.  363,  92  Pac 
1060,  14  L.  R.  A.  (N.  S.)  1234;  Smith  v.  Bayer  (1911),  115  Pac.  148; 
Gleason  v.  Denson  (1913),  132  Pac.  530;  Hewitt  v.  Andrews  (1914), 
140  Pac.  438. 

Pennsyhfania.— Johnson  Co.  Sav.  Bk.  v,  Kock  (1908),  38  Pa.  Super.  Ct. 
553;  Levy  v.  Gilligan  (1914),  90  Atl.  647. 

Rhode  Island.— Rnichings  v.  Renhalter   (1902),  23  R.  I.  518. 

South  Dakota.— Piper  v.  Hagen   (1914),  146  N.  W.  692. 

C7/a/t.— Escamilla  v.  Pingree  (1914),  141  Pac.  103. 

Virgitm.—FlQshman  v.  Bibb  (1916),  88  S.  E.  64. 

Washington.— Capitol  Nat.  Bk.  v.  Robinson  (1906),  41  Wash.  454,  83 
Pac.  1021;  Jackson  v.  Mercantile  Fire  Ins.  Co.  (1907),  45  Wash.  244, 
88  Pac.  127;  Hillman  v.  Stanley  (1909),  56  Wash.  320,  105  Pac.  816; 
Goodfellow  V.  First  Nat.  Bk.  (1913),  129  Pac.  90;  First  Nat.  Life  Assur- 
ance Soc.  of  Am.  V.  Farquhar  (1913),  135  Pac.  619;  Harris  v.  Johnson 
(1913),  75  Wash.  291,  134  Pac.  1048;  Carr  v.  Bonthires  (1914),  140 
Pac.  339. 

West  Virginia.— Farmer's  Nat.  Bk.  v.  Howard  (1912),  71  W.  Va. 
57,  76  S.  E.  122. 

Wiscotisin.—Swanhy  v.  Northern  St  Bk.  (1912),  150  Wis.  572,  137 
N.  W.  763. 

United  States.— Milton  v.  Pensacola  Bk.  &  Tr.  Co.  (1911),  190  Fed. 
126,  111  C.  C.  A.  166;  Loeb  v.  Weil  (1913),  209  Fed.  608;  Pensacola 
State  Bk.  v.  Melton  (1913),  210  Fed.  57;  First  Nat.  Bk.  v.  Fox  (1913), 
40  A.  C.  (  D.  C.)  430.  Norden  v.  Gillett,  275  Fed.  654. 

§  52.  What  constitutes  a  holder  in  due  course.  A  holder 
in  due  course  is  a  holder  who  has  taken  the  instrument  under  the 
following  conditions: 

1.  That  it  is  complete  and  regular  upon  its  face ;  or 

2.  That  he  became  the  holder  of  it  before  it  was  overdue, 
and  without  notice  that  it  had  been  previously  dishonored,  if 
such  was  the  fact;  or 

3.  That  he  took  it  in  good  faith  and  for  value ;  or 

4.  That  at  the  time  it  was  negotiated  to  him  he  had  no  notice 
of  any  infirmity  in  the  instrument  or  defect  in  the  title  of  the 
person  negotiating  it.-^'  ^* 

See  text,  §  126. 

Cross  sections :     13,  14,  25,  56. 


§    52  RIGHTS   OF    HOLDER.  485 

The  Wisconsin  act  (Sees.  1676-22)  adds  a  fifth  subdivision:  "That 
he  took  it  in  the  usual  course  of  business." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Crediting  paj'ee's  account  does  not  make  bank  holder  for  value.  Ger- 
man-American Nat.  Bank  v.  Lewis,  9  Ala.  App.  352,  63  So.  741. 

When  issuance  of  certificate  of  deposit  is  a  parting  with  value. 
Elmore  Co.  Bank  v.  Avant,  189  Ala.  418,  66  So.  509. 

Certificate  of  deposit  not  evidence  of  transferee  being  holder  for 
value.     Armstrong  v.  Walker  (Ala.),  76  So.  280. 

Indorsement  by  holder  and  delivery  necessary  to  transfer.  Jones  v. 
Bell,  —  Ala.  — ,  17  So.  998. 

Payment  of  value  required.     Davis  v.  Simpson,  —  Ala.  — ,  79  So.  48. 

Bona  fide  holder  must  show  his  good  faith  purchase  before  overdue 
and  without  knowledge.    Deshazo  v.  L.  &  E.  Lamar,  —  Ala.  — ,  85  So.  586, 

One  acquiring  notes  regular  in  form  without  notice  and  for  value  is 
holder  in  due  course.    Cannon  v.  Dillehay,  —  Ala.  App.  — ,  84  So.  549. 

Holder  in  due  course.  Navajo-Apache  Bank  &  Trust  Co.  v.  Wake- 
field, —  Ariz.  — ,  180  Pac.  529. 

Facts  holder  in  due  course  must  show  to  recover.  Lentz  v.  Lanrfers, 
—  Ariz.  — ,  185  Pac.  821. 

Plea  of  fraud  insufficient  as  against  holder  in  due  course.  White  v. 
Central  Nat.  Bank,  (Ala.),  1^  So.  74. 

Evidence  of  extension  or  renewal  affects  holder  in  due  course.  George 
V.  Williams,  27  Colo.  App.  400,  149  Pac.  837. 

Purchaser  for  value  after  maturity  may  be  holder  in  due  course. 
Mersick  v.  Alderman,  77  Conn.  634,  60  Atl.  109. 

The  change  of  ordinary  rule  of  procedure  as  to  allegation  and 
proof  by  negotiable  instruments  law  is  not  unconstitutional.  Johnson 
County  Sav.  Bank  v.  Walker,  79  Conn.  348,  65  Atl.  132, 

Proof  that  money  remained  in  discount  bank  at  time  of  notice  of 
equities.     Richards  v.  Street,  31  App.  Cas.  D.  C.  427. 

Holder  in  due  course  may  not  sue  as  innocent  holder  after  notice  of 
defense  and  security  given  against  loss  by  endorser.  First  Nat.  Bank  v. 
Fox,  40  App.  Cas.  D.  C.  430. 

Provision  in  mortgage  rendering  it  overdue  by  failure  to  pay  interest 
as  affecting  holder  in  due  course.  Taylor  v.  American  Nat.  Bank,  63  Fla. 
631,  57  So.  678,  Ann.  Cas.  1914A  309. 

Notes  procured  by  fraud  are  not  held  by  a  receiver  in  due  course 
he  being  charged  with  constructive  notice.  Brown  v.  Miller,  22  Idaho 
307,  125  Pac.  981. 

Notes  indorsed  in  blank  accepted  in  good  faith  from  an  unauthor- 
ized transferor  are  held  in  due  course.  Young  Men's  Christian  Assn., 
etc.,  Co.  V.  Rockford  Nat.  Bank,  179  111.  599,  54  N.  E.  297,  46  L.  R.  A.  753. 

Holder  in  due  course  against  a  subsequent  acceptor.  Mt.  Vernon  Nat. 
Bank  v.  Kelling-Karel  Co.,  189  111.  App.  375. 

Plaintiff  not  entitled  to  relief  where  holder  of  notes  indorsed  in 
blank  for  safe  keeping,  exceeds  his  authority  and  negotiates  same.  Jus- 
tice V.  Stonecipher,  267  111.  448,  108  N.  E.  722. 

Mere  fact  that  corporate  stock  for  which  note  was  given  was  worth- 
less does  not  place  burden  of  proof  on  holder  in  due  course.  Farmers 
Trust  Co.  v.  Sprowl,  —  Ind.  App.  — ,  126  N.  E.  81. 


486  NEGOTIABLE    INSTRUMENTS.  §    52 

Payee  not  holder  in  due  course  although  in  possession.  Vander 
Ploeg  V.  Van  Buuk,  135  Iowa  350. 

Prior  indebtedness  or  subsequent  withdrawal  necessary  to  make  bank 
holder  in  due  course.  McNight  v.  Parsons,  136  Iowa  390,  113  N.  W. 
858,  22  L.  R.  A.   (N.  S.)   718,  15  Ann.  Cas.  665,  125  Am.  St.  Rep.  265. 

Obligation  to  third  person  may  render  bank  holder  in  due  course. 
Montrose  Sav.  Bank  v.  Claussen,  137  Iowa  72,  114  N.  W.  547. 

Over  due  interest  does  not  put  purchaser  upon  inquiry  where  note 
contains  no  failure  of  payment  of  interest  stipulation.  Higby  v.  Bahren- 
fuss  (Iowa),  163  N.  W.  247. 

Purchaser  of  note  payable  "on  or  before  four after  date"  is  not 

holder  in  due  course.     In  re  Philpott's  Estate,  169  Iowa  555,  151  N.  W. 
825. 

Purchaser  of  unstamped  note  which  is  required  to  be  stamped  by 
revenue  laws.    Lutton  v.  Baker,  —  Iowa  — ,  174  N.  W.  599. 

Question  of  plaintiff's  bona  fides  in  purchase  is  for  the  jury.  Doty 
V.  Garfield  Township,  89  Kan.  719.  133  Pac.  172. 

Verdict  of  jury  that  they  did  not  know  whether  plaintiff  was  holder 
for  value  before  maturity  means  that  he  is  not.  Iowa  City  State  Bank 
V.  Claypool,  91  Kan.  248,  137  Pac.  949. 

Defenses  of  set-off  or  counterclaim  as  affecting  holder  for  value. 
Stevens  v.  Reegan,  103  Kan.  79. 

Where  a  bank  officer  knew  that  he  received  no  money  for  bank  draft 
but  did  not  know  of  another's  fraud  in  procuring  the  same  the  bank 
was  not  bound  by  the  fraud.  First  Nat.  Bank  v.  Lyons  Exchange  Bank 
(Kan.).  164  Pac.  137. 

When  note  payable  one  day  after  date  not  overdue.  Wilkins  v. 
Usher,  123  Ky.  696,  97  S.  W.  Z7. 

Holder  must  show  good  faith  purchaser.  Commercial  Sec.  Co.  v. 
Archer,  179  Ky.  842. 

Burden  shifts  to  holder  in  due  course  when  maker  shows  vise  in  in- 
ception of  note.     Harrison  v.  Perry,  —  Ky.  — ,  212  S.  W.  911. 

Holder  with  knowledge  of  conditions  surrounding  making  note  is  not 
a  holder  in  due  course.  Commercial  Germania  Trust  &  Savings  Bank 
V.  Southwestern  Surety  Ins.  Co.,  —  La.  — ,  82  So.  Z7Z. 

Purchaser  of  notes  before  maturity  in  good  faith  for  value  without 
notice  is  entitled  to  recover.  Dolph  v.  Stubblefield,  —  Md.  — ,  198  Alt.  488. 

Creditor  who  accepts  check  in  good  faith  although  applied  to  an- 
other's account  without  creditor's  knowledge  is  holder  in  due  course. 
Boston  Steel  &  Iron  Co.  v.  Steuer,  183  Mass.  140,  66  N.  E.  646,  97  Am.  St. 
Rep.  426. 

Innocent  purchaser  for  value  may  recover  although  accommodation 
agreement  violated.     Mehlinger  v.  Harriman,  185  Mass.  245,  70  N.  E.  51. 

Payee  may  be  holder  in  due  course.  Thorpe  v.  White,  188  Mass.  ZZZ, 
74  N.  E.  592. 

When  notes  indorsed  in  blank  are  held  in  due  course  by  one  who 
received  them  from  unauthorized  transferee  Gardiner  v.  Beacon  Trust 
Co.,  190  Mass.  27,  76  N.  E.  455,  2  L.  R.  A.  (N.  S.)  767. 

Holder  in  due  course  may  be  the  payee  of  negotiable  instrument. 
Liberty  Trust  Co.  v.  Tilton,  217  Mass.  462.  105  N.  E.  605,  L.  R.  A.  1915B, 
144. 

Holder  in  due  course  can  accept  note  only  under  authority  given 
agent  when  the  same  is  known.  Cheney  v.  Taber,  221  Mass.  332,  108 
N.  E.  1072, 


§    52  RIGHTS  OF   HOLDER.  487 

Notice  of  warranty  in  sales  agreement  does  not  affect  transferee  of 
note  as  holder  in  due  course.  Commercial  Credit  Co.  v.  M.  McDonough 
Co.,  130  N.  E.  179,  —  Mass.  — . 

Plaintiff  taking  note  for  value,  which  on  its  face  negatives  dishonor, 
is  holder  in  due  course.    Bovarnick  v.  Davis,  —  Mass.  — ,  126  N.  E.  380. 

Provisional  credit  does  not  make  bank  holder  in  due  course.  People's 
State  Bank  v.  Miller,  185  Mich.  565,  152  N.  W.  257. 

Payment  of  part  value  for  note  indorsed  without  recourse  may  raise 
question  of  good  faith.    Jobes  v.  Wilson,  140  Mo.  App.  281,  124  S.  W.  548. 

Delivery  of  check  may  not  be  negotiation.  St.  Charles  Sav.  Bank  v. 
Edwards,  243  Mo.  553,  147  S.  W.  978. 

Payment  of  draft  and  receipt  of  goods  under  bill  of  lading  makes 
purchasing  bank  holder  in  due  course.  Tapec  v.  Varley-Wolter  Co.,  184 
Mo.  App.  470,  171  S.  W.  19. 

Acceptance  of  certificate  of  deposit  with  words  "payment  refused" 
thereon  renders  one  not  a  holder  in  due  course.  State  v.  Greenville  Bank 
(Mo.  App.),  187  S.  W.  597. 

When  a  holder  of  note  without  notice  is  not  affected  by  unlawful  use  of 
the  note  by  his  indorser.     Priest  v.  Garnett   (Mo.  App.),  191  S.  W.  1048. 

Changing  place  of  payment  so  as  to  show  change  is  notice  to  indorsee. 
Mechanics  American  Nat.  Bank  v.  Helmbacher,  199  Mo.  App.  173. 

Defenses  to  which  note  is  subject  in  hands  of  payee.  Long  v.  Mason, 
m  Mo.  266. 

Knowledge  of  dispute  renders  indorsee  not  holder  in  due  course. 
Brophy  Grocery  Co.  v'  Wilson.  45  Aiont.  489,  124  Pac.  510. 

Knowledge  that  a  warranty  was  given  to  the  purchaser  of  goods  who 
executed  notes  transferred  does  not  render  one  a  holder  not  in  due  course. 
Baker  State  Bank  v.  Grant  (Mont.),  166  Pac.  27. 

Subsequent  holder  must  show  himself  holder  in  due  course  where 
fraud  in  inception  of  note  is  shown.  Mechanics  Savings  Bank  v.  Feeney, 
—  N.  H.  — ,  108  A.  295. 

Check  taken  upon  same  day  it  was  drawn,  for  value  without  notice  is 
held  as  holder  in  due  course.  Montgomery  Garage  Co.  v.  Manufactur- 
er's Liability  Ins.  Co.,  —  N.  J.  — ,  109  A.  296. 

Plaintiff  bound  by  knowledge  of  unfulfilled  condition  although  pur- 
chaser for  value.  Groh's  Sons  v.  Schneider,  34  Misc.  Rep.  195,  68  N.  Y. 
Supp.  862. 

Amount  drawn  from  bank  on  credit  given  in  purchase  of  note  con- 
trols amount  of  good  faith  purchase.  Albanv  Co.  Bank  v.  Peoples  Ice 
Co.,  92  App.  Div.  47,  86  N.  Y.  Supp.  in. 

Bank  may  not  be  holder  in  due  course  of  paper  on  which  it  gives  in- 
dorser's  account  credit.  Consolidation  Bank  v.  Kirkland,  99  App.  Div. 
121,  91  N.  Y.  Supp.  353. 

Allegation  that  plaintiff  is  not  holder  in  due  course  is  pleading  a 
conclusion.    Rogers  v.  Morton,  46  Misc.  Rep.  494,  95  N.  Y.  Supp.  49. 

Credit  without  extension  of  time  for  payment  not  valuable  considera- 
tion for  transfer  unless  payment  of  part  of  the  debt  is  made.  National 
Bank  v.  Foley,  54  Misc.  Rep.  126,  103  N.  Y.  Supp.  553. 

Holder  of  note  signed  by  one  of  dissolved  partnership  not  holder  in 
duft  course  against  former  partner.  Hunter  v.  Allen,  127  App.  Div. 
572,  111  N.  Y.  Supp.  820,  sub  nomine,  Hunter  v.  Bacon.  Affirmed  203  N.  Y. 
534. 

Length  of  time  interest  was  unpaid  is  competent  to  make  the  question 
of  holder  in  due  course  one  for  the  jury.  Citizens'  Savings  Bank  v. 
Couse,  68  Misc.  Rep.  153,  124  N.  Y.  Supp.  79. 


488  NEGOTIABLE    INSTRUMENTS.  §    52 

Holder  has  right  to  sue  maker,  although  he  has  been  secured  or  paid 
by  indorser.  People's  Nat.  Bank  v.  Rice,  149  N.  Y.  App.  Div.  18,  133 
N.  Y.  Supp.  622. 

Knowledge  of  recision  condition  affects  indorsee's  holding.  Laing 
V.  Hudgens,  62  Misc.  Rep.  388,  143  N.  Y.  Supp.  763. 

First  debits  charged  to  first  credits  rule  makes  bank  holder  in  due 
course.  Merchants'  Nat.  Bank  v.  Santa  Maria  Sugar  Co.,  162  App.  Div. 
248,  147  N.  Y.  Supp.  498,  affirmed,  220  N.  Y.  732. 

Certified  check  delivered  to  payee  by  thief  is  not  held  in  due  course. 
Empire  Trust  Co.  v.  Manhattan  Co.,  97  Misc.  Rep.  694,  162  N.  Y.  Supp 
629,  affirmed,  180  App.  Div.  891. 

Bank  not  holder  in  due  course  where  check  is  credited  to  depositor's 
account.  Citizens'  State  Bank  v.  Cowles,  180  N.  Y.  346,  IZ  N.  E.  IZ,  105 
Am.  St.  Rep.  765. 

Note  made  void  by  statute  as  notice  to  purchaser.     Sabine  v.  Paine, 

Bank  cashing  check  for  customer  part  in  cash  and  part  credited  to  his 
account  which  was  drawn  out,  is  holder  in  due  course.  Geneva  Nat.  Bank 
v.  Fox,  190  N.  Y.  Supp.  747. 

Burden  is  on  bank  to  prove  purchase  of  note.  Standing  Stone  Nat. 
Bank  v.  Wilser,  162  N.  C  53,  11  S.  E.  1006. 

On  question  of  notice  of  defects  to  holder.  Fidelity  Trust  Co.  v. 
Whitehead,  165  N.  C.  74,  80  S.  E.  1065,  Ann.  Cas.  1915D,  200. 

Retention  of  no  rights  except  to  charge  transferror  on  his  indorse- 
ment makes  bank  purchaser  for  value.  Worth  Co.  v.  International  Su- 
gar Feed  Co.,  172  N.  C.  335,  90  S.  E.  295. 

Assigns  as  used  in  corporation  statute  does  not  include  holder  in  due 
course  of  negotiable  paper,  Nat.  Bank  of  Commerce  v.  Pick,  13  N.  D, 
74,  99  N.  W.  dZ. 

When  overdue  interest  does  not  affect  indorsee.     McPherrin  v.  Tittle, 
Z^  Okla.  510,  129  Pac.  721,  44  L.  R.  A.  (N.  S.)  395. 

Part  performance  on  part  of  purchasing  bank  may  render  it  holder 
for  value.  Nat.  Bank  of  Commerce  v.  Armbruster,  42  Okla.  656,  142  Pac 
393. 

Memorandum  on  note  sufficient  to  charge  indorsee  with  duty  to  in- 
quire as  to  status.     Keisel  v.  Baldock  (Okla.),  154  Pac.  1194. 

Owner  before  maturity  for  value  and  without  notice  is  holder  in  due 
course.    Murphy  v.  Estel,  —  Okla.  — ,  182  Pac.  83. 

Purchaser  for  value  before  maturity  is  holder  in  due  course.  South- 
west Nat.  Bank  of  Commerce  of  Kansas  City  v.  Todd,  —  Okla  — ,  192 
Pac.  1096. 

Instructions  as  to  whether  plaintiff  is  holder  in  due  course.  Hill  v. 
McCrow,  88  Ore.  299. 

Inference  is  warranted  that  plaintiff  is  not  holder  in  due  course.  Com- 
mercial Security  Co.  v.  Donald  Drug  Co.,  —  S.  C.  — ,  104  S.  E.  312. 

Where  indorsee  of  note  is  shown  certificate  of  incorporation  and  con- 
sent of  insurance  department  to  do  business  in  the  state  he  is  a  holder 
in  due  course.  Ochsenreiter  v.  Block,  —  S.  D.  — ,  173  N.  W.  IZd. 

One  taking  notes  after  two  of  series  were  past  due  as  holder  in  due 
course.    LeRoy  v.  Meadows,  —  Okla.  — ,  200  Pac.  858. 

Holder  in  due  course  must  have  acquired  note  by  transfer  and  negotia- 
tion from  payee  and  not  from  maker.  Britton  Milling  Co.  v.  Williams, 
—  S.  D.  — ,  184  N.  W.  265. 

Procuring  credit  in  another  bank  may  make  one  holder  in  due  course. 
Elgin  City  Banking  Co.  v.  Hall,  119  Tenn.  548,  108  S.  W.  1068. 


§    52  RIGHTS  OF   HOLDER. 


4^ 


When  depositor's  account  is  reduced  in  amount  of  note  purchased 
he  is  holder  for  value.    Griswold  v.  Davis,  125  Tenn.  223,  141  S.  W.  205. 

Pledgee  of  unmatured  note  held  as  security  is  holder  in  due  course. 
Interstate  Trust  Co.  v.  Headland,  —  Utah,  — ,  171  Pac.  515. 

Trustee  may  be  holder  in  due  course  as  to  original  tenor  of  note 
although  it  was  altered  after  indorsement.  Trustees  of  American  Bank 
V.  McComb,  105  Va.  473,  54  S.  E.  14. 

Pledgee  of  completed  unmatured  note  for  value  without  notice  of 
equities  is  holder  in  due  course.  Anderson  v.  Union  Bank,  117  Va.  1, 
83  S.  E.  1080. 

Holder,  although  secured  against  loss,  has  right  to  sue  maker.  Capi- 
tol Nat.  Bank  v.  Robinson,  41  Wash.  454,  83  Pac.  1021. 

Holder  in  due  course  not  affected  by  absence  of  interest  indorse- 
ments on  note.  Spencer  v.  Alkali  Paint,  etc.,  Co.,  53  Wash.  11,  101 
Pac.  509. 

Rule  as  to  equities  in  favor  of  maker  does  not  apply  to  intermediate 
indorsers  or  holders.  Reardon  v.  Cockrell,  54  Wash.  400,  103  Pac.  457, 
SO  L.  R.  A.  (N.  S.)  87. 

Checks  marked  on  contract  should  be  applied  to  payment  of  materials 
when  transferred  to  material  man  by  contractor  when  considered  in  me- 
chanic's lien  case.    Hughes  &  Co.  v.  Flint,  61  Wash.  460,  112  Pac.  633. 

President  is  charged  with  knowledge  of  the  infirmity  of  considera- 
tions of  company's  note.    Hamilton  v.  Mihills,  92  Wash.  675,  159  Pac.  887. 

Overdue  interest  and  friendship  of  indorser  and  indorsee  does  not 
put  indorsee  upon  inquiry.     Shultz  v.  Crewdson   (Wash.),  163  Pac.  734. 

Failure  of  consideration  as  affecting  holder  in  due  course.  Fisk  Rub- 
ber Co.  of  N.  Y.  v.  Pinkey,  —  Wash.  — ,  170  Pac.  581. 

One  taking  instrument  complete  and  regular  on  its  face  is  holder  in 
due  course.  United  Ry.  &  Logging  Supply  Co.  v.  Siberian  Commercial 
Co.,  —  Wash.  —  201  Pac.  21. 

Note  rendered  overdue  by  failure  to  pay  interest  is  not  taken  by  subse- 
quent purchaser  as  in  due  course.  Hodge  v.  Wallace,  129  Wis.  84,  108 
N.  W.  212,  116  Am.  St.  Rep.  938. 

A  prima  facie  case  is  made  by  proof  of  payment  of  full  value  before 
maturity.     Hodge  v.  Smith,  130  Wis.  326.  110  N.  W.  192. 

Assignment  of  note  is  subject  to  defense  of  contemporaneous  agree- 
ment at  time  of  making.    Paulson  v.  Boyd.  137  Wis.  241.  118  N.  W.  841. 

Evidence  may  negative  good  faith  purchase  and  not  negative  title. 
Case  v.  Beyer,  142  Wis.  496,  125  N.  W.  947. 

Collection  notice  not  an  admission  of  bank  that  it  was  not  holder  in 
due  course.     Bank  of  Baraboo  v.  Laird,  150  Wis.  243.  136  N.  W._  603. 

Bank  not  holder  in  due  course  under  first  credits  and  debits  rule. 
Curry  v.  Wisconsin  Nat.  Bank.  149  Wis.  413.  136  N.  W.  349. 

Cashier's  knowledge  of  conditional  delivery  is  imputed  to  his  bank. 
Union  Investment  Co.  v.  Epley,  164  Wis.  438.  160  N.  W.  175. 

Note  showing  on  its  face  an  alteration  of  due  date  is  notice  to  pur- 
chaser.    Pensacola  State  Bank  v.  Melton.  210  Fed.  Rep.  57. 

Holder  in  due  course  free  from  secret  equities.  Wolf  v.  American 
Trust  &  Savings  Bank,  214  Fed.  761,  132  C.  C.  A.  410. 

Claimant  of  equitable  interest  not  a  holder  in  due  course.  Pensacola 
State  Bank  v.  Thornberry,  226  Fed.  611,  141  C.  C.  A.  367. 

Taker  of  overdue  bill  acquires  no  rights  against  acceptor.  Redfern 
V.  Rosenthal,  86  L.  R.  Rep.  855. 

Payee  in  possession  not  always  holder  in  due  course.  Herdman  v. 
Wheeler  (1902),  1  K.  B.  361. 


490  NEGOTIABLE    INSTRUMENTS.  §    52 

Thief  may  transfer  to  payee  an  instrument  payable  to  order  so  as  to 
render  him  holder  in  due  course.  Fletcher  Moulton,  L.  J.  (1907),  1  K.  B. 
794,  808. 

Fraudulently  replacing  securities  stolen  from  bank  by  an  officer 
does  not  render  bank  holder  in  due  course.  London  &  County  Banking 
Co.  V.  London  &  River  Plate  Bank,  21  Q.  B.  D.  535. 

Where  bill  is  indorsed  but  not  signed  by  drawer  until  overdue  and 
dishonored  it  is  not  complete.  South  Wales,  etc.,  Co.  v.  Underwood 
(Q.  B.  Div.  1899),  15  T.  L.  Rep.  157. 

Maker  may  be  liable  to  indorsee  although  he  pay  indorser  and  after- 
wards receives  the  note  from  indorser.  Nash  v.  DeFreville  (1900), 
2  Q.  B.  72. 

Post  dated  check  is  valid  and  negotiable  although  stamped  as  check. 
Hitchcock  V.  Edwards,  60  L.  T.  Rep.  636. 

*"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Merchants  Nat.  Bk.  of  Lafayette  v.  Morris  (1909),  163 
Ala.  51,  51  So.  15;  Sneed  v.  Barclift  (1911),  1  Ala.  App.  297,  56  So. 
592  ;Continental  Cretlit  Co.  v.  Ely  (1917),  100  Atl.  435;  Darden  v.  HoIIo- 
way  (1911),  1  Ala.  App.  661,  56  So.  32;  Moseley  v.  Selma  Nat.  Bk.  (1911). 
57  So.  91;  Stone  v.  Goldberg  v.  Lewis  (1912),  6  Ala.  App.  249,  60  So. 
744;  Tatum.  v.  Commercial  Bank  &  Tr.  Co.,  185  Ala.  249,  64  So.  501; 
Bruce  v.  Citizen's  Nat.  Bk.  of  Lineville  (1913),  185  Ala.  221,  64  So. 
82;  Hartsell  v.  Roberts  (1913),  e^V  So.  90;  Clark  v.  Thompson  (1915),  60 
So.  925;  Citizens  Nat.  Bk.  v.  Bucheit  (1916),  71  So.  82;  Sherrill  v.  Merch. 
&  Mech.  Trust  &  Savings  Bk.  (1916),  70  So.  723;  Hudson  v.  Repton  State 
Bk.  (1917).  75  So.  695;  Norris  v.  Merchants  Nat.  Bk.  (1911),  2  Ala. 
App.  434,  57  So.  71;  Bank  of  Tallahassee  v.  Jordan  (1917),  75  So.  930; 
Armstrong  v.  Walker  (Ala.),  76  So.  280;  Davis  v.  Floyd  (1917),  77  So. 
413;  White  v.  Central  Nat.  Bank,  (Ala.),  78  So.  714;  Birmingham  Trust 
&  Sav.  Co.  V.  Howell  (1918),  79  So.  377;  Elmore  Co.  Bank  v.  Avant, 
189  Ala.  418,  66  So.  509;  Jones  v.  Bell,  77  So.  998;  Davis  v.  Simpson,  79 
So.  48;  Cannon  v.  Dillchay,  84  So.  549;  Deshazoo  v.  L.  &  E.  Lamar,  85 
So.  586. 

Arizona. — Navajo-Apache  Bank  &  Trust  Co.  v.  Wakefield,  180  Pac. 
529;  Lentz  v.  Landers,  185  Pac.  821. 

Arkansas.— R2iTr\son  v.  Morgan  Curry  Co.  (1914).  170  S.  W.  578; 
Calhoun  v.  Ainsworth  (1915).  176  S.  W.  316;  Conqueror  Trust  Co.  v. 
Reves  Drug  Co.   (1915).  176  S.  W.  119. 

Co?orac/o.— McMann  v.  Walker  (1903),  31  Colo.  261.  72  Pac.  1055; 
Wedge  Mines  Co.  v.  Denver  Nat.  Bk.  (1903).  19  Colo.  App.  182,  72  Pac. 
873;  First  Nat.  Bk.  of  Iowa  City  v.  Smith  (1913),  136  Pac.  460;  Georg- 
V.  Williams  (1915),  149  Pac.  837;  Min.  &  Mill.  Co.  v.  Stephenson  (1917), 
165  Pac.  601;  Burnham  Investment  Co.  v.  Sethman  (1918),  171  Pac. 
884. 

Cormectkiif.—yitrslcVi  v.  Alderman  (1905),  77  Conn.  634.  60  Atl  lOO- 
Johnson  Co.  Sav.  Bk.  v.  Walker  (1909),  82  Conn.  24;  s.  c,  79  Conn. 
348,  65  Atl.  132  (1906).  80  Conn.  509,  69  Atl.  15;  First  Nat.  Bk.  v.  Fair- 
field Auto  Co.  (1917).  99  Atl.  577;  Continental  Credit  Co.  v.  Ely  (1917), 
100  Atl.  435;  Tice  v.  Moore   (1909),  82  Conn.  244,  7Z  Atl.  133. 


§   52  RIGHTS  OF    HOLDER.  491 

Delaware.SecMTity  Tr.  &  Safe  Dep.  Co.  v.  Duross  (1913),  86  Atl.  209. 

Florida.— Scott  v.  Taylor  (1912),  63  Fla.  612;  Taylor  v.  Am.  Nat.  Bk., 
63  Fla.  631,  57  So.  678,  Am.  Cas.  1914a  309;  Berryhill-Cromatic  Co.  v. 
Manitowoc  Shipbuilding  &  Dry  Dock  Co.  (1913),  63  So.  720;  Jones 
V.  Manitowoc  Shipbuilding  &  Dry  Dock  Co.  (1913),  62  So.  590;  Sum- 
ter Co.  State  Bk.  v.  Hayes  (1915),  67  So.  109;  Jones  v.  The  Manitowoc 
Shipbuilding  &  Dry  Dock  Co.  (1913),  65  Fla.  457;  Bass  v.  Lee  (1917), 
74  So.  7. 

Idaho.— Winter  v.  Nobs  ,1910),  19  Ida.  18,  112  Pac.  525;  Uuio  Stockn 
Yards  Nat.  Bk.  v.  Bolan  (1908),  14  Ida.  87.  93  Pac.  508;  Sheffield  v. 
Cleland  (1911),  19  Ida.  612,  115  Pac.  20;  Schellcnberger  v.  Nourse  (1911), 
20  Ida.  323,  118  Pac.  508;  Brown  v.  Miller  (1912),  22  Ida.  307,  125  Pac 
981;  Park  v.  Johnson  (1911),  20  Ida.  548,  119  Pac.  52;  Park  v.  Brandt 
(1911),  20  Ida.  660,  119  Pac.  877;  Winter  v.  Hutchins  (1911),  20  Ida. 
749,  119  Pac.  883;  McCartv  v.  Lowry  (1912),  123  Pac.  943;  Altschul  v. 
Rogers  (1912),  63  Ida.  512,  126  Pac.  1048;  McFarland  v.  Johnson  (1912), 
22  Ida.  694,  127  Pac.  908;  Nelson  v.  Hudgel  (1913),  23  Ida.  327.  130 
Pac.  85;  The  Southwest  Nat.  Bk.  of  Kansas  City  v.  Baker  (1913),  23 
Ida  428,  130  Pac.  799;  S.  W.  Nat.  Bk.  of  Kansas  City  v.  Lindley  (1916), 
158  Pac.  1082. 

Illinois— Schintz  v.  Am.  Tr.  &  Sav.  Bk.  (1909),  152  111.  App.  76; 
'  Peterson  v.  Emery  (1910),  154  III.  App.  294;  Manussier  v.  Wright  (1910), 
158  111.  App.  214;  Perks  v.  Eshleman  (1911),  165  111.  App.  420;  Black  v. 
Downes  (1912),  176  111.  App.  358;  Richter  v.  Burdock  (1913),  157  III. 
410,  100  N.  E.  1063;  Christina  v.  Cusseniano  (1912),  129  111.  873,  57  So. 
157;  Weir  &  Craig  Mfg.  Co.  v.  Bonus  (1913),  177  111.  App.  626;  Justice 
V.  Stonecipere  (1915),  108  N.  E.  722,  267  111.  448. 

Indiana.— Farker  v.  Hickman  (1916),  111  N.  E.  649;  Farmer's  Trust 
Co.  V.  Sprowl,  126  N.  E.  81. 

7owa.— Wankee  Sav.  Bk.  v.  Jones  (1916).  150  N.  W.  691;  Commer- 
cial Nat.  Bk.  V.  Citizens  State  Bk.  (1906),  132  Iowa,  706,  109  N.  W.  198; 
McKnight  V.  Parsons  (1907),  136  Iowa,  390,  113  N.  W.  858,  125  Am. 
St.  265;  Vander  Ploeg  v.  Van  Zuuk  (1907),  135  Iowa  350,  112  N.  W. 
807;  Keegan  v.  Rock  (1905),  128  Iowa,  39,  102  N.  W.  805;  City  Nat.  Bk. 
V.  Jordan  (1908).  139  Iowa,  499,  117  N.  W.  578;  Montrose  Sav.  Bk.  v. 
Claussen  (1908),  137  Iowa  73,  114  N.  W.  547;  Voss  v.  Chamberlain 
(1908),  139  Iowa,  569,  117  N.  W.  269;  Arnd  v.  Aylesworth  (1909),  145 
Iowa.  185,  123  N.  W.  lOOO;  O'Connor  v.  Kleiman  (1909).  143  Iowa 
435.  121  N.  W.  1088;  Iowa  Nat.  Bk.  v.  Carter  (1909),  144  Iowa,  715,  123 
N.  W.  237;  Case  v.  Bever  (1910),  125  N.  W.  947;  Woodbury  v.  Click 
(1911),  151  Iowa  648,  132  N.  W.  67;  Citizens  State  Bk.  v.  Lankin 
(1912),  134  N.  W.  882;  Stotts  v.  Fawfield  (1914).  145  N.  W.  61;  Farm- 
ers &  Merch.  St.  Bk.  v.  Shaffer  (1915),  154  N.  W.  485;  LeClere  v. 
Philpott  (1915).  151  N.  W.  825;  Roy  v.  Duff  (1915),  152  N.  W.  606; 
Higby  V.  Bahrenfus  (1917),  163  N.  W.  247;  Todd  v.  Bank  of  Edgewood 
(1917).  165  N.  W.  593;  In  re  Philpott's  Estate,  169  Iowa  555,  151  N.  W. 
825 ;  Lutton  v.  Baker,  174  N.  W.  599. 

/^a;;.ya.y.— Nyhart  v.  Hubach  (1907).  76  Kans.  154,  90  Pac.  796;  Youle 
V.  Fosha  (1907),  76  Kans.  20.  90  Pac.  1090;  Gate  City  Nat.  Bk.  v.  Thrall 
(1911),  85  Kans.  394:  Bk.  of  Wilber  v.  Freeburg  (1911),  84  Kans.  235; 
McMillan  v.  Gardner   (1912),  88  Kans.  279;  Doty  v.  Garfield  Township 


492  NEGOTIABLE    INSTRUMENTS.  §    52 

(1913),  89  Kans.  719;  Underwood  v.  Quaintie  (1911),  116  Pac.  361;  Mur- 
chison  V.  Nies  (1912),  87  Kans.  11;  Ireland  v.  Shore  (1914),  137  Pac.  926; 
The  Stock  Ex.  Bk.  v.  Wykes  (1913),  88  Kans.  750;  First  Nat.  Bank  v. 
Lyons  Exchange  Bk.  (Kansas.),  164  Pac.  137;  F.  &  M.  Bank  v.  Beal 
(1918),  170  Pac.  1007;  Stevens  v.  Rcegan,  103  Kans.  79. 

Kentucky.— W\\V\ns  v.  Usher  (1906),  123  Ky.  696,  97  S.  W.  Zl ;  Citi- 
zens Bank  v.  Bank  of  Weddy  (1907),  126  Ky.  169,  103  S.  W.  249; 
Chateau  Tr.  &  Banking  Co.  v.  Smith  (1909),  133  Ky.  418,  118  S.  W. 
279;  Bothwell  v.  Corum  (1909),  135  Ky.  767,  123  S.  W.  291;  Camphell 
V.  Fourth  Nat.  Bk.  of  Cincinnati  (1910),  137  Ky.  555,  126  S.  W.  114; 
Jett  V.  Standefer  (1911),  143  Ky.  787,  137  S.  W.  513;  Am.  Nat.  Bk.  v. 
Madison  (1911),  144  Ky.  152,  137  S.  W.  1076;  Austin  v.  First  Nat.  Bk. 
of  Scottsville  (1912),  150  Ky.  113;  Robertson  v.  Commercial  Security 
Co.  (1913),  151  Ky.  336,  153  S.  W.  450;  Gahren,  Dodge  &  Mahhy  v. 
Parkersburg  Nat.  Bk.  (1914),  162  S.  W.  1135;  Harrison  v.  Ford  (1914), 
165  S.  W.  663;  Pratt  v.  Rounds  (1914),  169  S.  W.  848;  Edelen  v.  Muir 
(1915),  174  S.  W.  474;  Gaertner  v.  Kraft  (1915),  176  S.  W.  207;  Bernard 
V.  Napier  (1916),  181  S.  W.  624;  Harrison  v.  Union  Store  Co.  (1918), 
201  S.  W.  31 ;  Commercial  Sec.  Co.  v.  Archer,  179  Ky.  842 ;  Harrison  v. 
Perry,  212  S.  W.  911. 

Louisiana.— WoU  v.  Zachary  &  N.  E.  R.  Co.  (1911),  128  La.  1092,  55 
So.  685;  Dicks  v.  Johnson  (1913),  63  So.  700;  Gajan  v.  Patout  &  Bou- 
guieres  (1913),  63  So.  585;  McCowen  v.  Barnett  (1915),  68  So.  102;  Com- 
mercial, Etc.,  Bank  v.  Southwestern  Surety  Insurance  Co.,  82  So.  373. 

Maryland.— Arnd  v.  Heckert  (1908),  108  Md.  300,  70  Atl.  417;  Burke 
V.  Smith  (1909),  111  Md.  624,  75  Atl.  114;  Weant  v.  Southern  Tr.  & 
Dep.  Co.  (1910),  112  Md.  463,  77  Atl.  289;  Dolph  v.  Stubblefield,  —  Md. 
— ,  108  Atl.  488. 

Massachusetts.— Boston  Steel  &  Iron  Co.  v.  Steuer  (1903),  183  Mass. 
140,  66  N.  E.  646.  97  Am.  St.  Rep,  426;  Rowe  v.  Bowman  (1903),  183 
Mass.  488,  67  N.  E.  636;  Mehlinger  v.  Harriman  (1904),  185  Mass. 
245,  70  N.  E.  51;  Mass.  Nat.  Bk.  v.  Snow  (1905),  187  Mass.  159,  72  N. 
E.  959;  White  v.  Dodge  (1905),  187  Mass.  449,  73  N.  E.  549;  Thorpe 
V.  White  (1905),  188  Mass.  333,  74  N.  E.  592;  Fillebrown  v.  Hay  ward 
(1906),  190  Mass.  472;  Buzzell  v.  Tobin  (1909),  201  Mass.  1,  86  N.  E. 
923;  DcReiset  v.  Longhery  (1910),  205  Mass.  8,  91  N.  E.  297;  Nesson 
V.  Miller  (1910),  205  Mass.  515;  Johnson  Kettel  Co.  v.  Longley  Lunch- 
eon Co.  (1910).  207  Mass.  52;  Lewiston  Trust  &  Safe  Dep.  Co.  v. 
Shackford  (1913),  213  Mass.  432;  Franklin  Sav.  Bk.  v.  International 
Tr.  Co.  (1913),  215  Mass.  231,  102  N.  E.  363;  Liberty  Trust  Co.  v. 
Tilton,  217  Mass.  462,  105  N.  E.  60S,  L.  R.  A.  1915b,  144;  Quency  Mutual 
Fire  Ins.  Co.  v.  International  Tr.  Co.  (1914),  104  N.  E.  845;  Cheney  v. 
Taber,  221  Mass.  332.  108  N.  E.  1072;  Nat.  Bk..  of  Newberry  v.  Went, 
worth  (1915),  105  N.  E.  626;  Nat.  Inv.  &  Security  Co.  v.  Corey  (1916), 
222  Mass.  453,  111  N.  E.  357;  Bank  Investment  Security  Co.  v.  Carey 
(1916),  111  N.  E.  357;  Colonial  Fur  Ranching  Co.  v.  First  Nat.  Bk. 
(1917),  116  N.  E.  731;  Bovarnick  v.  Davis,  126  N.  E.  380;  Commtfcial 
Credit  Co.  v.  M.  McDonough  Co.,  130  N.  E.  179. 

Michigan.— 'Neyens  v.  Worthington  (1908),  150  Mich.  580,  114  N.  W. 
404,  18  L.  R.  A.  (N.  S.)  142;  People's  Bldg.  &  Loan  Assn.  v.  Rutz 
(1909),  158  Mich.  440;  Gale  v.  Mayhew  (1910),  161  Mich.  96,  125  N. 
W.  781;  Takes  v.  Thayer  (1911),  131  N.  W.  174;  White  v.  Wadhams 
(1919),  170,  N.  W.  60. 


§   52  RIGHTS  OF   HOLDER.  493 

Mimtesota.—Fmseth    v.    Scherer    (1917),    165    N.    W.    124;    Gould    v. 
Svendsgaard  (1919),  170  N.  W.  595. 

Mississippi. — Mo3'se  Real  Est.  Co.  v.  First  Nat.  Bk.  of  Commerce 
(1916),  70  So.  821;  First  Nat.  Bk.  v.  McGrath  &  Son  Co.  (1916),  72 
So.  701;  Adair  v.  Bank  of  Hickory  Flat  (1917),  75  So.  759. 

Missouri— Chhwood  v.  Hatfield  (1909),  136  Mo.  App.  688;  Sublette  v. 
Brewington  (1909),  139  Mo.  App.  410,  122  S.  W.  1150;  Bk.  of  Hous- 
ton V.  Day  (1909),  122  S.  W.  756;  Jobes  v.  Wilson  (1910),  124  S.  W 
548;  Bk.  of  Ozark  v.  Kanaka  (1910).  142  Mo.  App.  110,  125  S.  W.  221 
Johnson  Co.  Sav.  Bk.  v.  Mills  (1910),  143  Mo.  App.  265,  127  S.  W 
425;  Bk.  of  Ozark  v.  Tuttle  (1910),  144  Mo.  App.  294;  Coleman  v 
Stocke  (1911),  159  Mo.  App.  43,  139  S.  W.  216;  Nat.  Bk.  of  Com- 
merce in  St.  Louis  v.  Morris  (1911),  156  Mo.  App.  43,  135  S.  W.  1008; 
Link  V.  Jackson  (1911),  158  Mo.  App.  62,  139  S.  W.  588;  Birch  Tree 
State  Bk.  v.  Dowler  (1912),  163  Mo.  65,  145  S.  W.  843;  Federal  Dis- 
count Co.  V.  Reid  (1912),  162  Mo.  App.  238;  Schneider  v.  Johnson 
(1912),  143  S.  W.  78;  Hill  v.  Dillon  (1913),  161  S.  W.  881;  State  Bk. 
of  Freeport  v.  Cape  Girardeau  &  C.  R.  Co.  (1913),  155  S.  W.  1111; 
Greer  v.  Orchard  (1913),  161  S.  W.  875;  Tapee  v.  Varley  Wolter  Co. 
(1914),  184  Mo.  App.  470,  171  S.  W.  19;  Long  v.  Shafer  (1914),  185 
Mo.  App.  641,  648;  171  S.  W.  690:  Bank  of  Polk  v.  Wood  (1915),  173 
S.  W.  1093;  Farmers  &  Traders  Bank  v.  Laird  (1915),  175  S.  W.  116; 
Fox  V.  Brosius  (1915),  173  S.  W.  693;  Hadley  v.  Greenville  (1916),  187 
S.  W.  597;  McLean  County  Bank  v.  Brown  (1916),  186  S.  W.  785;  Mil- 
ler V.  People's  Sav.  Bk.  (1916),  186  S.  W.  547;  Priest  v.  Garnet  (1917), 
191  S.  W.  1048;  State  v.  Greenville  Bank  (Mo.  App.).  187  S.  W.  597; 
Casimer  v.  Schwartz  (1918),  201  S.  W.  592;  Long  v.  Mason  (1918),  200 
S.  W.  1062;  Bacon  v.  Reichardt  (1919),  208  S.  W.  24;  Bacon  v.  Theiss 
(1919),  208  S.  W.  254;  Nevins  v.  Coleman  (1918),  200  S.  W.  445;  Me- 
chanics' American  Nat.  Bk.  v.  Helmbacher,  199  Mo.  App.  173 ;  Long  v. 
Mason,  273  Mo.  266. 

Montana.— 'N.  W.  Improvement  Co.  v.  Rhoades  (1916),  158  Pac.  832; 
State  Bk.  of  Moore  v.  Forsythe  (1910),  41  Mont.  249;  Brophy  Grocery 
Co.  V.  Wilson  (1912),  45  Mont.  489,  124  Pac.  510;  Baker  State  Bk.  v. 
Grant  (1917),  166  Pac.  27;  Buhler  v.  Loftus  (1917),  165  Pac.  601. 

Nebraska.— Benton  v.  Sikvta  (1909),  84  Neb.  808,  122  S.  W.  60;  Bo- 
lew  V.  Wright  (1911),  89  Neb.  116,  131  S.  W.  185;  Central  Nat.  Bk.  v. 
Ericson  (1912),  92  Neb.  396,  138  N.  W.  563;  Farmers  Nat.  Bk.  of  Lvons 
V.  Dixon  (1912),  91  Neb.  652,  136  N.  W.  845;  First  Nat.  Bk.  of  Shen- 
andoah V.  Kelgord  (1912)^  91  Neb.  178.  135  N.  W.  548;  Fisher  v.  O'Han- 
lon  Rowan  Appt.  (1913),  93  Neb.  529,  141  N.  W.  157;  Storz  Brewing  Co. 
V.  Skirving  (1913),  142  N.  W,  669;  Ostenberg  v.  Kavka  (1914).  145  N.  W. 
713;  Douglas  v.  Burton  (1915),  150  N.  W.  653;  State  Bk.  of  Omaha  v. 
Huffman  (1916),  160  N.  W.  115;  Marshall  v.  Kirschbaum  (1917),  161 
N.  W.  577;  New  Hampshire  Mechanics  Savings  Bank  v.  Feeney,  108 
Atl.  295. 

New  Jersey. — Borough  of  Montvale  v.  Peoples  Bank  (1907),  74  N.  J. 
Law  464,  67  Atl.  67;  Rice  v.  Barrington  (1906),  75  N.  J.  L.  806,  70  Atl. 
169;  Louis  De  Yonge  &  Co.  v.  Woodport  Hotel  &  Land  Co.  (1909),  72 
Atl.  439;  Clark  v.  Barthold  (1915),  93  Atl.  699:  Linebarger  v.  Board  of 
Education  of  West  N.  Y.  (1912),  83  N.  J.  L.  446;  Montgomery  Garage 
Co.  v.  Manufacturers'  Liability  Ins.  Co.,  109  Atl.  296. 


494  NEGOTIABLE    INSTRUMENTS.  §    52 

New  York. — Brewster  v.  Schrader  (1899),  26  Misc.  480;  Roscnwald 
V.  Goldstein  (1899),  27  Misc.  827;  Citizens  Nat.  Bk.  v.  Lilienthal  (1899), 
40  A.  D.  609;  McCannon  v.  Shantz  (1900),  149  A.  D.  460;  Benedict  v. 
Kress  (1904),  89  N.  Y.  Supp.  607;  Consolidated  Nat.  Bk.  v.  Kirkland 
(1904),  99  A.  D.  121,  91  N.  Y.  Supp.  353;  Ketchan  v.  Covin  (1901),  35 
Misc.  375,  71  N.  Y.  Supp.  991;  M.  Groh's  Sons  Co.  v.  Schneider  (1901), 
34  Misc.  195,  68  N.  Y.  Supp.  682;  Greeser  v.  Sugarman  (1902),  76  N.  Y. 
Supp.  922,  37  Misc.  799;  Citizens  Bk.  of  Buffalo  v.  The  Rung  Furni- 
ture Co.  (1902),  76  A.  D.  471;  Perth-Amboy  Mut.  Loan  Assn.  v.  Chap- 
man (1903),  80  A.  D.  556;  Packard  v.  Figlinolo  (1909),  114  N.  Y.  Supp. 
753;  Cominsky  v.  Coleman  (1909),  114  N.  Y.  Supp.  875;  Weiss  v. 
Rieser  (1909),  62  Misc.  292,  114  N.  Y.  Supp.  983;  Sutherland  v.  Mead 
(1903),  80  A.  D.  103,  80  N.  Y.  Supp.  504;  Karsch  v.  Pettier  &  Styners 
Mfg.  &  Importing  Co.  (1903),  81  N.  Y.  782,  A.  D.  230;  Mitchell  v. 
Baldwin  (1903),  88  A.  D.  265,  84  N.  Y.  Supp.  1043;  Packard  v.  Wind- 
holz  (1903),  40  Misc.  347,  affirmed  88  A.  D.  365  (1902);  Simpson  v. 
Hefter  (1904),  42  Misc.  482,  87  N.  Y.  Supp.  243;  Albany  Co.  Bk.  v.  Peo- 
ple's Co-op.  Ins.  Co.  (1904),  92  A.  D.  47,  86  N.  Y.  Supp|  7Z;  German- 
American  Bank  v.  Cunningham,  89  N.  Y.  Supp.  836,  97  A.  D.  244; 
Schreyer  v.  Bailer  &  Co.  )1904),  97  A.  D.  185;  Goetting  v.  Day  (1904), 
87  N.  Y.  Supp.  510;  Citizens  State  Bk.  v.  Cowles  (1905),  180  N.  Y.  346, 
73  N.  E.  Z:^,  reversing  s.  c,  89  A.  D.  280;  Chemical  Nat.  Bank  v. 
Kellogg  (1905),  183  N.  Y.  92,  75  N.  E.  1103;  The  Bk.  of  Am.  v.  Way- 
dell  (1905),  103  A.  D.  25,  92  N.  Y.  Supp.  666,  citing  25,  Sutherland 
V.  Mead,  80  A.  D.  103  and  Rosman  v.  Mahoney,  86  A.  D.  2>77 ;  Mil- 
lius  V.  Kaufman  (1905),  104  A.  D.  442,  93  N.  Y.  Supp.  669;  Ham- 
ilton Nat.  Bk.  V.  Upton  (1905),  100  A.  D.  105;  Orr  v.  So.  Amoby 
Terra  Cotta  Co.  (1905),  94  N.  Y.  Supp.  524,  47  Misc.  604;  Rogers  v. 
Morton  (1905),  46  Misc.  494,  95  N.  Y.  Supp.  49;  Hover  v.  Magley  (1905), 
48  Misc.  430,  96  N.  Y.  Supp.  925;  Hathaway  v.  County  of  Delaware 
(1906),  185  N.  Y.  368,  78  N.  E.  153,  13  L.  R.  A.  (N.  S.)  273,  113  A.  D. 
909;  Elias  v.  Whitney  (1906),  98  N.  Y.  Supp.  667,  50  Misc.  326;  Schles- 
inger  v.  Lehmaire  (1906).  99  N.  Y.  Supp.  389;  Rosenthal  v.  Freedman 
(1907),  53  Misc.  595,  103  N.  Y.  Supp.  714;  McGehee  v.  Cooke  (1907), 
55  Misc.  40,  105  N.  Y.  Supp.  60;  Siegmeister  v.  Lispenard  Realty  Co. 
(1907),  107  N.  Y.  Supp.  158;  The  Gansevort  Bk.  of  New  York  v.  Gilday 
(1907),  110  N.  Y.  Supp.  271.  53  Misc.  107;  Rice  v.  Eisler  (1907),  119 
A.  D.  132;  Arons  v.  Ziegfeld  (1907),  102  N.  Y.  Supp  898,  52  Misc.  571; 
Nat.  Bk.  of  Barre  v.  Foley  (1907),  54  Misc.  126,  103  N.  Y.  Supp.  553; 
Strauss  v.  St.  Louis  Co.  Bk.  (1908),  126  A.  D.  647;  Rosenthal  v.  Par- 
sont  (1908),  110  N.  Y.  Supp.  223;  Valley  Dew  Distilling  Co.  v.  Ritz- 
mann  (1908),  110  N.  Y.  Supp.  917;  Hunter  v.  Allen  (1908),  127  A.  D. 
572;  Nat.  Park  Bk.  v.  Saitta  (1908),  127  A.  D.  624,  111  N.  Y.  Supp. 
927;  Schlesinger  v.  Lehmaier  (1908).  191  N.  Y.  69,  83  N.  E.  657,  16 
L.  R.  A.  (N.  S.)  626,  123  Am.  St.  591;  Joveshoff  v.  Rockney  (1908), 
109  N.  Y.  Supp.  818,  58  Misc.  559;  Ward  v.  City  Tr.  Co.  (1908),  192  N. 
Y.  61,  84  N.  E.  585;  Am.  Seeding  Machine  Co.  v.  Slocum  (1908),  58 
Misc.  458;  The  Royal  Bk.  of  N.  Y.  v.  German-Am.  Ins.  Co.  (1908),  58 
Misc.  563;  Laschinsky  v.  Margolio  (1908),  129  A.  D.  529;  Wallabout 
Bk.  V.  Peyton  (1908),  123  A.  D.  727,  108  N.  Y.  Supp.  42;  Squire  v. 
Ordemann  (1909).  194  N.  Y.  394;  Heimbach  v.  Doubleday,  Page  Co. 
(1909),  130  A.  D.  34;  Republic  Life  Ins.  Co.  v.  Hudson  Trust  Co.  (1909), 
130  A.  D.  618;  Bacon  v.  Montauk  Brewing  Co.  (1909),  130  A.  D.  7Z', 
Manyfacturer's  Commercial  Co.  v.  Blitz   (1909),  131  A.  D.  17,  115  N.  Y. 


§   52  RIGHTS   OF    HOLDER.  495 

Supp.  402;  Horan  v.  Mason  (1910),  125  N.  Y.  Supp.  668;  Frank  v. 
Wolfif  (1910),  125  N.  Y.  Supp.  530;  Cluett  v.  Conture  (1910),  140  A.  D. 
830,  125  N.  Y.  Supp.  813;  Ferguson  v.  Nctter  (1910),  141  A.  D.  274; 
Empire  State  Surety  Co.  v.  Nelson  (1910),  126  N.  Y.  Supp.  453;  Citi- 
zens Sav.  Bk.  V.  Couse  (1910),  68  Misc.  153;  Hurst  v.  Lee  (1911),  143 
A.  D.  614,  127  N.  Y  Supp.  1040;  Buckley  v.  Lincoln  Trust  Co.  (1911), 
131  N.  Y.  Supp.  105;  Eq.  Tr.  Co.  v.  Taylor  (1911),  131  N.  Y.  Supp.  475, 
12  Misc.  52;  Jacobus  v.  Jamestown  Mantel  Co.  (1912),  149  A.  D.  356, 
134  N.  Y.  Supp.  418;  Borough  Bk.  of  Brooklyn  v.  Lamphear  (1912). 
138  N.  Y.  Supp.  864;  Bass  v.  Goldstein  (1913),  83  Misc.  412,  145  N.  Y. 
Supp.  38;  First  Bk.  of  Notasulga  v.  Jones  (1913),  141  N.  Y.  Supp.  304; 
Kass  V.  Blumberg  (1913),  142  N.  Y.  Supp.  544;  Laing  v.  Hudgcns  (1913), 
143  N.  Y.  Supp.  1(iZ,  62  Misc.  388;  Lich-und-Spakassa  Audorf  v.  Pfizer 
(1913),  158  A.  D.  505,  143  N.  Y.  Supp.  744;  Nat.  Discount  Co.  v.  Wil- 
liam R.  Jenkins  Co.  (1913),  143  N.  Y.  Supp.  996;  Spencer  &  Co.  v. 
Brown  (1913),  143  N.  Y.  Supp.  994;  Cleary  v.  Dykeman  (1914),  146 
N.  Y.  Supp.  611;  Clement  v.  Saratoga  Holding  Co.  (1914),  161  A.  D. 
898,  145  N.  Y.  Supp.  628;  Coffin  v.  Tevis  (1914),  149  N.  Y.  Supp.  986, 
164  Misc.  314;  Rambaut  v.  Tevis  (1914),  149  N.  Y.  Supp.  993,  164  A.  D. 
324;  Zivendling  v.  Kitrosser  (1914),  148  N.  Y.  Supp.  99;  Brown  v.  Rowan 
(1915),  154  N.  Y.  Supp.  1096;  Stoller  v.  Reichgott  (1915),  156  N.  Y. 
Supp.  551;  Bergstrom  v.  Ritz-Carlton  Hotel  Co.  (1916),  157  N.  Y.  Supp. 
959;  McBee  Co.  v.  Shoemaker  (1916),  160  N.  Y.  Supp.  251;  Thornton  v. 
Netherlands-Amer.  Steam  Nav.  Co.  (1917),  165  N.  Y.  Supp.  682;  Ga- 
rone  v.  Russo  Ludice  Realty  Co.  (1917),  164  N.  Y.  Supp.  135;  Kennedy 
V.  Hyman  (1917),  167  N.  Y.  Supp.  311;  Gillevan  v.  Owens  (1918),  169 
N.  Y.  Supp.  958 ;  Sabine  v.  Paine,  223  N.  Y.  401 ;  Geneva  Nat.  Bank  v. 
Fox,  190  N.  Y.  Supp.  747. 

North  Carolina.— Toms  v.  Jones  (1900),  127  N.  Car.  464;  Manufac- 
turing Co.  V.  Summers  (1906),  143  N.  Car.  102,  55  S.  E.  522;  Singer 
Mfg.  Co.  V.  Summers  (1906),  143  N.  Car.  102,  55  S.  E.  522;  Am.  Nat. 
Bk.  V.  Fountain  (1908),  62  S.  E.  738,  148  N.  Car.  590;  Am.  Nat.  Bk.  v. 
Fountain  (1908),  148  N.  Car.  590,  62  S.  E.  738;  Murchison  Nat.  Bk. 
V.  Dunn  Oil  Mills  Co.  (1909),  150  N.  Car.  718,  64  S.  E.  885;  Johnston 
Co.  Sav.  Bk.  V.  Chase  (1909),  151  N.  Car.  108;  Bk.  of  Sampson  v. 
Hatcher  (1909),  151  N.  Car.  359,  66  S.  E.  308;  First  Nat.  Bk.  of  Kan- 
sas City  V.  Griffin  (1910),  153  N.  Car.  72;  Citizens  &  Marine  Bk.  of 
Newport  News  v.  Southern  R.  W.  (1910),  153  N.  Car.  346;  Myers  v. 
Petty  (1910),  153  N.  Car.  462;  Hardy  v.  Mitchell  (1911),  156  N.  Car. 
76,  72  S.  E.  95,  161  N.  Car.  351  (1913),  Park  v.  Exam  (1911),  72  S.  E. 
309;  Am.  Nat.  Bk.  of  Richmond  v.  Hill  (1915),  85  S.  E.  209;  Gulf 
States  Steel  Co.  v.  Ford  (1917),  91  S.  E.  844;  Worth  Co.  v.  Interna- 
tional Sugar  Feed  Co.,  172  N.  Car.  335,  90  S.  E.  295. 

North  Dakota.— Drenkall  v.  Movius  State  Bk.  (1901),  118  N.  Dak. 
10,  88  N.  W.  724;  Bank  v.  Garcean  (1912),  22  N.  Dak.  576,  134  N.  W. 
882;  McCarty  v.  Kepveta  (1913),  139  N.  W.  992;  Nat.  Bk.  of  Commerce 
v.  Pick  (1904),  13  N.  Dak.  74,  99  N.  W.  (iZ;  Walters  v.  Rock  (1908),  18 
N.  Dak.  45,  115  N.  W.  511;  Farmer's  Bk.  of  Mercer  Co.  v.  Riedlinger 
(1914),  146  N.  W.  556. 

O/i/o.— Thompson  v.  Citizens  Nat.  Bk.  of  Adams  (1909).  2,2  O.  C.  C, 
131;  Spring  Valley  Nat.  Bk.  v.  Somers  (1910),  21  Ohio  Dec.  772;  Ham- 
ilton Mach.  Tool  Co.  v.  Memphis  Nat.  Bk.  (1911),  84  Ohio  St.  184, 
95  N.  E.  777. 


496  NEGOTIABLE    INSTRUMENTS.  §    52 

Oklahoma. — Jenkins  v.  Planters  &  Mechanics  Bk.  (1912),  126  Pac. 
757;  Wood  v.  Stickle  (1912),  128  Pac.  1082;  First  State  Bk.  of  Okla- 
homa V.  Tobin  (1913),  134  Pac.  395;  Cedar  Rapids  Nat.  Bk.  v.  Bashara 
(1913),  35  Pac.  1051;  McPherrin  v.  Tittle,  36  Okla.  510.  129  Pac.  721, 
44  L.  R.  A.  (N.  S.)  395;  Hudson  v.  Moore  (1913),  130  Pac.  774;  Jones 
V.  Citizen's  State  Bk.  (1913),  135  Pac.  Z7Z;  Western  Exchange  Bk.  of 
Kansas  City  v.  Coleman  (1913),  132  Pac.  488;  Nat.  Bk.  of  Commerce 
V.  Armbruster  (1914),  142  Pac.  393;  City  Nat.  Bk.  v.  Kelly  (1915),  151 
Pac.  1172;  Hodgins  v.  Northwestern  Finance  Co.  (1915),  148  Pac.  717; 
Keisel  v.  Baldock  (1915),  154  Pac.  1194;  Nicholas  Co.  v.  Thomas  (1915), 
151  Pac.  847;  Norman  v.  Lambert  (1915),  153  Pac.  1097;  Ogle  v.  Arm- 
.strong  (1915),  153  Pac.  1139;  Barry  v.  Kinseley  (Okla.),  155  Pac.  1168; 
Ward  V.  Oklahoma  State  Bank  (1915),  151  Pac.  852;  Lambert  v.  Smith 
(1916),  157  Pac.  909;  Conqueror  Trust  Co.  v.  Simmon  (1917),  162  Pac. 
1098;  Critser  v.  Steelcy  (1917),  162  Pac.  795;  Murphy  v.  Estel,  182  Pac. 
83 ;  Southwest  Nat.  Bk.  of  Commerce  of  Kansas  City  v.  Todd,  192  Pac. 
1096;  LeRoy  v.  Meadows  (Okla.),  200  Pac.  858. 

OrrgoK.— Brown  v.  Felwert  (1905),  46  Oreg.  363,  80  Pac.  414;  White 
V.  Savage  (1906),  45  Oreg.  604,  87  Pac.  1040;  First  Nat.  Bk.  of  Pom- 
eroy  v.  McCulIough  (1908),  50  Oreg.  508,  93  Pac.  366;  Matlock  v. 
Scheuerman  (1908),  51  Oreg.  49,  93  Pac.  823,  17  L.  R.  A.  (N.  S.)  747; 
First  Nat.  Bk.  of  Cottage  Grove  v.  Bank  of  Cottage  Grove  (1911),  59 
Oreg.  388,  117  Pac.  293;  Hull  v.  Agnus  (1911),  60  Oreg.  95,  118  Pac. 
284;  Bailey  v.  Inland  Empire  Co.  (1915),  146  Pac.  991;  Sink  v.  Allen 
(1916),  154  Pac.  415;  Everding  &  Parrel!  v.  Taft  (1917),  160  Pac.  1160; 
Hill  V.  McCrow,  88  Ore.  299. 

Pennsylvania. — Homewood  People's  Bk.  v.  Heckert  (1903),  207  Pa. 
231;  Neil  v.  Neil  (1904),  25  Pa.  Super.  Ct.  605;  Carman  v.  Gumbiner 
(1906),  32  Pa.  Super.  Ct.  181;  Allentown  Nat.  Bk.  v.  Clav  Product  Sup- 
ply Co.  (1907),  217  Pa.  St.  128,  66  Atl.  252;  Lindsay  v.  Button  (1907), 
217  Pa.  148,  66  Atl.  250;  Stouffer  v.  Kelchner  (1908),  38  Pa.  Super.  Ct. 
475;  Johnson  Co.  Sav  .Bk.  v.  Kock  (1908),  38  Pa.  Super.  Ct.  553;  Lowrv 
Nat.  Bk.  v.  Hazard  (1909),  223  Pa.  520;  Bowles  v.  Frazer  (1910),  109 
Pa.  812;  Grange  Trust  Co.  v.  Brown  (1911),  49  Pa.  Sup.  274;  People's 
Nat.  Bk.  of  Pensacola  v.  Hazard  (1911),  80  Atl.  554;  Wolfgang  v. 
Shirley   (1913),  86  Atl.  1011. 

Rhode  Island.— Ahram  v.  Greer    (1913),  88  Atl.  884. 

South  Carolina. — Commerce  Trust  Co.  v.  Grimes  (1914),  82  S.  E. 
420;  Edens  v.  Gibson  (1915),  84  S.  E.  1005;  Farmer's  Bk.  v.  Crawford 
(1916),  88  S.  E.  13;  Farmers  Mech.  Bk.  of  Florence  v.  Whitehead 
(1916),  89  S.  E.  657;  Stevens  v.  Khetter  (1918),  96  S.  E.  406;  Commer- 
cial Security  Co.  v.  Donald  Drug  Co.,  104  S.  E.  312. 

South  Dakota.— Kahney  v.  Thayer  (1915),  154  N.  W.  1103;  Runely 
V.  Anderson  (1915),  150  N.  W.  939;  Ochsenreiter  v.  Block,  173  N.  W. 
736;  Britton  Milling  Co.  v.  Williams,  (S.  Dak.),  184  N.  W.  265. 

Tennessee. — Kimbrough  v.  Hornsby  (1904),  113  Tenn.  605;  Farmer's 
Bk.  V.  Bank  of  Rutherford,  115  Tenn.  64,  88  S.  W.  939,  112  Am.  St. 
Rep.  817;  Elgin  City  Bldg.  Co.  v.  Hall  (1907),  119  Tenn.  548, 
108  S.  W.  1068;  Jefferson  Bk.  of  St.  Louis  v.  Champman-Whittee 
Lyons  Co.  (1909),  122  Tenn.  415,  123  S.  W.  641;  Edwards  v.  Hambly 
(1915),  180  S.  W.  163;  Griswold  v.  Davis,  125  Tenn.  223,  141  S.  W.  205; 


§    52  RIGHTS   OF    HOLDER.  497 

Merrimon  v.  Parkey  (1917),  191  S.  W.  121;  Madison  Tr.  Co.  v.  Stahl- 
man  (1916),  183  S.  W.  1012;  Bromley  v.  Chattanooga  Co  (1917),  198 
S  .W.  775. 

T^xaj.— Davis  v.  Converse  (1916),  188  S.  W.  697;  McCamant  v.  Mc. 
Camant  (1916),  187  S.  W.  1096;  Sayles  v.  First  State  Bank  of  Abilene 
(1917),  195  S.  W.  230;  Zielinski  v.  Hernig  (1917),  195  S.  W.  952. 

L'/fl/?.— Cole  Banking  Co.  v.  Sinclair  (1908),  34  Utah,  454,  98  Pac 
411;  Lcavitt  v.  Thurston  (1911),  38  Utah  351,  113  Pac.  11;  Miller  v. 
Marks  (1915),  148  Pac.  412;  Helper  St.  Bk.  v.  Jackson  (1916),  160  Pac. 
287;  Interstate  Trust  Co.  v.  Headlund  (1918),  171  Pac.  515. 

Virginia.— Aragon  Coffee  Co.  v.  Rogers  (1906),  105  Va.  51;  Penning- 
ton v.  Third  Nat.  Bk.  of  Columbus,  Ga.  (1913),  11  S.  E.  455;  Am.  Bk. 
of  Orange  v.  McComb  (1906),  105  Va.  473,  54  S.  E.  14;  Fayette  Nat. 
Bk.  V.  Sunners  (1906),  105  Va.  689,  54  S.  E.  862;  City  Nat.  Bk.  of 
Roanoke  v.  Hundley  (1911),  70  S.  E.  494;  Miller  v.  Norton  &  Smith 
(1913),  11  S.  E.  452;  Williams  v.  Liphart  (1914),  81  S.  E.  11;  Ander- 
son V.  Union  Bk.  of  Richmond  (1915),  117  Va.  1,  83  S.  E.  1080;  Flesh- 
man  V.  Bibb  (1916),  88  S.  E.  64;  Holdsworth  v.  Anderson  (1916),  87 
S.  E.  565;  Ratcliffe  v.  Costello  (1915),  85  S.  E.  469;  Colona  v.  Parksley 
Nat.  Bk.  (1917),  92  S.  E.  979. 

W^fl,y/iw^;o».— McNamara  v.  Jose  (1902),  28  Wash.  461,  (&  Pac.  903, 
Keene  v.  Behan  (1905),  40  Wash.  505,  82  Pac.  884;  Gosline  v.  Dry- 
foos  (1907),  45  Wash.  396,  88  Pac.  644;  Spencer  v.  Alkali  Paint, 
Etc.,  Co.,  53  Wash.  11,  101  Pac.  509;  Reardan  v.  Cockrell  (1909),  54 
Wash.  400,  103  Pac.  457;  Gray  v.  Boyle  (1909),  55  Wash.  578,  104  Pac. 
828;  Bradley  Engineering  &  Mfg.  Co.  v.  Heyburn  (1910),  56  Wash. 
628,  106  Pac.  170;  Cedar  Rapids  Nat.  Bk.  v.  Myhre  (1910),  57  Wash. 
596,  107  Pac.  518;  Bowles  v.  Frazer  (1910),  109  Pac.  812;  Hughes  &  Co. 
V.  Flint  (1911),  61  Wash.  460,  112  Pac.  633;  Moyses  v.  Bell  (1911),  62 
Wash.  134,  114  Pac.  193;  Scandinavian  Am.  Bk.  v.  Johnston  (1911),  63 
Wash.  187,  115  Pac.  102;  Wells  v.  Duffv  (1912),  69  Wash.  310;  Am.  Sav. 
Bk.  &  Tr.  Co.  V.  Helgesen  (1911),  64  Wash.  54,  116  Pac.  837;  Barker  v. 
Sartori  (1911),  66  Wash.  260,  119  Pac.  611;  Parker  v.  Saxton  (1911),  66 
V/ash.  260;  Canadian  Bk.  of  Commerce  v.  Sesuon  Co.  (1912),  123  Pac. 
602;  Davis  v.  Hibbs  (1913),  IZ  Wash.  315,  131  Pac.  1135;  Fournier  v. 
Cornish  (1913),  133  Pac.  9;  Union  Inv.  Co.  v.  Rosenzweig  (1914).  139 
Pac.  874;  Hamilton  v.  Mihills,  92  Wash.  675.  159  Pac.  887;  Wash. 
Trust  Co.  V.  Keyes  (1915),  152  Keyes,  1029;  Schultz  v.  Crewdson  (1917), 
163  Pac.  734;  Hauson  v.  Roesch  (1919).  176  Pac.  349;  Citizens'  Bk.  v. 
Limpright,  93  Wash.  361,  160  Pac.  1046;  Fisk  Rubber  Co.  of  New  York 
V.  Pinkey,  170  Pac.  581 ;  United  Ry.  &  Logging  Supply  Co.  v.  Siberian 
Commercial  Co.,  (Wash.),  201  Pac.  21. 

Wisconshi.-^K^\  V.  Bk.  of  Evansville  (1905),  124  Wis.  93,  102  N. 
W.  329,  68  L.  R.  A.  (N.  S.)  964,'l09  Am.  St.  925;  Hodge  v.  Wallace.  129 
Wis.  84,  108  N.  W.  212,  116  Am.  St.  Rep.  938;  Hodge  v.  Smith  (1907), 
130  Wis.  326,  110  N.  W.  192;  Aukland  v.  Arnold  (1907),  131  Wis.  64, 
111  N.  W.  212;  Quiggle  v.  Herman  (1907).  131  Wis.  379,  111  N.  W. 
479;  Northfield  Nat.  Bk.  v.  Arndt  (1907),  132  Wis.  383,  112  N.  W.  451; 
Paulson  v.  Bovd  (1908),  137  Wis.  241,  118  N.  W.  841;  Kipp  v.  Smith 
(1908),  137  Wis.  234,  118  N.  W.  848;  Bk.  of  Baraboo  v.  Laird  (1912), 
136  N.  W.  603;  Washburn  v.  Riener    (1912),  149  Wis.  387;   Green  v. 


498  NEGOTIABLE    INSTRUMENTS.  §    53 

Gunsten  (1913),  142  N.  W.  261;  Badger  Machinery  Co.  v.  Columbia 
County  Electric  Co.  (1917),  163  N.  W.  188;  Union  Investment  Co.  v. 
Epley,  164  Wis.  438,  160  N.  W.  175. 

Wyoming.— lovf a  State  Sav.  Bk.  v.  Henry  (1913),  136  Pac.  863;  Holds- 
worth  V.  Blyth  &  Fargo  (1915),  146  Pac.  603. 

United  States— In  re  Hopper-Morgan  Co.  (1907),  154  Fed.  249;  In  re 
Hill  (1911),  187  Fed.  214;  First  Nat.  Bk.  of  Shenandoah  v.  Linver  (1911), 
187  Fed.  16,  109  U.  S.  C.  C.  A.  70;  Nat.  Bk.  og  Commerce  in  St.  Louis  v. 
Sancho  Pag.  Co.  (1911),  110  C.  C.  A.  112,  186  Fed.  257;  Amalgamated 
Sugar  Co.  V.  U.  S.  Nat.  Bk.  of  Portland,  Oreg.  (1911),  109  C.  C.  A.  494; 
First  Nat.  Bk.  of  Wilkesbarre  v.  Barnum  (1908),  160  Fed.  245;  MiUon  v. 
Pensacola  Bk.  &  Tr.  Co.  (1911),  190  Fed.  126,  111  C.  C.  A.  166;  Crosby 
V.  Reynolds  (1912),  196  Fed.  640;  Pensacola  State  Bk.  v.  Melton  (1913), 
370;  O'Toole  v.  Lanson  (1914),  41  App.  D.  C.  276;  Smith  v.  Nelson  Land 
&  Cattle  Co.  (1914),  212  Fed.  56;  Pensacola  State  Bk.  v  Thornberry 
(1915),  226  Fed.  611  (C.  C.  A.  6th  Ct.)  ;  Postal  Tel.  Cable  Co.  v.  Citizens 
Nat.  Bk.  (1916),  228  Fed.  601  (C.  C.  A.,  3d  Ct.)  ;  Nat.  City  Bk.  of  Seattle 
V.  Titlow  (1916),  233  Fed.  838;  Church  v.  Sweetland  (1917),  24  3Fetl.  289. 
112  N.  W.  918;  In  re  Estate  of  Phitlpott,  169  Iowa  555,  151  N.  W.  825. 
wold  V.  Morrison,  —  Cal.  App.  — ,  200  Pac.  62. 

§  53.  When  person  not  deemed  holder  in  due  course. 
Where  an  instrument  payable  on  demand  is  negotiated  an  unrea- 
sonable length  of  time  after  its  issue,  the  holder  is  not  deemed 
a  holder  in  due  course.-*'  ** 

See  text,  §  129. 

Cross   sections :   7. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  See  36 
(3)  bill,  86   (3). 

South  Dakota  under  another  section  fixes  the  maturity  of  demand 
instruments. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Note  received  in  due  course  of  business  before  maturity  is  held  in 
due  course.  Lapp  v.  Merchant's  Nat.  Bk.  of  Indianapolis,  —  Ind.  App. 
— ,  123  N.  E.  231. 

Seven  months  delay  a  question  for  jury  as  to  reasonable  time  on  de- 
mand note.     In  re  Estate  of  Philpott,  169' Iowa,  555,  151  N.  W.  825. 

Check  negotiated  two  days  later  not  overdue  where  drawn  on  Satur- 
day.   Asbury  v.  Taube,  151  Ky.  142,  152  S.  W.  372. 

Seven  months  an  unreasonable  time.  American  Nat.  Bk.  v.  Patterson, 
—  La.  — ,  83  So.  218. 

Check  delivered  on  Sunday  is  valid  in  hands  of  innocent  purchaser. 
Gordon  v.  Levine,  197  Mass.  267,  83  N.  E.  861,  15  L.  R.  A.  (N.  S.)  243, 
125  Am.  Rep.  361. 

Five  days  not  unreasonable  time  on  check.  Singer  Mfg.  Co.  v.  Sum- 
mers, 143  N.  C.  102,  55  S.  E.  522. 


§    53  RIGHTS   OF    HOLDER.  499 

One  year  limit  of  reasonable  time  on  demand  note.  McAdam  v. 
Grand  Forks,  Etc.,  Co.,  24  N.  D.  645,  140  N.  W.  725,  47  L.  R.  A.  (N. 
S.)  246. 

Negotiation  of  check  next  day  after  issue  does  not  give  overdue  no- 
tice. Matlock  V.  Scheuerman,  51  Ore.  49,  93  Pac.  823,  17  L.  R.  A.  (N.  S.) 
747. 

Sixteen  months  not  unreasonable  where  monthly  payments  of  inter- 
est made.  McLean  v.  Bryer,  24  R.  I.  599,  54  Atl.  372. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Idaho.— MUler  v.  Del  Rio  Mining  &  Milling  Co.   (1913),  136  Pac.  448. 

/;/mot.y.— Greer  v.  Downing  (1912),  176  111.  App.  355. 

Indiana.— Lapp  v.  Merchants  Nat.  Bank,  123  N.  E.  231. 

I ozva.— Anderson  v.  First  Nat.  Bk.  of  Chariton  (1909),  144  Iowa  251, 
122  N.  W.  918;  LeClere  v.  Philpott  (1915),  151  N.  W.  825;  In  re  Estate 
of  Philpott,  169  Iowa  555,  151  N.  W.  825. 

Kansns.— Doty  v.  Garfield  Township   (1913),  89  Kans.  719. 

Kenfticky.—Ashury  v.  Taube,  151  Ky.  142,  152  S.  W.  372. 

Louisiana. — American  Nat.  Bk.  v.  Patterson,  83  So.  268. 

Massachusetts.— Gardner  v.  Beacon  Trust  Co.  (1906),  190  Mass.  27; 
Gordon  v.  Levine  (1908),  197  Mass.  267,  83  N.  E.  861,  15  L.  R.  A.  (N. 
S.)   243.  125  Am.  Rep.  361. 

Nebraska.— Ostenherg  v.  Kavka   (1914),   145  N.   W.  713. 
New  York.— Albany  Co.  Bk.  v.  People's  Co-op.  Ice  Co.   (1904),  92  A 
D.  47,  86  N.  Y.  Supp.  73;  Royal  Bk.  of  N.  Y.  v.  Reinschreiber   (1911), 
126  N.  Y.  Supp.  749;   Stanley  v.  Franco-American  Ferment  Co.    (1916), 
161  N.  Y.  Supp.  365. 

North  Carolina.—Singer  Mfg.  Co.  v.  Summers  (1906),  143  N.  Car. 
102,  55  S.  E.  522;  Johnson  v.  Lasseter  (1911),  155  N.  Car.  47. 

North  Dakota.— McAdam  v.  Grand  Forks,  Etc.,  Co.,  24  N.  D.  645,  140 
N.  W.  725,  47  L.  R.  A.  (N.  S.)  246. 

Oregon.— Matlock  v.  Scheuerman  (1908),  51  Greg.  49,  93  Pac.  823,  17 
L.  R.  A.  (N.  S.)  747. 

Rhode  Island.— McLean  v.   Bryer,  24  R.   I.  599,   54  Atl.   373. 

South  Carolina.— Wmiams  v.  Weekly   (1915),  84  S.  E.  299. 

Tennessee.— Easley  v.  East  Tenn.  Nat.  Bk.   (1917),  198  S.  W.  66. 

Virginia.— Aragon  Coffee  Co.  v.  Rogers  (1906),  105  Va.  51;  Am.  Bk.  of 
Orange  v.  McComb  (1906).  105  Va.  473,  54  S.  E.  14;  Pennington  v.  Third 
Nat.  Bk.  of  Columbus,  Ga.  (1913),  77  S.  E.  455;  Colona  v.  Parksley 
Nat.  Bk.   (1917),  92  S.  E.  979. 

United  States— Fensacoh  State  Bk.  v.  Melton   (1913),  210  Fed.  57. 


500  NEGOTIABLE    INSTRUMENTS.  §    54 

§  54.  Notice  before  full  amount  paid.  Where  the  trans- 
feree receives  notice  of  any  infirmity  in  the  instrument  or  defect 
in  the  title  of  the  person  negotiating  the  same  before  he  has  paid 
the  full  amount  agreed  to  be  paid  therefor,  he  will  be  deemed 
a  holder  in  due  course  only  to  the  extent  of  the  amount  thereto- 
fore paid  by  him.*'  ^^ 

See  text,  §  129. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states  : 

Receiving  instrument  in  fraud  renders  title  defective.  Ensign  v.  Cran- 
dall,  —  Mo.  App.  —  231  S.  W.  675. 

When  one  pays  full  amount  agreed  upon  prior  to  notice  of  defect  he 
may  recover.  Montgomerv  Garage  Co.  v.  Manufacturers  Liability  Ins. 
Co.,  —  N.  J.  — ,  109  A.  296. 

Nonpayment  of  note  when  due  as  notice  affecting  payment  of  bal- 
ance of  purchase  money.  Albany  County  Bank  v.  People's  Ice  Co.,  92 
App.  Div.  47,  86  N.  Y.  Supp.  773. 

Where  indorsee  retained  one-half  the  price  for  three  notes  and  de- 
fendant sets  up  defense  to  first  one,  indorsee  entitled  to  receive  only 
half.    Rosenbaum  v.  Roth,  164  App.  Div.  617,  150  N.  Y.  Supp.  396. 

Notice  to  agent  is  notice  to  principal.  Baruch  v.  Buckley,  167  App. 
Div.  113,  151  N.  Y.  Supp.  853. 

Indorsee  entitled  only  to  recover  as  to  portion  paid  prior  to  notice 
of  defects.  First  National  Bank  v.  Buffalo  Brev/ing  Co.,  154  N.  Y. 
Supp.  765. 

Indorsee  not  bound  to  stop  payment  on  check  after  notice  of  infirmi- 
ties of  note  purchased.  Miller  v.  Marks,  46  Utah  257,  148  Pac.  412. 

No  notice  of  infirmity  of  note  until  after  payment  of  certificate  of 
deposit.     Duncan  v.  Broadway  Nat.  Bank,  —  Va.  — ,  102  S.  E.  577. 

Where  no  notice  of  depositor's  defective  title  bank  should  recover. 
Bancroft  v.  McKnight,  11  Richardson  (Law)  663;  Sering's  Appeal,  10 
Barr  235. 

*"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Arkansas.— l^lorehead  v.  Harris    (1916),   182  S.   W.  521. 

California — Griswold  v.  Morrison   (Cal.  App.),  200  Pac.  62. 

Illinois.— Weh  &  Craig  Mfg.  Co.  v.  Bonus   (1913),  177  111.  App.  626. 

Indiana.— Lapp  v.  Merchants  Nat.  Bank,  123  N.  E.  231. 

/owa.— Citizen's  State  Bk.  v.  Lankin   (1912),  134  N.  W.  882. 

Louisiana. — Amer.  Nat.  Bank  v.  Patterson,  83  So.  218. 

Michigan.— People's  State  Bk.  v.  Miller    (1915),   152  N.  W.  257. 

Missouri.— Ch'itwood  v.  Hatfield  (1909).  136  Mo.  App.  688;  Link  v 
Jackson    (1911).   158  Mo.  App.  63,   139  S.  W.   588;  53   Nat.   Bk.  v.   Mc- 


§    55  RIGHTS   OF    HOLDER. 


501 


Crory   (1915),  177  S.  W.   1058;  Mount  v.  Neighbors  Imp.  &  Vehicle  Co. 
(1916),  189  S.  W.  614;  Ensign  v.  Crandall    (Mo.  App.),  231  S.  W.  675. 

Nebraska.— Ostenherg  v.  Kavka   (1914).   145  N.  W.  713. 

New  /fr.f<'v.— Montgomery  Garage  Co.  v.  Manufacturers  Liability 
Ins.  Co.,  109  Atl.  296. 

New  ForA'.— Pcrth-Amboy  Mut.  Loan  Assn.  v.  Chapman  (1903),  80 
A.  D.  556;  Albany  Co.  Bank  v.  People's  Ice  Co.,  86  N.  Y.  Supp.  773,  92 
A.  D.  47;  Goetting  v.  Day  (1904),  87  N.  Y.  Supp.  510;  Ferguson  v. 
Natter  (1910),  141  A.  D.  274;  Rosenbaum  v.  Roth  (1914),  150  N.  Y. 
Supp.  396,  164  A,  D.  617;  Interboro  Brewing  Co.  v.  Doyle  (1915),  151 
N.  Y.  Supp.  325;  Banich  v.  Buckley,  151  N.  Y.  Supp.  853,  167  A.  D.  113; 
First  Nat.  Bk.  of  Winona  v.  Buff  Brewing  Co.  (1915),  154  N.  Y.  Supp. 
765;  Title  Guar.  Co.  v.  Pain  (1915),  155  N.  Y.  Supp.  333. 

North  Carolina.— Johnson   v.   Lasseter    (1911),   155   N.   Car.  47. 

North  Dakota.— W'cihers  v.  Rock  (1908),  18  N.  Dak.  45,  115  N.  W. 
511;  Bank  v.  Garcean   (1912),  22  ;N.  Dak.  576,  134  N.  W.  882. 

0/izo.— Hamilton  Mech.  Tool  Co.  v.  Memphis  Nat.  Bk.  (1911),  84 
Ohio  St.  184,  95  N.  E.  777. 

Oklahoma.— Hudson  v.  Moore  (1913),  130  Pac.  774;  Voris  v.  Bird- 
sail   (1917),  162  Pac.  951;  State  v.  Emery   (1918),  174  Pac.  770. 

P^«n.yy/t/arn'a.— Snyder  v.  Commercial  Ex.  Nat.  Bk.  (1908),  221  Pa. 
599,  70  Atl.  876;  Bank  of  Morehead  v.  Hernig,  220  Pa.  224,  69  Atl.  679. 

Utah.— Felt  v.  Bush  (1912),  126  Pac.  688;  Miller  v.  Marks  (1915), 
148  Pac.  412,  46  Utah  257. 

Virginia.— Aragon  Coffee  Co.  v.  Rogers  (1906),  105  Va.  51;  Pen- 
nington V.  Third  Nat.  Bk.  of  Columbus,  Ga.   (1913),  77  S.  E.  455. 

Washington.— Citizens  Bk.  &  Tr.  Co.  v.  Limpright  (1916),  160  Pac. 
1046. 

Wisconsin.— Uodge  v.  Smith  (1907),  130  Wis.  326,  110  N.  W.  192; 
Green  v.  Gunsten   (1913),  142  N.  W.  261. 

Utiited  States.— In  re  Continental  Engine  Co.  (1916),  234  Fed.  Rep. 
58,  148  C.  C.  A.  74 ;  Duncan  v.  Broadway  Nat.  Bank,  102  S.  E.  577. 

§  55.  When  title  defective.  The  title  of  a  person  who 
negotiates  an  instrument  is  defective  within  the  meaning  of  this 
act  when  he  obtains  the  instrument,  or  any  signature  thereto, 
by  fraud,  duress,  or  force  and  fear,  or  other  unlawful  means, 
or  for  an  illegal  consideration,  or  when  he  negotiates  it  in  breach 
of  faith,  or  under  such  circumstances  as  amount  to  a  fraud.*'  ** 

See  text,  §§  127,  142. 

Kansas    states   "alleged"    instead   of   "illegal,"   a   clerical   error. 

Minnesota  adds  an  additional  section  as  follows:  "6015.  Instru- 
ment  obtained  by   fraud.— No   person,    nor   the  heirs   or   personal   repre- 


502  NEGOTIABLE    INSTRUMENTS.  §    55 

sentatives  of  any  person,  whose  signature  is  obtained  to  any  bill  of  ex- 
change, promissory  note,  or  other  paper  negotiable  under  the  law  mer- 
chant, shall  be  held  liable  thereon  if  it  be  made  to  appear  that  the  sig- 
nature was  obtained  by  fraudulent  representation,  trick  or  artifice  as  to 
the  nature  and  terms  of  the  contract  so  signed,  that  at  the  time  of  sign- 
ing he  did  not  believe  it  to  be  a  bill  of  exchange,  promissory  note,  or 
other  paper  negotiable  under  the  law  merchant,  and  that  he  was  not 
guilty  of  negligence  in  signing  such  paper  without  knowledge  of  its 
terms.  The  question  of  negligence  in  any  suit  on  such  contract  shall  in 
all  cases  be  one  of  fact  for  the  jury,  and,  the  person  sought  to  be  charged 
thereon  shall  be  entitled  to  have  the  question  of  his  negligence  sub- 
mitted to  a  jury." 

The  Wisconsin  Act  (Sees.  1676-25)  adds  to  this  section  the  follow- 
ing: "And  the  title  of  such  person  is  absolutely  void  when  such  instru- 
ment or  signature  was  so  procured  from  a  person  who  did  not  know 
the  nature  of  the  instrument  and  could  not  have  obtained  such  knowl- 
edge by  the  use  of  ordinary  care." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Note  taken  as  collateral  by  person  without  knowledge  of  defect  be- 
fore maturity  is  held  in  due  course.  Burnham  Loan  &  Investment  Co. 
V.  Sethman,  —  Colo.  — ,  171  Pac.  884. 

Former  statutes  declaring  void  instruments  given  for  gambling  debt 
or  usurious  interest  repealed.     Wirt  v.  Stubblefield,  17  App.  D.  C.  283. 

Proof  as  to  title  of  holder  being  defective.  Farmers  Trust  Co.  v. 
Sprowl,  —  Ind.  App.  — ,  126  N.  E.  81. 

When  oral  evidence  permissible  to  show  agreement  not  to  negotiate. 
McNight  v.  Parsons,  136  Iowa  390,  113  N.  W.  858,  125  Am.  St.  Rep.  265, 
15  Ann.  Cas.  665,  22  L.  R.  A.   (N.  S.)   718. 

Note  obtained  by  duress  is  voidable  only.  State  v.  Wegener  (Iowa), 
162  N.  W.  1040. 

Confidential  adviser  of  widov/  procuring  note  by  fraud.  Lundean  v. 
Hamilton,  —  Iowa  — ,  159  N.  W.  163. 

Where  endorser's  title  is  defective  on  account  of  fraud.  Ford  v. 
Ott,  —  Iowa  — ,  173  N.  W.  121. 

Question  of  being  a  good  faith  holder  is  for  the  jury.  Plank  v.  Swift, 
—  Iowa  —    174  N.  W.  236. 

Indorsee  has  burden  of  proof  when  shown  that  note  was  procured 
by  fraud.     Underwood  v.  Leichtman,  —  Iowa  — ,  176  N.  W.  683. 

Fraud  is  a  defense  against  subsequent  holders  not  in  due  course. 
Rinella  v.  Faylor,  —  Iowa  — ,  180  N.  W.  983. 

Former  gambling  statute  not  repealed  as  to  negotiable  instruments. 
Alexander  v.  Hazelrigg,  123  Ky.  Law  Rep.   1212,  97  S.  W.  353. 

Whether  A  embezzled  the  proceeds  or  made  the  negotiation  with 
fraudulent  intent  is  question  for  jury.  Demelman  v.  Brazier,  198  Mass. 
458,  84  N.  E.  856. 

Holder  in  due  course  may  recover  as  to  part  of  joint  makers  when 
part  only  were  makers  by  forgery.  First  National  Bank  v.  Shaw,  157 
Mich.  192,  121  N.  W.  811. 

When  negligence  in  not  reading  instrument  renders  makers  liable  to 
holder  in  due  course.    Van  Slyke  v.  Rooks,  181  Mich.  88,  147  N.  W.  579. 

Misrepresentation  of  fact  in  procuring  note  affects  title.  People's 
State  Bank  v.  Miller,  185  Mkh.  565,  152  N.  W.  257. 


§    55  '  RIGHTS   OF    HOLDER.  503 

Agreement  to  return  note  if  maker  dissatisfied  with  land  does  not 
throw  burden  upon  holder  in  due  course.  Snelling  State  Bank  v.  Clasen, 
132  Minn.  404,  157  N.  VV.  643. 

Fraud  in  obtaining  signature  to  instrument  which  when  detached  is 
a  note  affects  title  of  indorsee.  Stevens  v.  Pearson  (Minn.),  163  N. 
W.  769. 

Fraudulent  misrepresentations  of  financial  standing  as  affecting  note. 
First  Nat.  Bank  v.  Denfeld,  —  Minn.  — ,  173  N.  W.  661. 

Knowledge  of  plaintiff's  cashier  that  notes  were  not  proceeds  of  col- 
lections made  and  that  they  were  taken  in  bad  faith  affects  right  of  re- 
covery.    State  Bank  of  Rogers  v.  Missia,  —  Minn.  — ,  175  N.  W.  614. 

Fraud  as  illegal  consideration.  Albrecht  v.  Rathai,  —  Minn.  — ,  185 
N.  W.  259. 

Assignment  of  nonassignable  saloon  license  as  part  consideration 
does  not  render  note  void  in  hands  of  holder  in  due  course.  Farmers' 
Sav.  Bank  v.  Reed,  192  Mo.  App.  344,  180  S.  W.  1002. 

Notice  to  make  title  defective  must  be  actual.  Morehead  v.  Cum- 
mins, —  Mo.  App.  —  230  S.  W.  656. 

Fraud  on  part  of  plaintiff's  agent  was  effective  against  indorsee  of 
agent  who  purchased  after  maturity.  Northwestern  Improvement  Co.  v. 
Rhoades,  52  Mont.  428,  158  Pac.  832. 

Note  failing  to  state  consideration  as  required  by  statute  is  void  be- 
tween parties  and  indorsees  with  notice.  Benton  v.  Sikyta,  84  Neb.  808, 
122  N.  W.  1057,  24  L.  R.  A.  (N.  S.)  1057. 

Former  usury  statute  repealed.  Schlesinger  v.  Kelly,  114  App.  Div. 
546,  99  N.  Y.  Supp.  1083. 

Fraudulent  diversion  places  burden  of  proving  indorsee  holder  in 
due  course  upon  indorsee.  Peterson  v.  Alton,  162  App.  Div.  21,  147  N. 
Y.   Supp.  280. 

Failure  to  read  instrument  providing  for  detachment  of  attached  note 
renders  maker  liable  to  holder  in  due  course.  Munnich  v.  Jaffe,  164  App. 
Div.  30.  149  N.  Y.  Supp.  338. 

Notice  of  effective  title  transferred.  Vogel  v.  Pyne,  189  N.  Y.  Supp. 
285. 

Check  indorsed  in  unlawful  gambling  transaction  is  good  when  suit 
brought  by  payee  although  paid  to  his 'indorsee.  Drinkall  v.  Movius 
State  Bank,  11  N.  D.  10.  88  N.  W.  724. 

Breach  of  warranty  is  not  a  defense  and  must  be  set  up  as  counter- 
claim.    First  National  Bank  v.  Sayer,  35  S.  D.  581,  153  N.  W.  652. 

Effect  of  illegal  consideration  on  title.  State  v.  Emery,  —  Okla.  — , 
174  Pac.  770. 

Defective  title  as  shown  by  one  taking  note  after  others  of  series  due. 
LeRoy  v.  Meadows,  —  Okla.  — ,  200  Pac.  858. 

Note  given  for  interest  at  unlawful  rate  makes  payee's  title  defec- 
tive.    Keene  v.  Behan,  40  Wash.  505,  82  Pac.  884. 

Former  usury  statute  not  repealed  by  negotiable  instruments  law. 
Askridge  v.  Thomas    (W.  Va.).  91    S.  E.  7    (usury). 

Where  fraud  makes  title  defective  as  to  one  maker  it  does  so  as  to 
all  joint  makers.     Hodge  v.  Smith,  130  Wis.  326,  110  N.  W.  192. 

Failure  to  state  consideration  as  required  by  statute  note  was  void 
between  parties.     Quiggle  v.  Herman,  131  Wis.  379,  111  N.  W.  479. 

Fraud  operates  as  to  all  makers.  Aukland  v.  Arnold,  131  Wis.  64,  111 
N.  W.  212. 

When  innocent  purchaser  of  note  not  stating  consideration  is  holder 
in  due  course  although  statute  requires  consideration  be  stated.  Samp- 
son v.  Ward,  147  Wis.  48,  132  N.  W.  629, 


504  NEGOTIABLE    INSTRUMENTS.  §    55 

Intoxication  of  maker  affects  negotiability.  Green  v.  Gunster,  154 
Wis.,  69,  142  N.  W.  261. 

Note  given  for  purchase  price  of  article  bought  upon  fraudulent  rep- 
resentations.    Jones  V.  Brandt,  —  Wis.  — ,  181  N.  W.  813. 

Parol  to  show  nonnegotiation  agreement  between  parties  not  holders 
in  due  course.  Holdsworth  v.  Blyth  &i  Fargo  Co.,  23  Wyo.  52,  146  Pac. 
603. 

Effect  of  fraud  as  to  one  maker  upon  other  joint  makers.  Schmidt 
V.  Bank  of  Commerce,  234  U.  S.  64. 

Bonds  made  void  by  prior  statute  not  affected.  In  re  Valecia  Con- 
densed Milk  Co.,  233  Fed.  Rep.   173. 

Negotiation  in  breach  of  faith  to  one  with  notice  of  dishonor  renders 
title  defective.  Hornby  v.  McLaren  (C.  A.  March  31,  1908),  24  T.  L. 
Rep.  494. 

Overdue  bill  indorsed  in  blank  sold  on  judicial  proceedings  may  give 
title.    Alock  V.  Smith,  1  Ch.  238. 

■^*  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Hass  v.  Commerce  Trust  Co.  (1915),  69  So.  89;  Peoples' 
Bank  &  Trust  Co.  v.  Floyd  (1917),  75  So.  940;  Jones  v.  Martin  (1917), 
74  So.  761;  Bernheimer  v.  Gray   (1918),  78  So.  840. 

^mono.— Hurley  v.  Wilky   (1916),  156  Pac.  83. 

Arkansas.— Moore  v.  Wade    (1916),   186  S.  W.  828. 

California. — Merchants  Collection  Agency  v.  Roantrue  (1918),  173 
Pac.  600. 

Colorado. — Johnson  Co.  Sav.  Bk.  v.  Gregg  (1911),  51  Colo.  358,  117 
Pac.  1003;  First  Nat.  Bk.  of  Iowa  City  v.  Smith  (1913),  136  Pac.  460; 
Burnham  Loan  and  Investment  Co.  v.  Sethman,   171   Pac.  884. 

Connccfiait.-Johnson  Co.  Sav.  Bk.  v.  Walker  (1909),  82  Conn.  24; 
s.  c,  79  Conn.  348,  65  Atl.  132  (1906),  80  Conn.  509,  60  Atl.  15;  Conti- 
nental Credit  Co.  v.  Ely  (1917)',  100  Atl.  435. 

/rfaAo.— Shellenberger  v.  Nourse  (1911),  20  Ida.  323,  118  Pac.  508; 
Park  v.  Johnson  (1911),  20  Ida.  548,  119  Pac.  52;  Park  v.  Brandt  (1911), 
20  Ida.  660,  119  Pac.  877;  Winter  v.  Hutchins  (1911),  20  Ida.  749,  119 
Pac.  883;  Brown  v.  Miller  (1912),  22  Ida.  307,  125  Pac.  981;  Southwest- 
ern Nat.  Bk.  of  Kansas  City  v.  Lindley  (1916),  158  Pac.  1082. 

////«o/.y.— Black  v.  Downes  (1912),  176  111.  App.  358;  Christina  v. 
Cuseniano   (1912),  129  III.  873,  57  So.  157. 

Indiana. — Farmers  Trust  Co.  v.  Sprowl,  126  N.  E.  81. 

lowa.—Keegan  v.  Rock  (1905),  128  Iowa  39,  102  N.  W.  805;  Mc- 
Knight  v.  Parsons  (1907),  136  Iowa  390,  113  N.  W.  858,  125  Am.  St. 
265;  Cox  v.  Cline  (1908),  139  Iowa  128,  117  N.  W.  48 ;  O'Connor  v. 
Kleiraan  (1909).  143  Iowa  435,  121  N.  W.  1088;  Citizen's  State  Bk.  v. 
Lankin  (1912),  134  N.  W.  882;  Bk.  of  Bushnell  v.  Buck  Bros.  (1913),  142 
N.  W.  1004:  Stotts  v.  Fawfield  (1914),  145  N.  W.  61;  First  Nat.  Bk. 
of  Shenandoah  v.  Hall   (1915),  169  Iowa  218,  151  N.  W.  120;  Perry  Sav. 


§    55  RIGHTS   OF    HOLDER.  505 

Bk.  V.  Fitzgerald,  167  Iowa  446,  149  N.  W.  477  (usury)  ;  LeClere  v. 
Philpot  (1915),  151  N.  W.  825;  Loos  v.  Callendar  Sav.  Bk.  (1916),  156 
N.  W.  712;  State  v.  Wegener  (1917),  162  N.  W.  1040;  German-Am.  Bk. 
V.  Kelley  (1918),  166  N.  W.  1053;  Lundean  v.  Hamilton,  159  N.  W. 
163;  Ford  v.  Ott,  173  N.  W.  121;  Plank  v.  Swift,  174  N.  W.  236;  Un- 
derwood V.  Leichtman,  176  N.  W.  683 ;  Rivella  v.  Faylor,  180  N.  W.  983. 

Kansas. — Underwood  v.  Quantie  (1911),  116  Pac.  361;  Bk.  of  Wilber 
V.  Freeburg  (1911),  84  Kans.  235;  Murchison  v.  Nies  (1912),  87  Kans. 
77;  The  Stock  Ex.  Bk.  v.  Wykes  (1913),  88  Kans.  750;  Ireland  v.  Shore 
(1914).  137  Pac.  926;  Farmers  Nat.  Bk.  of  Lincoln  v.   Francis    (1917), 

164  Pac.  146;  Rodgers  v.  Slaveno  (1917),  165  Pac.  655;  First  Nat.  Bk. 
V.  Stroup  (1919),  177  Pac.  836. 

Kentucky. — Laurence  v.  First  Nat.  Bank,  31  Ky.  Law  Rep.  318. 
102  S.  W.'324;  McAfee  v.  Mercer  Nat.  Bank,  31  Ky.  Law  Rep. 
863,  104  S.  W.  287;  Asbury  v.  Taube  (1912).  151  S.  W.  372;  Aluir  v. 
Edelen  (1913),  160  S.  W.  1048;  Gahren,  Dodge  &  Maltbv  v.  Parkers- 
burg  Nat.  Bk.  (1914),  162  S.  W.  1135;  Harrison  v.  Ford  (1914),  165 
S.  VV.  663 ;  Alexander  v.  Hazelrigg,  123  Ky.  Law  Rep.  1212,  97  S.  W.  353 ; 
Holzbog  V.  Barrow,  156  Ky.  161,  160  S.  W.  792,  50  L.  R.  A.  (N.  S.)  1023. 

Maryland.—Stoufier  v.  Alford  (1910),  114  Md.  110,  78  Atl.  387; 
American  Agriculture  Chemical  Co.  v.  Scringer  (1917),  100  Atl.  774; 
Spoerer  v.  Wehland  (1917),  100  Atl.  287,  130  Md.  226. 

Massachusetts.— Caldwell  v.  Nash  (1906),  190  Mass.  507;  Demelman 
V.  Brazier  (1907),  193  Mass.  588,  79  N.  E.  812;  demons  Elec.  Mfg. 
Co.  V.  Walton  (1910),  206  Mass.  215;  Lewiston  Trust  &  Safe  Dep. 
Co.  V.  Shackford  (1913),  213  Mass.  432;  Anthony  &  Cowell  Co.  v. 
Brown  (1913),  214  Mass.  439;  Palmbaum  v.  Magulsky  (1914),  104  N. 
E.  746. 

Michigan.— Fh-st  Nat.  Bk.  of  Durand  v.  Shaw  (1909),  157  Mich. 
192,  121  N.  W.  811,  Van  SIvke  v.  Rooks,  181  Mich.  88,  147  N.  W.  579;  J. 
D.  Gruber  Co.  v.  Smith  (1917),  162  N.  W.  124;  Loveland  v.  Bump  (1917). 

165  N.  W.  855;  People's  State  Bk.  v.  Miller,  185  Mich.  565,  152  N.  W.  257. 

Minnesota.— Thorpe  v.  Cooley  (1917),  165  N.  W.  265:  Snclling  St. 
Bank  v.  Clasen,  132  Minn.  404,  157  N.  W.  643;  First  Nat.  Bank  v.  Denfeld, 
173  N.  W.  661;  State  Bank  of  Rogers  v.  Missia,  175  N.  W.  614;  Alhrecht 
V.  Rathai,  —  ^linn.  — ,  185  N.  W.  259. 

Missouri. — Whitener  v.  Scoggins  (1910),  152  Mo.  App.  343;  Jobes  v. 
Wilson  (1910),  124  S.  W.  548;  Link  v.  Jackson  (1911),  158  Mo.  App. 
63,  139  S.  W.  588;  Birch  Tree  State  Bk.  v.  Dowler  (1912),  163  Mo.  65, 
145  S.  W.  843;  Hill  v.  Dillon  (1913),  161  S.  W.  881;  Bank  of  Polk  v. 
Wood  (1915),  173  S.  W.  1093;  Farmers'  Sav.  Bank  v.  Reed,  192  Mo 
App.  344,  180  S.  W.  1002;  Newburg  State  Bk.  v.  Heflin  (1915),  175 
S.  W.  297;  Miller  v.  People's  Sav.  Bk.  (1916),  186  S.  W.  547;  Ozark 
Motor  Co.  V.  Horton  (1917),  196  S.  W.  395;  Pioneer  Stock  Powder 
Co.  V.  Goodman  (1918),  201  S.  W.  576;  Morehead  v.  Cummins,  230  S 
W.  656. 

Montana.—Stzte  Bk.  of  Moore  v.  Forsythe  (1910),  41  Mont.  249; 
Northwestern  Imp.  Co.  v.  Rhoades,  52  Alont.  428,  158  Pac.  832. 


506  NEGOTIABLE    INSTRUMENTS.  §    55 

Nebraska.— Benton  v.  Sikyta,  84  Neb.  808,  122  S.  W.  60.  24  L.  R.  A. 
(N.  S.)  1057,  contra;  Bothcll  v.  Miller,  87  Neb.  835,  128  N.  W.  628; 
Bolew  V.  Wright  (1911),  89  Neb.  116,  131  N.  W.  185;  Ostenberg  v.  Kavka 
(1914),  145  N.  W.  713. 

New  Jersey.— Benstl  v.  Anderson  (1916),  96  Atl.  910. 

New  Mexico. — Bk  of  Commerce  v.  Broyles  (1911),  120  Pac.  670; 
First  Nat.  Bk.  of  Albuquerque  v.  Stover  (1916),  155  Pac.  905. 

New  York.—U.  Groh's  Sons  Co.  v.  Schneider  (1901),  34  Misc.  195. 
68  N.  Y.  Supp.  682;  Strickland  v.  Henry  (1901),  66  A.  D.  23,  73  N. 
Y.  Supp.  121 ;  Citizens  Bk.  of  Buffalo  v.  The  Rung  Furniture  Co. 
(1902),  76  A.  D.  471;  Sutherland  v.  Mead  (1903),  80  A.  D.  103,  80  N. 
Y.  Supp.  504;  Perth-Amboy  Mut.  Loan  Assn.  v.  Chapman  (1903),  80 
A.  D.  556;  Mitchell  v.  Baldwin  (1903),  88  A.  D.  265,  84  N.  Y.  Supp. 
1043;  Goetting  v.  Day  (1904),  87  N.  Y.  Supp.  510;  Schreyer  v.  Bailey 
&  Co.  (1904),  97  A.  D.  185;  Hamilton  Nat.  Bk.  v.  Upton  (1905).  100 
A.  D.  105;  Schlesinger  v.  Kelly  (1906),  114  A.  D.  546,  99  N.  Y.  Supp. 
1083;  Douglass  v.  Richards  (1906).  116  A.  D.  27;  Elliott  v.  Brady 
(1907),  118  A.  D.  208;  Peterson  v.  Alton,  147  N.  Y.  Supp.  280,  162  A. 
D.  21;  Schlesinger  v.  Gilhooly  (1907),  189  N.  Y.  1,  91  N.  E.  619;  Hor- 
\vitz  V.  Wollowitz  (1908),  59  Misc.  520,  110  N.  Y.  Supp.  972;  Munnich  v. 
Jaffe,  149  N.  Y.  Supp.  338,  164  A.  D.  30;  Schlesinger  v.  Lehmaier  (1908), 
191  N.  Y.  69,  83  N.  E.  657,  16  L.  R.  A.  (N.  S.)  626,  123  Am.  St.  591 ; 
Ward  V.  City  Tr.  Co.  (1908),  192  N.  Y.  61,  84  N.  E.  585;  Packard  v. 
Figlinolo  (1909),  114  N.  Y.  Supp.  753;  Klar  v.  Kostuk  (1909),  119  N.  Y. 
Supp.  683,  65  Misc.  Rep.  199;  Cluett  v.  Couture  (1910), 
140  A.  D.  830,  125  N.  Y.  Supp.  813;  Kennedy  v.  Spilks  (1911).  129  N.  Y. 
Supp.  390;  Broderick  &  Bascom  Rope  Co.  v.  McGrath  (1913).  142  N.  Y. 
Supp.  496,  81  Misc.  222;  Crusins  v.  Siegman.  142  N.  Y.  Supp.  348,  81 
Misc.  Rep.  357  (usury);  Lang  v.  Hudgens  (1913),  143  N.  Y.  Supp.  763, 
82  Misc.  388;  Waxberg  v.  Stappler  (1913),  83  Misc.  78,  144  N.  Y.  Supp. 
608;  Zivendling  v.  Kitrosser  (1914),  148  N.  Y.  Supp.  99;  Interboro 
Brewing  Co.  v.  Doyle  (1915).  151  N.  Y.  Supp.  325;  Olser  Co.  v.  Behrend, 
151  N.  Y.  Supp.  873,  89  Misc.  Rep.  391;  Kass  v.  Maisel  (1915).  155  N.  Y. 
Supp.  217;  Title  Guar.  &  Tr.  Co.  v.  Pam  (1915).  155  N.  Y.  Supp.  333; 
Siegel  V.  Kovinskv  (1916).  157  N.  Y.  Supp.  340;  Empire  Trust  Co.  v. 
President  and  Directors  Manhattan  Co.  (1917),  162  N.  Y.  Supp.  629; 
Aetna  Explosives  Co.  v.  Bassick  (1917),  163  N.  Y.  Supp.  917;  Garone  v. 
Russo  lodice  Realty  Co.  (1917),  164  N.  Y.  Supp.  135  Saline  v.  Paine.  151 
N.  Y.  Supp.  735.  166  A.  D.  93;  affirmed  223  N.  Y.  401,  119  N.  E.  849; 
Kennedy  v.  Heyman,  167  N.  Y.  Supp.  311;  Vogel  v.  Pyne,  189  N.  Y.  Supp, 
285. 

North  Carolina. — Johnston  Co.  Sav.  Bk.  v.  Chase  (1909),  151  N.  Car. 
108;  Hardy  v.  Mitchell  (1911).  156  N.  Car.  76,  72  S.  E.  95,  161  N.  Car. 
351;  Merchants  Nat.  Bk.  of  Indianapolis  v.  Branson  (1914),  81  S.  E. 
410;  A.  B.  Hunter  &  Co.  v.  Sherron  (1918),  97  S.  E.  5. 

North  Dakota.— Dr'm\<z\l  v.  Movius  State  Bk.  (1901),  11  N.  Dak.  10, 
118  A.  D.  10,  88  N.  W.  724;  Walters  v.  Rock  (1908),  18  N.  Dak.  45,  115 
N.  W.  511 ;  Am.  Nat.  Bk.  v.  Lundy  (1910),  21  N.  Dak.  167.  129  N.  W.  99; 
Bank  v.  Garcean  (1912).  22  N.  Dak.  576.  134  N.  W.  882;  McCartv  v.  Kep- 
veta  (1913),  139  N.  W.  992;  Dow  v.  Lillie  (1914),  144  N.  W.  1082;  Grebe 
V.  Swords  (1914),  149  N.  W,  126;  Com.  Security  Co.  v.  Jack  (19.15), 
150  N.  W.  460. 


§    55  RIGHTS   OF    HOLDER.  507 

O/iJo— Thompson  v.  Citizens  Nat.  Bk.  of  Adams  (1909),  Z2  O.  C.  C.  131 ; 
State  V.  Hill  (1916),  113  N.  E.  1045. 

0/?/a/!07»a.— Hudson  v.  Moore  (1913),  130  Pac.  774;  Jones  v.  Citizen's 
State  Bank  (1913),  135  Pac.  ZIZ;  Western  Ex.  Bk.  of  Kansas  City  v. 
Coleman  (1913),  132  Pac.  488;  Keisel  v.  Baldock  (1915),  154  Pac.  1194; 
Barry  v.  Kniseley  (1916),  155  Pac.  1168;  Phillips  v.  HarRardine-Mc- 
Kittrick  Co.  (1916),  159  Pac.  320;  Huston  v.  Domeuy  (1918),  173  Pac. 
805;  Daniels  v.  Bunch  (1918),  172  Pac.  1086;  Callahan  v.  Thurmond 
(1918),  172  Pac.  798;  State  v.  Emery,  174  Pac.  770;  LeRoy  v.  Meadows, 
—  Okla.  — ,  200  Pac.  858. 

Orc^ow.— Matlock  v.  Scheuerman  (1908),  51  Oreg.  49,  93  Pac.  823, 
17  L.  R.  A.  (N.  S.)  744;  Mills  v.  Keep  (1912),  197  Fed.  360;  Baldwin 
Co.  V.  Savage  (1916).  159  Pac.  80;  Rostad  v.  Thorsen  (1917),  163  Pac. 
423;  Wicks  v.  Metcalf  (1917),  163  Pac.  988;  Kohler  &  Chase  Co.  v. 
Savage  (1917),  167  Pac.  789. 

P ennsyh-ania. —S^zorvA  Nat.  Bk.  of  Pittsburg  v.  Hofifman  (1911),  229 
Pa.  St.  429,  78  Atl.  1002. 

Rhode  Island.— E:\\\  v.  Veloso  (1915),  31  R.  I.  160. 

South  Dakota.— Peterson  v.  Hoftiezer  (1915).  150  N.  W.  934;  First 
Nat.  Bank  v.  Saver,  35  S.  Dak.  581,  153  N.  W.  652. 

Tennessee.— Vnzka  Nat.  Bk.  of  Butler  (1904),  113  Tenn.  674,  83  S. 
W.  655. 

7e;ra.y.— Henderson  v.  McDaniel  (1916),  186  S.  W.  865. 

Utah.— Cole  Banking  Co  v.  Sinclair  (1908),  34  Utah  454,  98  Pac. 
411;  Leavitt  v.  Thurston  (1911),  38  Utah,  351,  113  Pac.  77. 

Virginia.— Ar2,gon  Coffee  Co.  v.  Rogers  (1906),  105  Va.  51;  Pen- 
nington V.  Third  Nat.  Bk.  of  Columbus,  Ga.  (1913),  77  S.  E.  455. 

Washington.— Yak\m2.  Valley  Bk.  v.  McAllister  (1905),  2,7  Wash.  566, 
79  Pac.  1119;  Nethercutt  v.  Hopkins  (1905),  38  Wash.  577,  80  Pac. 
798;  Keene  v.  Behan  (1905),  40  Wash.  505,  82  Pac.  884;  Hynes  v. 
Plastino  (1906),  45  Wash.  190,  87  Pac.  1127;  Moyses  v.  Bell  (1911), 
62  Wash.  534,  114  Pac.  193;  W^ells  v.  Duffy  (1912),  69  Wash.  310; 
Fournier  v.  Cornish  (1913),  133  Pac.  9;  Shultz  v.  Crewdson  (1917).  163 
Pac.  734;  West  Va.-Twentieth  Street  Bank  v.  Jacols,  74  W.  Va.  525.  82 
S.  E.  320  (gaming)  ;  Askridge  v.  Thomas  (W.  Va.),  91  S.  E.  7  (usury). 

Wisconsin.— The  New  Bank  of  Eau  Claire  v.  Kleiner  (1901),  112 
Wis.  287;  Hodge  v.  Smith  (1907).  130  Wis.  326.  110  N.  W.  192;  Auk- 
land  v.  Arnold  (1907),  131  Wis.  64;  Quiggle  v.  Herman  (1907),  131  Wis. 
379,  111  N.  W.  479;  Samson  v.  Ward  (1911),  147  Wis.  84,  132  N.  W.  629: 
Jones  V.  Brandt,  181  N.  W.  813. 

Wyoming.— Acme  Coal  Co.  v.  Northrup  Nat.  Bk.  of  lola  (1915),  146 
Pac.  593;  Holdsworth  v.  Blyth  &  Fargo  (1915),  23  Wyo.  52,  146  Pac. 
603,  146  Pac.  603. 

United  States.— Wood  v.  Babbitt  (1907),  149  Fed.  818;  Wirt  v.  Stub- 
ble fieM  (1900),  17  App.  D.  C.  283;  Crosby  v.  Reynolds  (1912),  196  Fed. 
640;  Yates  Nat.  Bk.  v.  Lauber   (1915),  240  Fed.  237;  Patten  v.  Duntlcy 


508  NEGOTIABLE    INSTRUMENTS.  §    56 

(1915),  227  Fed.  381  (C.  C.  A.  7th  Ct.)  ;  Bk.  of  Morehead  v.  Hernig 
(1908),  220  Pac.  224;  Cutler  v.  Fray  (1917),  240  Fed.  238;  Yates  Center 
Nat.  Bk.  V.  Schaede  (1917),  240  Fed.  240. 

§  56.  What  constitutes  notice  of  defect.  To  constitute 
notice  of  an  infirmity  in  the  instrument  or  defect  in  the  title  of 
the  person  negotiating  the  same,  the  person  to  whom  it  is  nego- 
tiated must  have  had  actual  knowledge  of  the  infirmity  or  de- 
fect, or  knowledge  of  such  facts  that  his  action  in  taking  the 
instrument  amounted  to  bad  faith,*'  ** 

See  text,  §  129. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Facts  which  if  followed  will  show  defect  may  charge  purchaser  with 
knowledge.     Elmore  Co.  Bank  v.  Avant.  189  Ala.  418,  66  So.  509. 

Correspondence  as  to  other  notes  not  notice  of  defect.  Neil  v.  Cen- 
tral Nat.  Bank,  —  Ala.  — ,  78  So.  IZ. 

Purchaser  not  required  to  make  investigation  without  notice.  Ellis 
V.  First  Nat.  Bank,  —  Ariz.  — ,  172  Pac.  281. 

Delivery  as  collateral  security  as  being  notice  of  defect.  Burnham 
Loan  &  Investment  Co.  v.  Sethman,  —  Colo.  — ,  171  Pac.  884. 

Bank  has  no  notice  of  defects  although  president  is  director  of  com- 
pany making  note  where  the  president  of  bank  had  no  knowledge  of  re- 
newal agreement.  First  National  Bank  v.  Fairfield  Auto  Co.  (Conn.), 
99  Atl.  577. 

Negligence  may  not  always  prevent  recovery  by  indorsee,  Hutchins 
V,  Langley,  27  App.  D.  C.  234. 

Condition  for  return  of  notes  given  if  company  not  organized  is  bind- 
ing on  indorsee  who  had  knowledge.  Sumter  Co.  State  Bank  v.  Hays, 
(A  Fla.  473,  67  So.  109. 

Partial  payment  indorsements  as  of  date  of  issue  do  not  always  put 
purchaser  on  notice.     Bland  v.  Fidelity  Trust  Co.   (Fla.),  71  So.  630. 

Wilful  ignorance  of  facts  shows  bad  faith.  Park  v.  Brandt,  20  Idaho 
660.  119  Pac.  877. 

Good  faith  is  question  for  jury.  Winter  v.  Hutchins,  20  Idaho  749, 
119  Pac.  883. 

Notice  of  crookedness  in  other  transactions  does  not  control  an  other- 
wise bona  fide  purchase.    Vaughan  v.  Brandt,  21  Idaho  628,  123  Pac.  191. 

Judgment  for  defendant  reversed  where  uncontradicted  evidence 
showed  plaintiff's  good  faith.  Southwest  Nat.  Bank  v.  Baker,  23  Idaho 
428,  130  Pac.  799. 

Care  necessary  on  part  of  purchaser  to  show  good  faith.  Burdell  v. 
Nereson,  28  Idaho  129,  152  Pac.  576. 

Inquirv  as  to  partner's  authority  to  use  partnership  note  for  individual 
purposes.'  Rcdfield  v.  Wells,  —  Idaho  — ,  173  Pac.  640. 

Good  faith  implies  honest  intent.  Schintz  v.  American  Trust  &  Sav. 
Bk.,  152  111.  App.  76. 

To  defeat  holder  it  must  be  shown  that  he  took  in  bad  faith.  First 
Nat.  Bank  v.  Garner,  —  Ind.  — ,  119  N.  E.  711. 

When  evidence  has  tendency  to  show  fraud  burden  is  on  indorsee  and 


§    56  RIGHTS   OF    HOLDER.  509 

it  becomes  a  jury  question.     McNight  v.  Parsons,  136  Iowa  390,  113  N. 
W.  858,  22  L.  R.  A.  (N.  S.)  718,  15  Ann.  Cas.  665. 

Purchaser  who  suspects  a  defense  must  investigate.  Iowa  Nat.  Bank 
V.  Carter,  144  Iowa  715,  123  N.  W.  237. 

Rule  as  to  actual  notice  is  same  as  at  common  law.  Arnd  v.  Ayles- 
worth,  145  Iowa  185,  123  N.  W.  1000,  29  L.  R.  A.  (N.  S.)  638. 

Wilful  neglect  or  gross  carelessness  show  bad  faith.  Farmers  and 
Merchants  Bank  v.  Shaffer  (Iowa),  147  N.  W.  851. 

When  court  may  direct  verdict  for  holder  of  note  procurred  by  fraud 
of  transferor.  German-American  Nat.  Bank  v.  Kelley  (Iowa),  166  N. 
W.  1053. 

To  charge  indorsee  with  defective  title  through  fraud  it  must  be 
shown  he  had  notice  of  the  fraud  at  time  of  purchase.  Ford  v.  Ott,  ■ — 
Iowa  — ,  173  N.  W.  121. 

Where  purchase  at  less  than  one-third  value  shows  knowledge  of 
defect.    Underwood  v.  Leichtman,  —  Iowa  — ,  176  N.  W.  683. 

Denial  by  indorsee  of  knowledge  or  notice  of  fraud  is  sufficient. 
Bothwell  V.  Corum,  135  Ky.  766,  123  S.  W.  291. 

Payment  of  one-third  for  note  may  not  prove  bad  faith  purchase. 
Ham  V.  Merritt,  150  Ky.  11.  149  S.  W.  1131. 

Discount  of  one-fourth  does  not  of  necessity  charge  purchaser  with 
knowledge  of  fraud  in  procuring  same.  Pratt  v.  Rounds,  160  Ky.  358, 
169  S.  W.  848. 

Note  payable  to  guardian  discounted  and  funds  placed  to  credit  of  indi- 
vidual account  by  bank  is  notice  to  bank.  Taylor  v.  Harris*  Admr.,  164 
Ky.  645,  176  S.  W.  168. 

Purchaser  with  notice  of  infirmity  afTects  his  right  of  recovery  as  well 
as  the  payee.  Eichberg  v.  Board  of  Education,  165  Ky.  814,  178  S.  W. 
1075. 

Purchaser  must  have  such  knowledge  as  will  amount  to  bad  faith  to 
constitute  notice  of  defect.  Mechanic's  Sav.  Bank  v.  Berry,  —  Me.  — , 
111  Atl.  533. 

Purchaser  without  notice  of  payee's  failure  to  carry  out  executory 
agreement  may  recover.  Black  v.  Bank  of  Westminster,  96  Md.  399, 
54  Atl.  88. 

Suspicious  circumstances  may  not  prevent  recovery.  Valley  Savings 
Bank  v.  Mercer,  97  Md.  458,  55  Atl.  435. 

Check  payable  to  one  as  "attorney"  is  negotiable.  First  Denton  Nat. 
Bank  v.  Kennedy,  116  Md.  124,  81  Atl.  227,  Ann.  Cas.  1913B,  1337. 

Presentation  of  note  indorsed  in  blank  does  not  constitute  notice  of 
defects.    Mass.  Nat.  Bank  v.  Snow,  187  Mass.  159,  72  N.  E.  959. 

Where  one  deposits  in  his  own  account  a  check  to  him  as  trustee, 
he  having  no  trust  account,  does  not  put  bank  on  notice.  Batchelder  v. 
Central  Nat.  Bk.,  188  Mass.  25,  7Z  N.  E.  1024. 

Where  creditor  takes  checks  in  good  faith  indorsed  to  him  by  treas- 
urer of  corporation,  individually,  which  were  issued  to  the  treasurer,  the 
creditor  has  no  notice.  Fillebrow  v.  Hayward,  190  Mass.  472,  77  N. 
E.  45. 

City  may  recover  money  paid  upon  a  check  by  its  treasurer  to  his 
creditor.  Newburyport  v.  Fidelity  Insurance  Co.,  197  Mass.  596,  84  N 
E.  111. 

Intiorsees  of  check  on  city  given  by  its  treasurer  in  payment  of  indi- 
vidual debts  liable  for  moneys  had  and  received.  City  of  Newburyport 
v.  Spear,  204  Mass.  146,  90  N.  E.  522. 


510  NEGOTIABLE    INSTRUMENTS.  §    56 

Question  of  good  faith  not  raised  where  treasurer  issued  corporate 
checks  to  his  creditor.  Johnson-Kittell  Co.  v.  Longley  Luncheon  Co., 
207  Mass.  52,  92  N.  W.  1035. 

Town  treasurer's  authority  to  indorse  check  payable  to  town  is  lim- 
ited to  deposit  for  collection  only.  Franklin  Sav.  Bank  v.  International 
Trust  Co.,  215  Mass.  231,  102  N.  E.  363. 

Bank  not  put  upon  inquiry  by  action  of  treasurer  of  town  who  forged 
note.  City  of  Newburyport  v.  First  Nat.  Bank,  216  Mass.  304,  103  N.  E. 
782. 

Check  payable  to  treasurer  of  town  puts  all  persons  upon  notice  that 
he  can  not  indorse  it  for  circulation.  Quincy  Mut.  Fire  Ins.  Co.  v.  Inter- 
national Trust  Co.,  217  Mass.  370,  104  N.  E.  845,  L.  R.  A.  (N.  S.)  1915B 
725. 

.    Notice  that  something  is  wrong  is  sufficient  to  show  bad  faith.     Paika 
V.  Perry,  225  Mass.  563,  114  N.  E.  830. 

Plaintiff's  undisputed  evidence  as  to  good  faith  is  not  question  for 
jury.    Van  Slyke  v.  Rooks,  181  Mich.  88,  147  N.  W.  579. 

President's  personal  check  on  his  own  bank  does  not  give  notice  of 
overdraft.     Pope  v.  Ramsay  Co.  State  Bank  (Minn.),  162  N.  W.  1051. 

What  circumstances  constitute  notice  of  defect.  First  Nat.  Bank  v. 
Anderson,  —  Minn.  — ,  175  N.  W.  544. 

Knowledge  that  cashier  is  using  bank  funds  for  personal  purposes 
shows  bad  faith.  St.  Charles  Savings  Bank  v.  Edwards,  243  Mo.  App. 
553,  147  S.  W.  978. 

Corporation  check  drawn  by  officer  in  payment  of  his  debt  puts 
creditor  upon  inquiry.  Reynolds  v.  Title  Guaranty  Trust  Co.  (Mo.  App.), 
189  S.  W.  33. 

Signing  of  company  check  by  officer  in  presence  of  payee  creditor 
puts  payee  upon  inquiry.  Coleman  v.  Stocke,  159  Mo.  App.  43,  139 
S.  W.  216. 

Purchaser  need  not  know  all  particulars  to  be  guilty  of  bad  faith. 
Ozark  Motor  Co.  v.  Horton  (Mo.  App.),  196  S.  W.  395. 

Actual  knowledge  as  notice  of  defect.  Mechanics  American  Nat. 
Bank  v.  Helmbacher,  199  Mo.  App.  173. 

Indorsee  is  holder  in  due  course  where  he  had  no  knowledge  as  to 
defenses.    Swift  &  Co.  v.  McFarland,  —  Mo.  App.  — ,  231  S.  W.  65. 

Where  pledgee  had  no  knowledge  of  pledgor's  lack  of  authority,  he  is 
not  bound  by  fact  that  bonds  are  municipal  bonds  payable  to  bearer. 
Borough  of  Montvale  v.  People's  Bank,  74  N.  J.  Law  464,  67  Atl.  67. 

Plausible  explanation  of  erasure  at  time  of  purchase  may  make  pur- 
chaser holder  in  due  course.     Goetting  v.  Day,  87  N.  Y.  Supp.  510. 

Purchase  at  one-half  within  six  weeks  of  maturity  sufficient  to  send 
question  of  good  faith  to  jury.  Becker  v.  Hart,  135  App.  Div.  785,  120 
N.  Y.  Supp.  270. 

Trust  company  taking  check  on  itself  in  payment  of  debt  of  president 
of  company  issuing  the  check  is  put  upon  inquiry.  Lanning  v.  Trust  Co. 
of  America,  137  App.  Div.  722,  122  N.  Y.  Supp.  485. 

Check  signed  by  guardian  gives  constructive  notice  of  payment  from 
trust  funds.  Empire  State  Surety  Co.  v.  Nelson,  141  App.  Div.  850,  126 
N.  Y.  Supp.  453. 

Checks  indorsed  by  corporation  by  its  president  who  has  no  author- 
ity to  indorse  puts  bank  where  deposited  upon  inquiry.  Niagara  Woolen 
Co.  V.  Pacific  Bank,  141  App.  Div.  265,  126  N.  Y.  Supp.  890. 

Where  inquiry  if  made  would  show  apparent  authority  for  partnership 
manager  to  appropriate  proceeds  of  check  to  individual  use  it  is  no  de- 


§    56  RIGHTS   OF    HOLDER.  511 

fense  that  inquiry  was  not  made.  Buckley  v.  Lincoln  Co.,  72  Misc.  Rep. 
218,  131  N.  Y.  Supp.  105. 

Indorsee  put  upon  inquiry  by  notes  payable  to  vice-president  of  cor- 
poration and  signed  by  him  as  vice-president  for  the  corporation.  Neu- 
man  v.  Neuman,  160  App.  Div.  331,  145  N.  Y.  Supp.  325. 

Notice  given  by  form  of  indorsement  calls  for  reasonable  inquiry. 
Fensterer  v.  Pressurde  Lighting  Co.,  85  Misc.  Rep.  621,  149  N.  Y. 
Supp.  49. 

Suspicious  explanation  of  words  on  a  check  put  indorsee  upon  inquiry. 
Monk  V.  Twenty-Third  Ward  Bank,  165  N.  Y.  Supp.  1055. 

When  fact  that  payee  is  director  of  corporation  does  not  put  pur- 
chaser upon  inquiry.  Orr  v.  South  Amboy  Terra  Cotta  Co.,  113  App. 
Div.  103,  98  N.  Y.  1026. 

President's  indorsement  of  check,  payable  to  his  corporation,  in  pay- 
ment of  his  debt  gives  notice  of  misuse.  Ward  v.  City  Trust  Co.,  192 
N.  Y.  61,  84  N.  E.  585. 

Note  signed  by  executors  of  estate  gives  notice  of  payment  to  be  made 
from  trust  funds.     Squire  v.  Ordemann,  194  N.  Y.  394,  87  N.  E.  435. 

Bank  held  agent  of  railroad  in  determining  whether  checks  by  latter's 
treasurer  to  himself  and  having  acted  in  good  faith  could  not  be  pro- 
ceeded against  by  railroad.  Havana  Central  Railroad  Co.  v.  Knicker- 
bocker Trust  Co.,  198  N.  Y.  422,  92  N.  E.  12,  L.  R.  A.  1915B  720,  27 
B.  L.  J.  51. 

Sufficiency  of  evidence  to  show  bad  faith  discount.  Ironbound  Trust 
Co.  V.  Schmidt-Dauber  Co.,  169  N.  Y.  S.  524. 

Knowledge  necessary  to  give  notice  of  defense.  Morris  v.  Muir,  181 
N.  Y.  S.  913. 

Circumstances  as  giving  notice  of  defective  title.  Vogel  v.  Pyne,  189 
N.  Y.  Supp.  285. 

Purchase  by  one  who  suspects,  but  fails  to  investigate  to  see  if  defense 
exists  is  not  purchaser  in  good  faith.  Walter  v.  Rock  (N.  D.),  115  N. 
W.  511. 

Taking  one  of  series  of  notes  after  part  are  due  as  notice  of  defective 
title.    LeRoy  v.  Meadows,  —  Okla.  — ,  200  Pac.  858. 

When  bank  liable  to  surety  on  guardian's  bond  for  permitting  the  lat- 
ter to  draw  trust  funds  on  individual  checks.  U.  S.  Fidelitv,  etc.,  Co.  v. 
U.  S.  Nat.  Bank,  80  Ore.  361,  157  Pac.  155.  L.  R.  A.  1916E.'  610. 

Circumstances  surrounding  purchase  may  or  may  not  show  bad  faith 
and  present  a  question  for  jury.  Everding  v.  Toft,  82  Ore.  1,  160  Pac. 
1160. 

Showing  necessary  as  to  defect  of  title.    Hill  v.  McCrow,  88  Ore.  299. 

Notice  rule  applies  to  all  classes  of  persons.  Cox  &  Sons  Co.  v. 
North  Brewing  Co..  245  Pa.  418,  91  Atl.  859.  Ann.  Cas.  1916A  86. 

Corporation  check  given  by  employee  in  payment  of  latter's  debt  puts 
payee  upon  inquiry.    Sheer  v.  Hall  &  Lyon  Co.,  36  R.  I.  47,  88  Atl.  801. 

Acts   which   constitute  notice.     Ochsenreiter  v.   Block,   —   S.   D.   — , 

173  N.  w.  ne. 

Loser  of  check  indorsed  in  blank  can  not  recover  from  drawee  bank 
who  has  paid  to  holder  in  due  course  after  notice  of  loss.  Unaka  Nat. 
Bank  v.  Butler,  113  Tenn.  574.  83  S.  W.  655. 

Certificate  of  deposit  payable  to  one  as  trustee  gives  notice  to  pur- 
chaser.   Ford  V.  Brown,  114  Tenn.  467.  88  S.  W.  1036. 

Note  negotiable  in  form  is  good  in  hands  of  holder  in  due  course  al- 
though not  enforcible  by  payee  because  of  ultra  vires  purposes  of  issue. 


512  NEGOTIABLE    INSTRUMENTS.  §    56 

Jefferson  Bank  v.  Chapman-White  Lyons  Co.,  122  Tenn.  215,  123  S.  W. 
641. 

When  presumption  of  knowledge  not  raised  by  disccunt  of  $200  to 
$400.     Miller  v.  Marks,  46  Utah  227,  148  Pac.  412. 

Payment  of  one-half  on  note  payable  in  inaccessible  place  in  absence  of 
other  evidence  of  bad  faith  is  not  sufficient  to  show  bad  faith  purchase. 
McNamara  v.  Jose,  28  Wash.  461,  68  Pac.  903. 

Insufficiency  of  property  mortgaged  to  secure  note  to  pay  same  does 
not  put  purchaser  upon  inquiry.  Barker  v.  Sartori,  66  Wash.  260,  119 
Pac.  611. 

Written  agreement  for  discharge  of  note  on  return  of  automobile  not 
inadmissible  in  evidence  as  contradicting  note.  Washington  Trust  Co. 
V.  Keyes,  79  Wash.  61,  139  Pac.  638,  Ann.  Cas.  1916A,  279. 

Large  discount  purchases  may  put  purchaser  upon  inquiry.  Moore  & 
Co.  V.  Burling,  93  Wash.  217,  160  Pac.  420. 

Holder  in  due  course  not  bound  by  payee  creditors  accepting  a  check 
signed  by  an  officer  of  a  company  in  payment  of  his  individual  debt.  Nat. 
City  Bank  v.  Shelton  Electric  Co.,  96  Wash.  74,  164  Pac.  933. 

Purchase  with  intent  to  collect  or  enforce  payment  before  real  date 
of  note  which  was  erroneously  dated  is  evidence  of  bad  faith.  Naylor 
V.  Lovell,  —  Wash.  — ,  186  Pac.  855. 

Actual  knowledge  as  to  defects  is  notice.  Larsen  v.  Betcher,  — 
Wash.  — ,  195  Pac.  27. 

What  necessary  to  constitute  notice  of  defect.  Guaranty  Security  Co. 
V.  Coad,  —  Wash.  — ,  195  Pac.  22. 

Holder  in  due  course  with  knowledge  that  note  given  for  definite 
land  at  definite  price  is  not  charged  with  knowledge  of  failure  of  title 
or  shortage  of  guarantv.  Dollar  Savings  &  Trust  Co.  v.  Crawford,  69 
W.  Va.  109,  70  S.  E.  1089,  33  L.  R.  A.   (N.  S.)  587. 

Plaintiff's  knowledge  that  treasurer  of  corporation,  who  was  payee  of 
note  indorsed,  was  also  member  of  partnership  from  whom  he  received 
note  affects  the  plaintiff's  title.  Pelton  v.  Spider  Lake  Co.,  132  Wis. 
219,  112  N.  W.  29,  122  Am.  St.  Rep.  963. 

Creditor  has  notice  of  defects  when  he  takes  corporation  check  signed 
by  his  debtor  as  officer  thereof.  Kipp  v.  Smith,  137  Wis.  234,  118  N.  W. 
484. 

When  bank  charged  with  notice  of  ward's  rights  as  to  check  endorsed 
by  guardian.     Brovan  v.  Kyle   (Wis.),  165  N.  W.  383. 

When  knowledge  that  treasurer  and  president  of  corporation  were 
members  of  firm  negotiating  corporate  notes,  did  not  affect  transfer.  In  re 
Troy  &  Cohoes  Shirt  Co.,  136  Fed.  Rep.  420. 

Bank  held  not  the  agent  of  corporate  depositor  to  pass  upon  validity 
of  checks.  Havana  Central  Railroad  Co.  v.  Central  Trust  Co.,  204  Fed. 
Rep.  546,  123  C.  C.  A.  72.  L.  R.  A.  1915B,  715. 

Offering  note  for  sale  before  maturity  in  a  state  other  than  where 
made  does  not  put  purchaser  upon  inquiry.  Bison  State  Bank  v.  Billing- 
ton,  228  Fed.  Rep.  116,  142  C.  C.  A.  522. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  .states,  where  this  section  has  been  construed: 

Alaba^na. —E\more  Co.  Bk.  v.  Avant  (1914),  189  Ala.  418,  66  So.  509; 
Shcrrill  v.  Merch.  &  Mech.  Tr.  &  Sav.  Bk.  (1916),  70  So.  723;  Sample 
V.  Tennessee  Valley  Bank  (Ala.),  76  So.  936;  Neill  v.  Central  Nat.  Bank, 
78  So.  73. 


§    56  RIGHTS   OF    HOLDER.  513 

Arisona.—EU\s  v.  First  Nat.  Bk.  (1918),  172  Pac.  281;  Phoenix 
Safety  Inv.  Co.  v.  Michaels  (1919),  176  Pac.  587;  Ellis  v.  First  Nat. 
Bank,  172  Pac.  281. 

Arkansas— KcaiWey  v.  Holland  Banking  Co.  (1914),  166  S.  W.  935; 
Pinson  v.  Cobl)  (1914),  166  S.  W.  943;  Little  v.  Arkansas  Nat.  Bk. 
(1914),  167  S.  W.  75;  Hamburg  Bank  v.  Ahrens  (1915),  177  S.  W. 
14;  Morehead  v.  Harris  (1916),  182  S.  W.  521;  Holland  Banking  Co.  v. 
Booth,  121  Ark.  171,  180  S.  W.  978;  Manley  Carriage  Co.  v.  Fowler  & 
Hill  (1917),  194  S.  W.  708. 

Colorado.— First  Nat.  Bk.  of  Iowa  City  v.  Smith  (1913),  136  Pac. 
460;  Wedge  Mines  Co.  v.  Denver  Nat.  Bk.  (1903),  19  Colo.  App.  182,  73 
Pac.   873;   Burnham   Investment   Co.  v.   Sethman    (1918),   171    Pac.  884 

Connecticut.— Tice  v.  Moore  (1909),  82  Conn.  244,  73  Atl.  133 
Johnson  Co.  Sav.  Bk.  v.  Walker  (1909),  82  Conn.  24;  s.  c,  79  Conn 
348,  65  Atl.  132  (1906),  80  Conn.  509,  69  Atl.  15;  First  Nat.  Bk.  v 
Fairfield  Auto  Co.  (1917),  99  Atl.  577. 

Florida. — Jones  v.  The  Manitowoc  Shipbuilding  &  Dry  Dock  Co. 
(1913)  65  Fla.  467;  Bland  v.  Fidelity  Tr.  Co.  (1916),  71  So.  630;  Bass  v. 
Lee  (1917),  74  So.  7. 

Idaho.— Winter  v.  Nobs  (1910),  9  Ida.  18,  112  Pac.  525;  Shellenber- 
ger  V.  Nourse  (1911),  20  Ida.  323,  118  Pac.  508;  Park  v.  Johnson   (1911), 

20  Ida.  548,  119  Pac.  52;  Park  v.  Brandt  (1911),  20  Ida.  660.  119  Pac. 
877;  Vaughan  v.  Johnson  (1911).  20  Ida.  669.  119  Pac.  879;  Winter  v. 
Hutchins   (1911),  20  Ida.  749,  119  Pac.  883;  Vaughan  v.   Brandt    (1912), 

21  Ida.  628,  123  Pac.  191;  McCarty  v.  Lowry  (1912),  123  Pac.  943;  Red- 
field  V.  Wells  (1918),  173  Pac.  640;  Burdell  v.  Nereson,  28  Ida.  129,  152 
Pac.  576. 

///mo/.y.— Schintz  v.  Am.  Tr.  &  Sav.  Bk.  (19C9),  152  PI.  App.  76; 
Peterson  v.  Emery  (1910).  154  111.  App.  294;  First  Nat.  Bk.  of  Mat- 
toon  V.  Seass  (1910),  158  III.  App.  122;  Black  v.  Downes  (1912).  176 
111.  App.  358;  Christina  v.  Cuseniano  (1912),  129  111.  873,  57  So.  157; 
Richter  v.  Burdock  (1913),  257  111.  410,  100  N.  E.  1063. 

Indiana.— Bright  Nat.  Bk.  v.  Kartman  (1915),  109  N.  E.  846;  Boxell 
V.  Bright  Nat.  Bk.  of  Flora  (1916),  110  N.  E.  962;  Parker  v.  Hickman 
(1916),  111  N.  E.  649;  Miami  Co.  Bank  v.  State,  61  Ind.  App.  360,  112 
N.  E.  40;  First  Nat.  Bank  v.  Garner,  119  Ind.  711. 

Iowa.— J ohnsor\  v.  Buffalo  Bank,  134  Iowa  731,  112  N.  W.  165  Mc- 
Knight  v.  Parsons  (1907),  136  Iowa  390,  113  N.  W.  858,  125  Am.  St. 
Rep.  265;  Iowa  Nat.  Bk.  v.  Carter  (1909),  144  Iowa  715,  123  N.  W.  237, 
.^rnd  V.  Aylesworth  (1909),  145  Iowa  185,  123  N.  W.  1000; 
Citizen's  State  Bk.  v.  Lankin  (1912),  134  N.  W.  882  Farmer's  &  Mech. 
State  Bk.  v.  Shaffer  (1914),  147  N.  W.  851;  Stotts  v.  Fawfield  (1914). 
145  N.  W.  61;  Higby  v.  Bahrenfus  (1917),  163  N.  W.  247;  Limdeau 
V.  Flamilton  (1918),  169  N.  W.  208;  German-American  Nat.  Bank  v. 
Kelley,  166  N.  W.  1053;  Ford  v.  Ott,  173  N.  W.  121;  Underwood  v. 
Leichtman,  176  N.  W.  683. 

Katisas.—Yonh  v.  Fosha  (1907),  76  Kans.  20,  90  Pac.  1090;  People's 
Bk.  of  Minneapolis  v.  Reid  (1912),  120  Pac.  339;  Murchison  v.  Nies 
(1912),  87  Kans,  77;  Ireland  v.  Shore   (1914),  137  Pac.  926;  First  Nat. 


514  NEGOTIABLE   INSTRUMENTS.  §  56 

Bk.  of  Elk  City  v.  Dikeman  (1915),  153  Pac.  559;  Elmo  State  Bk.  v. 
Hildebrand  (1919),  177  Pac.  6;  Oscar  Schmidt,  Inc.  v.  Benedict  (1919), 
178  Pac.  444. 

Kentucky.— Layjrson  v.  First  Nat.  Bk.  of  Fulton  (1907),  31  Ky.  L. 
318,  102  S.  W.  324;  Chateau  Tr.  &  Banking  Co.  v.  Smith  (1909),  133 
Ky.  418,  118  S.  W.  279;  Bothwell  v.  Corum  (1909),  135  Ky.  767,  123 
S.  W.  291;  Childs  v.  Billiter  (1911),  137  S.  W.  795;  Am.  Nat.  Bk.  v. 
Madison  (1911),  144  Ky.  152,  137  S.  W.  1076;  Ham  v.  Merritt  (1912), 
150  Ky.  11,  149  S.  W.  1131;  Asbury  v.  Taube  (1912),  151  S.  W.  372 
Citizens  Bk.  v.  Crittenden  Record-Press  (1912),  150  Ky.  634;  Pratt  v. 
Rounds,  160  Ky.  358,  169  S.  W.  848 ;  Gahren,  Dodge  &  Maltby  v.  Parkers- 
burg  Nat.  Bk.  (1914),  62  S.  W.  1135;  Elk  Valley  Coal  Co.  v.  Third 
Nat.  Bk.  of  Lexington  (1914),  163  S.  W.  766;  Riehm  v.  111.  Tr.  &  Sav. 
Bk.  (1915),  176  S.  W.  32;  Harrison  v.  Ford,  158  Kv.  467,  165  S.  W.  663; 
Cit.  Tr.  &  Guar.  Co.  v.  Hays  (1915),  167  Ky.  560,  180  S.  W.  811;  Eich- 
berg  V.  Board  of  Education  (1915),  165  Ky.  814,  178  S.  W.  1075;  Bank 
of  Willard  v.  Pennsylvania  &  Ky.  Firebrick  Co.  (1917),  194  S.  W.  110; 
Citizens'  State  Bk.  of  Greenup  v.  Johnson  County  (1919),  207  S.  W.  8; 
Farmers  Bank  of  Lynnville  v.  First  Nat.  Bank,  164  Ky.  548,  175  S.  W. 
1019. 

Louisiana.— WoU  v.  Zachary  &  N.  E.  R.  Co.  (1911),  128  La.  1092,  55 
So.  685;  Dreyfuss  v.  Papalia  (1918),  78  So.  843;  A.  Marx  &  Sons  v. 
Frey,  137  La.  948. 

Maine. — Mechanic's  Savings  Bank  v.  Berry,  111  Atl.  533. 

Maryland.— Bhck  v.  Bank  of  Westminster  (1903),  96  Md.  399,  54 
Atl.  88;  Valley  Sav.  Bk.  v.  Mercer  (1903),  97  Md.  458,  55  Atl.  435; 
Weant  v.  Southern  Tr.  &  Dep.  Co.  (1910),  112  Md.  463,  77  Atl.  289; 
Wilson  V.  Kelso  (1911),  115  Md.  162,  80  Atl.  895;  Zielian  v.  Baltimore 
Plate  Ice  Co.  (1911),  115  Md.  658,  81  Atl.  22;  Denton  Nat.  Bk.  v.  Ken- 
nedy (1911),  116  Md.  124,  81  Atl.  227. 

Massachusetts.— Mass.  Nat.  Bk.  v.  Snow  (1905),  187  Mass.  li)9.  72 
N.  E.  959;  Fillebrown  v.  Hayward  (1906),  190  Mass.  472,  77  N.  E.  45; 
Batchelder  v.  Central  Nat.  Bk.,  188  Mass.  25,  73  N.  E.  1024;  Bass  v. 
Inhabitants  of  Wellesley  (1906),  192  Mass.  526;  City  of  Newburyport  v. 
Fid.  Mut.  L.  Ins  Co.  (1908),  197  Mass.  596,  84  N.  E.  Ill;  Fiegenspan  v. 
McDonnell  (1909),  201  Mass.  341,  87  N.  E.  624;  City  of  Newburyport  v. 
Spear  (1910),  204  Mass.  146;  Ford  v.  Shapiro  (1910),  207  Mass.  108; 
Johnson-Kittell  Co.  v.  Langley-Luncheon  Co.,  207  Mass.  52,  92  N.  W. 
1035;  Brown  v.  Newburyport  (1911),  209  Mass.  259;  Broadway  Nat.  Bk. 
of  Chelsea  v.  Hefferman  (1915),  107  N.  E.  921;  Paika  v.  Perry  (1917), 
225  Mass.  563.  114  N.  E.  830;  Allen  v.  Fourth  Nat.  Bank.  224  Mass.  239, 
112  N.  E.  650;  City  of  Newburyport  v.  First  Nat.  Bank,  216  Mass.  304, 
103  N.  E.  782;  Quincy  Mut.  Fire  Ins.  Co.  v.  International  Trust  Co.,  217 
Mass.  370,  104  N.  E.  845,  L.  R.  A.  (N.  S.)  1915B;  Kendall  v.  Fidelity 
Trust  Co.   (Mass.),  119  N.  E.  861. 

Michigan.— Hakes  v.  Thayer  (1911).  165  Mich.  478.  131  N.  W.  174; 
Van  Slyke  v.  Rooks  (1914),  147  N.  W.  579;  Stevens  v.  Venema  (1918), 
168  N.  W.  531. 

Minnesota.— Tope  v.  Ramsey  Co.  State  Bk.  (1917),  162  N.  W.  1051; 
State  Bank  of  Morton  v.  Adams  (1919),  170  N.  W.  925;  First  Nat, 
Bank  v.  Anderson,  175  N.  W.  544. 


§  56  RIGHTS   OF    HOLDER.  515 

Missouri.— Chitwood  v.  Hatfield  (1909),  136  Mo.  App.  688;  Burchett 
V.  Fink  (1909),  139  Mo.  App.  381;  Johnson  Co.  Sav.  Bk.  v.  Redfearn 
(1910),  141  Mo.  App.  386;  Reeves  v.  Litts  (1910),  143  Mo.  App.  196.  128 
S.  W.  246;  Settles  v.  Moore  &  Scobee  (1910),  149  Mo.  App.  724;  Hill 
V.  Dillon  (1910),  151  Mo.  App.  86;  Coleman  v.  Stocke  (1911),  159 
Mo.  App.  43,  139  S.  W.  216;  Link  v.  Jackson  (1911),  158  Mo.  App. 
63.  139  S.  W.  588;  St.  Qiarles  Sav.  Bk.  of  Edwards  (1912),  243  Mo. 
553,  147  S.  W.  978;  Hill  v.  Dillon  (1913),  161  S.  W.  881;  Southwest 
Bk.  of  Kansas  City  v.  House  (1913),  157  S.  W.  809;  State  Bk.  of  Free- 
port  V.  Cape  Girardeau  &  C.  R.  Co.  (1913),  155  S.  W.  1111;  Farmers 
Sav.  Bk  V.  Reed  (1915),  180  S.  W.  1002;  Mercantile  Tr.  Co.  v.  Donk 
(1915),  178  S.  W.  113;  Willis  v.  Reed  (1916),  190  S.  W.  377;  Miller  v. 
Peoples  Sav.  Bank  (Mo.  App.),  186  S.  W.  547;  Central  Bank  of  Colum- 
bia V.  Lyda  (1917),  191  S.  W.  245;  German-American  Bank  v.  Smith 
(1919),  208  S.  W.  878;  Atkins  v.  Brown  (1919),  208  S.  W.  502;  Mecha- 
ics  American  Nat.  Bank  v.  Helmbacher,  199  Mo.  App.  173,  201  S.  W.  383; 
Swift  &  Co.  V.  McFarland,  231  S.  W.  65. 

ilfo»/a;!a.— State  Bk.  of  Moore  v.  Forsythe  (1910),  41  Mont.  249; 
Buhler  v.  Loftus  (1917),  165  Pac.  601 ;  Baker  State  Bank  v.  Grant  (1917), 
166  Pac.  27. 

Nebraska.— First  State  Bank  of  Pleasant  Dale  v.  Borchers  (1909), 
83  Neb.  530,  120  N.  W.  142;  Benton  v.  Sikyta  (1909),  84  Neb.  808.  122 
S.  W.  60;  Bolew  v.  Wright  (1911),  89  Neb.  116,  131  N.  W.  185;  Storz 
Brewing  Co.  v.  Skirving  (1913),  142  N.  W.  669;  Ostenberg  v.  Kavka 
(1914),  145  N.  W.  713;  Hatfield  v.  Jakway  (1919),  170  N.  W.  181. 

New  Jersey.— Borough  of  Montwale  v.  Peoples  Bk.  (1907),  87  Atl. 
67;  Rice  v.  Barxington  (1908),  75  N.  J.  L.  806,  70  Atl.  169;  DeYonge 
&  Co.  V.  Woodport  Hotel  &  Land  Co.  (1909),  77  N.  J.  L.  233;  Davis  v. 
Clark  (1914),  90  Atl.  303. 

New  M^.rzVo.— Sandall  v.  Norment    (1915),  145  Pac.  259. 

New  York.— First  Nat.  Bk.  of  Fort  Worth  v.  Am.  Ex.  Nat.  Bk. 
(1900),  49  A.  D.  349;  McCannon  v.  Shantz  (1900).  149  A.  D.  460;  Mc- 
Groh's  Sons  Co.  v.  Schneider  (1901),  34  Misc.  195,  68  N.  Y.  Supp.  682; 
Ketcham  v.  Covin  (1901),  35  Misc.  375,  71  N.  Y.  Supp.  991;  Metro- 
politan Bk.  v.  Engel  (1901),  66  A.  D.  273;  Campbell  v.  Upton  (1901), 
66  A.  D.  434;  Citizens  Bk.  of  Buffalo  v.  The  Rung  Furniture  Co. 
(1902),  76  A.  D.  471;  Sutherland  v.  Mead  (1903),  80  A.  D.  103,  80 
N.  Y.  Supp.  504;  Perth-Amboy  Mut.  Loan  Assn.  v.  Chapman  (1903),  80 
A.  D.  556;  Packard  v.  Windholz  (1903),  84  N.  Y.  Supp.  666,  40  Misc.  347, 
affirmed  88  A.  D.  365;  Jennings  v.  Carlucci  (1904),  87  N.  Y.  Supp.  475; 
Schreyer  v.  Bailey  &  Co.  (1904),  97  A.  D.  185;  Meuer  v.  Phenix  Nat. 
Bk.  (1904),  94  A.  D.  331,  88  N.  Y.  Supp.  83;  Poess  v.  Twelfth  Ward 
Bk.  (1904),  43  Misc.  45,  86  N.  Y.  Supp.  857;  Orr  v.  So.  Amboy  Terra 
Cotta  Co.  (1905),  94  N.  Y.  Supp.  524.  47  Misc.  604;  Hamilton  Nat. 
Bk.  V.  Upton  (1905),  100  A.  D.  105;  Douglass  v.  Richards  (1906). 
116  A.  D.  27;  Nat.  Bk.  of  Newport  v.  Snyder  Mfg.  Co.  (1907),  117  A. 
D.  370,  102  N.  Y.  Supp.  478;  Siegmeister  v.  Lispenard  Realty  Co. 
(1907),'  107  N.  Y.  Supp.  158;  Rice  v.  Eisler  (1907),  119  A.  D.  132; 
Schlesinger  v.  Lehmaier  (1908),  191  N.  Y.  69.  83  N.  E.  657,  16  L,  R.  A. 
(N.  S.)  626,  123  Am.  St.  591;  Ward  v.  City  Tr.  Co.  (1908),  192  N.  Y. 
61,  84  N.   E.   585;   The   Royal   Bk.   of   N.   Y.   v.    German-Am    Ins.   Co. 


516  NEGOTIABLE    INSTRUMENTS.  §  56 

(1908),  58  Alisc.  563;  U.  S.  Ex.  Bk.  v.  Zimmerman  (1908),  113  N.  Y. 
Supp.  23;  Strauss  v.  St.  Louis  Co.  Bk.  (1908),  126  A.  D.  647;  Barbieri 
V.  Casazza  (1909),  115  N.  Y.  Supp.  1074;  Republic  Life  Ins.  Co.  v.  Hud- 
son Trust  Co.  (1909),  130  A.  D.  618;  Squire  v.  Ordemann  (1909), 
194  N.  Y.  394;  Frank  v.  Wolff  (1910),  125  N.  Y.  Supp.  530;  Ni- 
agara Woolen  Co.  V.  Pacific  Bank  (1910),  141  A.  D.  265;  Cluett  v. 
Couture  (1910),  140  A.  D.  830,  125  N.  Y.  Supp.  813;  Havana  Cent.  R. 
Co.  V.  Knickerbocker  Trust  Co.  (1910),  198  N.  Y.  422,  92  N.  E.  12,  L.  R. 
A.  1915B  720,  27  B.  L.  J.  51;  Eisenberg  v.  Lefkowitz  (1911),  142  A.  D. 
569;  Hurst  v.  Lee  (1911),  143  A.  D.  614,  127  N.  Y.  Supp.  1040;  Ken- 
nedy V.  Spilka  (1911),  129  N.  Y.  Supp.  390;  Buckley  v.  Lincoln  Co., 
131  N.  Y.  Supp.  105,  72  Misc.  Rep.  218;  Raisky  v.  Fred  A.  Smith  Co. 
(1913),  139  N.  Y.  Supp.  1088;  Cleary  v.  Dykeman  (1914),  146  N. 
Y.  Supp.  611;  Coffin  v.  Tevis  (1914),  149  N.  Y.  Supp.  986,  164  Misc.  314; 
Feusterer  v.  Pressure  Lighting  Co.  (1914),  149  N.  Y.  Supp.  49,  85 
Misc.  .621;  Rosenbaum  v.  Roth  (1914),  150  N.  Y.  Supp.  396,  164 
A.  D.  617;  Cole  v.  Harrison  (1915),  153  N.  Y.  Supp.  200;  Flood  v.  Stein- 
i-etz  (1915),  153  N.  Y.  Supp.  192;  Oliner  v.  Gronich  (1915),  154  N.  Y. 
Supp.  612;  Anchor  Realty  Co.  v.  Bankers  Trust  Co.  (1916),  161  N. 
Y.  Supp.  300;  Hartford  Nat.  Bk.  v.  Gardner  (1916),  157  N.  Y.  Supp. 
849;  Thornton  v.  Netherlands-Amer.  Steam  Nav.  Co.  (1917),  165  N.  Y. 
Supp.  682;  Monk  v.  23d  Ward  Bank  (1917),  165  N.  Y.  Supp.  1055;  Hud- 
son Boiler  Mfg.  Co.  v.  Cardillo  (1919),  174  N.  Y.  Supp.  638;  Bischoff 
V.  Yorkville  Bank,  218  N.  Y.  106,  112  N.  E.  759;  Ironbound  Trust  Co. 
V.  Schmidt-Dauber  Co.,  169  N.  Y.  Supp.  524;  Morris  v.  Muir,  181  N  Y. 
Supp.  V.  913 ;  Vogel  v.  Pyne,  189  N.  Y.  Supp.  285. 

North  Carolina.— Toif\s  v.  Jones  (1900),  127  N.  Car.  464;  Setzer  v. 
Deal  (1904),  135  N.  Car.  428;  Murchison  Nat.  Bk.  v.  Dunn  Oil  Mills 
Co.  (1909),  150  N.  Car.  718.  64  S.  E.  885;  Johnston  Co.  Sav.  Bk.  v. 
Chase  (1909),  151  N.  Car.  108;  Bk.  of  Sampson  v.  Hatcher  (1909),  151 
N.  Car.  359,  66  S.  E.  308;  First  Nat.  Bk.  of  Lumberton  v.  Brown 
(1912),  160  N.  Car.  23;  Vance  v.  Bryan  (1912),  158  N.  Car.  502,  74 
S.  E.  459;  J.  L.  Smathers  &  Co.  v.  Toxaway  Hotel  Co.  (1913),  78  S.  E. 
224;  First  Nat.  Bk.  v.  Warsaw  Drug  Co.  (1914),  81  S.  E.  993; 
Smathers  &  Co.  v.  Toxowav  Hotel  Co.  (1914),  83  S.  E.  844;  Sykes  v. 
Everett  (1914),  83  S.  E.  585. 

North  Dakota.— Walters  v.  Rock  (1908),  18  N.  Dak.  45,  115  N.  W. 
511;  Am.  Nat.  Bk.  v.  Lundv  (1910),  21  N.  Dak.  167.  129  N.  W.  99; 
Bank  v.  Garcean  (1912),  22  N.  Dak.  576,  134  N.  W.  882;  McCarty  v. 
Kepweta  (1913),  139  N.  W.  992;  Johanna  v.  Lennon  (N.  D.),  755  N.  W. 
685. 

0/n"o.— Thompson  v.  Citizens  Nat.  Bk.  of  Adams  (1909),  32  O.  C.  C. 
131;  Hamilton  Mach.  Tool  Co.  v.  Memphis  Nat.  Bk.  (1911),  84  Ohio  St. 
184,  95  N.  E.  777. 

Oklahoma.— First  State  Bk.  of  Oklahoma  v.  Tobin  (1913),  134  Pac. 
395;  Hudson  v.  Moore  (1913),  130  Pac.  774;  Jones  v.  Citizen's  State 
Bk.  (1913),  135  Pac.  273;  Western  Ex.  Bk.  of  Kansas  City  v.  Coleman 
(1913).  132  Pac.  488;  Hardin  v.  Dale  (1915),  146  Pac.  717;  Security  Tr. 
Co.  V.  Gluckman  (Okla.),  150  Pac.  908;  Ringer  v.  Wilson  (1916),  154 
Pac.  1145;  Lambert  v.  Smith  (Okla.),  157  Pac.  909,  911;  Cline  v.  First 
Nat.  Bk.  (1918),  170  Pac.  472;  Mangold  &  Glandt  Bk.  v.  Utterback 
(1918),  174  Pac.  542;  Producer's  N.it.  Bank  v.  Elrod  (1918),  173  Pac. 
659;  LeRoy  v.  Meadows,  —  Okla.  — ,  200  Pac.  858. 


§56  RIGHTS    OF    HOLDER.  517 

Oregon.— Mat\ock  v.  Schenerman,  51  Ore.  49,  93  Pac.  823,  17  L.  R.  A. 
(N.  S.)  477;  Everding  &  Farrell  v.  Toft  (1916),  82  Ore.  1,  160  Pac. 
1160;  Lassas  v.  McCarty,  47  Ore.  747,  84  Pac.  76;  U.  S.  Fidelity,  etc., 
Co.  V.  U.  S.  Nat.  Bank,  80  Ore.  361,  157  Pac.  155,  L.  R.  A.  1916E  610; 
Hill  V.  A'lcCrow,  88  Ore.  299. 

Pennsylvania. — Johnson  Co.  Sav.  Bk.  v.  Kock  (1908),  38  Pa.  Super. 
Ct.  553;  Lowry  National  Bank  v.  Hazard  (1909),  223  Pa.  520;  People's 
Nat.  Bk.  of  Pensacola  v.  Hazard  (1911),  80  Atl.  554;  Dominion  Trust 
Co.  V.  Hildner  (1914),  90  Atl.  69;  Cox  &  Sons  Co.  v.  Northampton 
Brewing  Co.    (1914),  91  Atl.  859;  Levy  v.  Gilligan   (1914),  90  Atl.  647. 

South  Carolina.— Merchants  Nat.  Bk.  v.  Smith   (1918),  96  S.  E.  690. 

South  Dakota.— Ochsenreiter  v.  Block,  173  N.  W.  736. 

Tennessee.— XJnaka  Nat.  Bk.  v.  Butler  (1904),  113  Tenn.  574,  83 
S.  W.  655;  Ford  v.  Brown  (1905),  114  Tenn.  467;  Pease  &  Dwyer  Co. 
V.  State  Nat.  Bk.  (1905),  114  Tenn.  693,  88  S.  W.  172;  Jefferson  Bk.  of 
St.  Louis  V.  Chapman-White  Lyons  Co.  (1909),  122  Tenn.  415,  123  S. 
W.  641;  First  Nat.  Bk.  of  Elgin,  111.  v.  Russell  (1911),  139  S.  W.  734; 
Madison  Tr.  Co.  v.  Stahlman   (1916),  183  S.  W.  1012. 

Te-raj.— Henderson  v.  McDaniel   (1916),   186  S.  W.  865. 

Utah.— Cole  Banking  Co.  v.  Sinclair  (1908),  34  Utah  454,  98  Pac. 
411;  McCormick  v.  Swem  (1909),  36  Utah  6,  102  Pac.  626;  Miller  v. 
Marks,  46  Utah  227,  148  Pac.  412. 

Virginia. — Aragon  Coffee  Co.  v.  Rogers  (1906),  105  Va.  51;  City 
Nat.  Bk.  of  Roanoke  v.  Hundley  (1911),  70  S.  E.  494;  Pennington  v. 
Third  Nat.  Bk.  of  Columbus,  Ga.  (1913),  77  S.  E.  455;  City  Nat.  Bk. 
V.  McDonald  (1914),  83  S.  E.  389;  Hawkes  v.  Bowles  (1916),  2  Va. 
Law  Reg.  N.  S.  268;  Ratcliffe  v.  Costello  (1915),  85  S.  E.  469;  Flesh- 
man  V.  Bibb  (1916),  118  Va.  582,  88  S.  E.  64;  Castron  v.  Bostic  (1918), 
96  S.  E.  845. 

lVashingto7t.—Uc'NamaTa  v.  Jose  (1902),  28  Wash.  461,  68  Pac.  903; 
Yakima  Valley  Bk.  v.  McAllister  (1905),  37  Wash.  566,  79  Pac.  1119; 
Keene  v.  Behan  (1905),  40  Wash.  505,  82  Pac.  884;  Johnson  Co.  Sav. 
Bk.  V.  Rapp  (1907),  47  Wash.  30,  91  Pac.  382;  Spencer  v.  Alki  Point 
Transp.  Co.  (1909),  53  Wash.  77,  101  Pac.  509;  Gray  v.  Boyle  (1909),  55 
Wash.  578,  104  Pac.  828,  133  Am.  St.  Rep.  1042;  Scandanavian  Am.  Bk. 
v.  Johnston  (1911),  63  Wash.  187,  115  Pac.  102;  Scandanavian  Am.  Bk. 
v.  Appleton  (1911),  63  Wash.  203,  115  Pac.  109;  Movses  v.  Bell,  62 
Wash.  534,  114  Pac.  193;  Wells  v.  Duffy  (1912).  69  Wash.  310;  Fournier 
v.  Cornish  (1913),  133  Pac.  9;  German-American  Bank  v.  Wright,  85 
Wash.  460,  148  Pac.  769;  Washington  Trust  Co.  v.  Keyes  (1914),  139 
Pac.  638;  Citizens  Bk.  &  Trust  Co.  v.  Limpright  (1916),  160  Pac.  1046; 
Moore  &  Co.  v.  Burling,  93  Wash.  217,  160  Pac.  420;  City  Nat.  Bk.  v. 
Shelton  Elec.  Co.  (1917),  164  Pac.  993;  Schultz  v.  Crewdson  (1917), 
163  Pac.  734 ;  Naylor  v.  Lovell.  186  Pac.  855 ;  Guaranty  Security  Co.  v. 
Coad,  195  Pac.  22 ;  Larson  v.  Betcher,  195  Pac.  27. 

West  Virginia. — Interstate  Finance  Co.  v.  Schroeder  (1914),  81  S. 
E.  552;  U.  S.  Fidelity  Co.  v.  Home  Bank,  77  W.  Va.  665,  88  S.  E.  109. 

IVisconsin.-Quiggle  v.  Herman  (1907),  131  Wis.  379,  111  N.  W. 
479;  Pelton  v.  Spider  Lake  S.  &  L.  Co.  (1907),  132  Wis.  219,  112  N.  W. 


518  NEGOTIABLE    INSTRUMENTS.  §  57 

29,  122  Am.  St.  963;  Kipp  v.  Smith  (1908),  137  Wis.  234,  118  N.  W.  848; 
Erevan  v.  Kyle   (Wis.),  165  N.  W.  383. 

Wyoming.— HoldswoTth  v.  Blyth  &  Fargo  (1915),  146  Pac.  603. 

United  States.— Hutch'ms  v.  Langley  (1906),  27  A.  C.  (D.  C.)  34;  Mar- 
tin V.  Poole  (1911),  36  A.  C.  (D.  C.)  281;  Howell  v.  Commercial  Nat. 
Bk.  (1913),  40  A.  C.  (D.  C.)  370;  Hazen  v.  Van  Senden  (1915),  43 
D.  C.  App.  161;  Mills  v.  Keep  (1912),  197  Fed.  360;  First  Nat.  Bk.  of 
Shenandoah  v.  Linver  (1911),  187  Fed.  16,  109  U.  S.  C.  C.  A.  70;  Nat.  Bk. 
of  Commerce  in  St.  Louis  v.  Sancho  Pag.  Co.  (1911),  110  C.  C.  A.  112, 
186  Fed.  257;  Amalgamated  Sugar  Co.  v.  U.  S.  Nat.  Bk.  of  Portland 
(1911),,  109  C.  C.  A.  494;  Young  v.  Lowry  (1912).  192  Fed.  825,  113 
C.  C.  A.  149;  Washington  &  Canonsburg  Ry.  Co.  v.  Murray  (1914),  211 
Fed.  440;  Bison  St.  Bk.  v.  Billington  (1915),  228  Fed.  116;  Pied- 
mont &  Caro  Ry.  Co.  v.  Shee  (1915),  223  Fed.  973;  Postal  Tel.  Cable  Co. 
V.  Citizens  Nat.  Bk.  (1916),  228  Fed.  601;  Brent  v.  Simpson  (1916), 
238  Fed.  285;  Stockyard  Nat.  Bk.  of  St.  Paul,  Minn.  v.  First  Nat.  Bank 
of  Towner,  N.  D.   (1918),  249  Fed.  421. 

§  57.  Rights  o£  holder  in  due  course.  A  holder  in  due 
course  holds  the  instrument  free  from  any  defect  of  title  of 
prior  parties  and  free  from  defenses  available  to  prior  parties 
among  themselves,  and  may  enforce  payment  of  the  instrument 
for  the  full  amount  thereof  against  all  parties  liable  thereon.**  ** 

See  text,  §  126. 

The  Illinois  Act  makes  fraud  touching  the  execution  and  makes  gam- 
bling consideration  "real  defenses"  and  good  against  a  holder  in  due 
course. 

The  Wisconsin  Act  (Sees.  1676-27)  adds  the  following:  "Except  as 
provided  in  Sections  1944  and  1945  of  these  statutes,  relating  to  insur- 
ance premiums,  and  also  in  cases  where  the  title  of  the  person  negotiat- 
ing such  instrument  is  void  under  the  provision  of  Sections  1676-25  of 
this  act." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Bona   fide  purchaser  takes  note   free   from   defects.     Davis   v.    Simpson, 
—  Ala.  — ,  79  So.  48. 

Transferee's  rights  measured  by  rights  ,of  assignor:  Fortson  v. 
Bishop,  —  Ala.  — ,  86f  So.  399. 

Holder  in  due  course  need  not  investigate  circumstances  as  to  incep- 
tion.    Ellis  v.  First  Nat.  Bank,  —  Ariz.  —   172  Pa.c  281. 

Holder  in  due  course  may  recover  on  note  made  without  considera- 
tion.    Weir  &  Craig  Co.  v.  Bonus,  177  111.  App.  626. 

Bona  fide  holder  without  notice  of  defect  is  holder  in  due  course. 
Lapp  v.  Merchant's  Nat  Bank  of  Indianapolis,  —  Ind.  App.  — ,  123 
N.  E.  231. 

Suit  by  bank  against  maker  and  not  payee  indorser.  Choteau  Trust  & 
Banking  Co.  v.  Smith,  133  Ky.  418,  118  S.  W.  279. 


§57  RIGHTS   OF    HOLDER.  519 

Rights  of  holder  in  due  course  as  against  prior  parties  to  note.  Lynch- 
burg- Shoe  Co.  V.  Hensley,  —  Ky.  — ,  218  S.  W.  243. 

When  issue  of  fraud  immaterial  Bovarnick  v.  Davis,  —  Mass.  — ,  126 
N.  E.  380. 

Notice  of  warranty  in  sales  agreement  as  affecting  status  of  holder  in 
due  course.  Commercial  Credit  Co.  v.  McDonough  Co.  —  Mass. 
— ,  130  N.  E.  179. 

Bank  in  which  fraudulently  obtained  check  was  deposited  by  payee 
paid  part  to  pavee,  could  not  recover  against  maker.  Southwestern  Na- 
tional Bank  V.  House,  172  Mo.  App.  197,  157  S.  W.  809. 

Holder  in  due  course  may  recover.  Montgomery  Garage  Co.  v. 
Manufacturer's  Liability  Ins.  Co.,  —  N.  J.  — ,  109  Atl.  296. 

Usury  laws  not  repealed  and  a  transaction  violating  such  laws  avoids 
a  note  in  hands  of  holder  in  due  course.  Sabine  v.  Paine,  166  App.  Div. 
9,  151  N.  Y.  Supp.  735,  affirmed,  223  N.  Y.  401,  119  N.  E.  849. 

Where  plaintiff  has  no  knowledge  that  check  was  indorsed  for  gambling 
debt  he  may  recover  from  drawer.  Poshkoff  v.  Bernstein,  95  Misc.  Rep. 
140,  159  N.  Y.  Supp.  207. 

Note  void  as  between  original  parties  by  reason  of  usurious  interest 
by  national  bank  is  good  in  hands  of  state  bank  who  is  bona  fide  holder 
in  due  course.  Schlesinger  v.  Lehmaier,  191  N.  Y.  69,  83  N.  E.  657,  16 
L.  R.  A.  (N.  S.)  626. 

Holder  may  sue  maker  or  indorser  and  latter  may  set  off  holder's  in- 
debtedness to  him.    Curtis  v.  Davidson,  215  N.  Y.  395,  109  N.  E.  481. 

Effect  of  transfer  without  indorser  signing  upon  holder  in  due 
course.     Critcher  v.  Ballard,  —  N.  C.  — ,  104  S.  E.  134. 

Purchaser  at  two-thirds  discount  may  be  holder  in  due  course  and 
recover  full  amount.     Lassas  v.  McCarty,  47  Ore.  474,  84  Pac.  Id. 

Holder  in  due  course  recovers  full  amount  of  instrument.  Jefferson 
Bank  v.  Chapman-White-Lyons  Co.,  122   Tenn.  415,  123  S.  W.  641. 

Note  which  does  not  comply  with  lightning  rod  statute  may  be  good  in 
hands  of  holder  in  due  course.  Arnd  v.  Sjoblom,  131  Wis.  642,  111  N. 
W.  666,  10  L.  R.  A.  (N.  S.)  842. 

Statute  as  to  set-off  not  changed  by  Missouri  negotiable  instruments 
law.    Worden  v.  Gillett,  275  Fed.  654. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

/4/afcawa.— Snead  v.  Barclift  (1911),  2  Ala.  App.  297;  Norris  v. 
Merchants  Nat.  Bk.  (1911),  2  Ala.  App.  434,  57  So.  71;  Bledsoe  v.  City 
Nat.  Bk.  of  Selma  (1912),  7  Ala.  App.  195,  60  So.  942;  Hudson  v. 
Repton  State  Bk.  (1917),  75  So.  695;  Jones  v.  Martin  (1917),  74  So.  761; 
Jones  V.  Bell  (1917),  77  So.  918;  Sample  v.  Tennessee  Valley  Bk.  (1917). 
76  So.  936;  Vogler  v.  Manson  (1917),  76  So.  117;  Davies  v.  Simpson. 
79  So.  48 ;  Fortson  v.  Bishop,  86  So.  399 ;  Arizona- Ellis  v.  First  Nat.  Bank, 
172  Pac.  281. 

Arkansas.— U\.1\&  v.  Arkansas  Nat.  Bk.  (1914),  167  S.  W.  75;  Man- 
ley  Carriage  Co.  v.  Fowler  and  Hill  (1917),  194  S.  W.  708;  Huff  v. 
Iowa  City  State  Bk.  (1918),  204  S.  W.  306. 

Connechcut.—U.^r^\z\i  v.  Alderman  (1905),  11  Conn.  634.  60  Atl. 
109;  Johnson  Co.  Sav.  Bk.  v.  Walker  (1909).  82  Conn.  24;  s.  c,  79  Conn. 
348,  65  Atl.  132  (1906),  and  80  Conn.  509,  69  Atl.  15;  Continental  Credit 
Co,  v.  Ely  (1917),  100  Atl.  435. 


520  NEGOTIABLE    INSTRUMENTS.  §  57 

Delaware. —Security  Tr.  &  Safe  Dep.  Co.  v.  Duross  (1913),  86  Atl.  209. 

Florida — Jones  v.  The  Manitowoc  Shipbuilding  and  Dry  Dock  Co 
(1913),  65  Fla.  467;  Bland  v.  Fidelity  Co.   (1916),  71  So.  630. 

/(fa/io.— McCarty  v.  Lowry  (1912),  123  Pac.  943;  Nelson  v.  Hudgel 
(1913),  23  Ida.  327,  130  Pac.  85;  Southwest  Nat.  Bk.  of  Kansas  City  v 
Baker    (1913),  23   Ida.  428,   130  Pac.   799;   Harshbarger  v.   Eby    (1916) 

156  Pac.  619. 

Illinois.— Black  v.  Downcs  (1912),  176  111.  App.  358;  Weir  &  Craig 
Co.  V.  Bonus,  177  111.  App.  626;  Richter  v.  Burdock  (1913),  257  111.  410, 
100  N.  E.  1063;  Niblack  v.  Farley  (1919),  122  N.  E.  160. 

Indiana.— Lapp  v.  Merchants  Nat.  Bank,  123  N.  E.  231. 

/owe— Commercial  Nat.  Bk.  v.  Citizens  State  Bk.  (1906),  132  Iowa 
706,  109  N.  W.  198;  Vander  Ploey  v.  Van  Zunk  (1907),  135  Iowa  350, 
112  N.  W.  807;  McKnight  v.  Parsons  (1907),  136  Iowa  390,  113  N. 
W.  858,  125  Am.  St.  265;  Kushner  v.  Abbott  (1912),  137  N.  W.  913. 

Kansas.— Nyhan  v.  Kubach  (1907),  76  Kans.  154,  90  Pac.  796; 
Gate  City  Nat.  Bk.  v.  Thrall  (1911),  85  Kans.  394. 

Kenhuky.— Alexander  v.  Hazelrigg  (1906),  123  Ky.  677,  97  S.  W. 
353;  Citizens  Bk.  v.  Bk.  of  Waddy  (1907),  126  Ky.  169,  103  S.  W. 
249;  Chateau  Tr.  and  Banking  Co.  v.  Smith  (1909),  133  Ky.  418,  118 
S.  W.  279;  Bothwell  v.  Corum  (1909).  135  Ky.  767,  123  S.  W.  291; 
Lovelace  v.  Lovelace  (1910),  136  Ky.  452,  124  S.  W.  400;  Jett  v. 
Standafer  (1911),  143  Kv.  787,  137  S.  W.  513;  Holzbog  v.  Bakrow 
(1913),  160  S.  W.  792;  Gahren-Dodge  and  Maltby  v.  Parkersburg  Nat. 
Bk.  (1914).  162  S.  W.  1135;  Pratt  v.  Rounds  (1914),  169  S.  W.  848; 
Lynchburg  Shoe  Co.  v.  Hensley,  218  S.  W.  243. 

Louisiana.— Woli   v.  Zachary  &  N.  E.  R.  Co.   (1911),  128  La.   1092, 

55  So.  685. 

Maryland.— Wcan\i  v.   Southern  Tr.  and  Dep.  Co.    (1910),   112  Md. 

463,  77  Atl.  289. 

Massachusetts.— Mass.  Nat.  Bk.  v.  Snow  (1905),  187  Mass.  159,  72 
N.  E.  959;  Fillebrown  v.  Hayward  (1906),  190  Mass.  472;  City  of  New- 
buryport  v.  Spear,  204  Mass.  146,  90  N.  E.  522;  Franklin  Sav.  Bank  v. 
International  Trust  Co.,  215  Mass.  231,  102  N.  E.  363 ;  Quincy  Mut.  Fire 
Ins.  Co.  v.  International  Trust  Co.,  217  Mass.  370,  104  N.  E.  845,  L.  R. 
A.  1915B  725;  Colonial  Fur  Ranching  Co.  v.  First  Nat.  Bank 
(1917),  116  N.  E.  731;  Willard  v.  Greenwood  (1917),  117  N.  E.  823; 
Newburyport  v.  Fidelity  Ins.  Co.,  197  Mass.  596,  84  N.  E.  Ill;  Bovarnick 
V.  Davis,  126  N.  E.  380;  Commercial  Credit  Co.  v.  M.  McDonough,  130 
N.  E.  179;. 

Michigan.— Yiakts  v.  Thayer  (1911),  131  N.  W.  174;  People's  State  Bk. 

V.  Miller  (1915),  152  N.  W.  257. 

Missouri. — State  Nat.  Bk.  of  Shawnee  v.  Levy  (1910),  141  Mo.  App. 
288;  Southwest  Nat.  Bk.  of  Kansas  v.  House   (1913),  172  Mo.  App.  197, 

157  S.  W.  809;  Coleman  v.  Stacke,  159  Mo.  App.  43,  139  S.  W.  216;  St. 
Charles  Savings  Bank  v.  Edwards,  243  Mo.  App.  553,  147  S.  W.  978; 
Hadley  v.  Greenville  (1916),  187  S.  W.  1096;  Reynolds  v.  Title  Guaranty 


§  57  RIGHTS   OF    HOLDER.  521 

Trust  Co.  (Mo.  App.),  189  S.  W.  33;  Miller  v.  Chinn  (1917),  195  S.  W. 
552;  Jefferson  Bank  v.  Merchants  Refrigerating  Co.,  236  Mo.  407,  139  S. 
W.  545. 

Mojitaua.— Baker  State  Bank  v.  Grant   (1917),  166  Pac.  27. 

Nebraska.— Benton  v.  Sikyta  (1909),  84  Neb.  808,  122  S.  W.  60; 
Storz  Brewing  Co.  v.  Skirving  (1913),  142  N.  W.  669;  Ostanbcrg  v. 
Kavka  (1914),  145  N.  W.  713. 

Netv  Jersey— Rice  v.  Barrington  (1906),  75  N.  J.  L.  806,  70  Atl.  169; 
Davis  V.  Clark  (1914),  90  Atl.  303;  Clark  v.  Barthold  (1915),  93  Atl. 
699;  Bensel  v.  Anderson  (1916)  (N.  J.  Ch.),  96  Atl.  910;  Mont- 
gomery Garage  Co.  v.  Manufacturer's  Liability  Ins.  Co.,  109  Atl.  296. 

New  York.— Ketcham  v.  Covin  (1901),  35  Misc.  375,  71  N.  Y.  Supp 
991;  Benedict  v.  Kress  (1904),  89  N.  Y.  Supp.  607;  Greeser  v.  Sugar- 
man  (1902),  76  N.  Y.  Supp.  922,  37  Misc.  799;  Sutherland  v.  Mead  (1903), 
80  A.  D.  103,  80  N.  Y.  Supp.  504;  Albany  Co.  Bk.  v.  People's  Co-op.  Ice 
Co.  (1904),  92  A.  D.  47,  86  N.  Y.  Supp.  73;  Broadway  Trust  Co.  v. 
Manhcim  (1905),  47  Misc.  415,  95  N.  Y.  Supp.  93;  Schlesinger  v.  Kelly 
(1906),  114  A.  D.  546,  99  N.  Y.  Supp.  1083;  Siegmeister  v.  Lispenard 
Realty  Co.  (1907),  107  N.  Y.  Supp.  158;  The  Gansevort  Bank  of  N.  Y. 
v.  Gilday  (1907),  110  N.  Y.  Supp.  271,  53  Misc.  107;  Schlesinger  v.  Gil- 
hooley  (1907),  189  N.  Y.  1,  81  N.  E.  619;  Schlesinger  v.  Lehn.aier 
(1908),  191  N.  Y.  69.  83  N.  E.  657,  16  L.  R.  A.  (N.  S.)  626,  123  Am. 
St.  591;  Bruck  v.  Lambeck  (1909),  118  N.  Y.  Supp.  494;  Lanning  v. 
Trust  Co.  of  America,  122  N.  Y.  Supp.  485,  137  A.  D.  722;  Klar  v.  Kos- 
tink  (1909),  119  N.  Y.  Supp.  683;  Niagara  Woolen  Co.  v.  Pacific  Bank, 
126  N.  Y.  Supp.  890,  141  A.  D.  265 ;  Ward  v.  City  Trust  Co..  192  N.  Y. 
61,  84  N.  E.  585;Hurst  v.  Lee  (1911).  143  A.  D.  614,  127  N.  Y.  Supp. 
1040;  Eq.  Tr.  Co.  v.  Taylor  (1911),  131  N.  Y.  Supp.  475,  72  ^lisc.  52; 
Eisenberg  v.  Lefkowitz  (1911),  142  A.  D.  569;  Broderick  &  Bascom 
Rope  Co.  v.  McGrath  (1913),  142  N.  Y.  Supp.  496,  81  Misc.  222;  Crusins 
V.  Siegman  (1913),  142  N.  Y.  Supp.  348;  Cleary  v.  Dvkeman  (1914),  146 
N.  Y.  Supp.  611;  Emanuel  v.  Misicke  (1914),  149  N.  Y.  Supp.  905;  Oeser 
v.  Behrend  (1915),  151  N.  Y.  Supp.  873;  Baldinger  &  Kupferman  Mfg. 
Co.  V.  Manf.-Citizens  Tr.  Co.  (1915),  156  N.  Y.  Supp.  445;  Curtis  v. 
Davidson  (1915),  215  N.  Y.  395,  109  N.  E.  481;  Title  Guar.  Co.  v.  Pain 
(1915),  155  N.  Y.  Supp.  333;  Poshkoff  v.  Bernstein,  159  N.  Y.  Supp.  207, 
95  Misc.  Rep.  140;  Miller  v.  Campbell  (1916),  160  N  .Y.  Supp.  834; 
Garone  v.  Russo  lodice  Realty  Co.  (1917),  164  N.  Y.  Supp.  135  Thorn- 
ton v.  Netherlands  Amer.  Steam  Nav.  Co.  (1917),  165  N.  Y.  Supp.  682; 
United  Cigar  Store  Co.  v.  American  Raw  Silk  Co.  (1918),  171  N.  Y. 
Supp.  480;  Kennedy  v.  Heyman,  167  N.  Y.  Supp.  311;  Sabine  v.  Paine 
(1918),  223   N.   Y.  401,   119  N.   E.  849. 

North  Carolina.— Mmchison  Nat.  Bk.  v.  Dunn  Oil  Mills  Co.  (1909), 
150  N.  Car.  718,  64  S.  E.  885;  Vance  v.  Brj-an  (1912).  158  N.  Car.  502, 
74  S.  E.  459;  Amer.  Nat.  Bk.  of  Richmond  v.  Hill  (1915),  85  S.  E.  209; 
Critcher  v.  Ballard,  104  S.  E.  134. 

North  Dakota.— Nat  Bk.  of  Commerce  v.  Pick  (1904),  13  N.  Dak. 
74,  99  N.  W.  63. 

O^fo.— Spring  Valley  Nat.  Bk.  v.  Somers  (1910).  21  Ohio  Dec.  772; 
Hamilton  Mach.  Tool  Co.  v.  Memphis  Nat.  Bk.  (1911),  84  Ohio  St. 
184,  95  N.  E.  777. 


522  NEGOTIABLE    INSTRUMENTS.  §57 

Oklahoma.— J tnkms  v.  Planters,  Etc.,  Bank,  34  Okla.  607,  126  Pac. 
757;  Wood  v.  Stickle  (1912),  128  Pac.  1082;  First  State  Bk.  of  Okla- 
homa City  V.  Tobin  (1913),  134  Pac.  395;  Hodgins  v.  Northwestern 
Finance  Co.  (1915),  148  Pac.  717;  Mangold  &  Glandt  Bk.  v.  Utterback 
(1918),  174  Pac.  542. 

Oregon.— Lasszs  v.  McCarty  (1906),  47  Oreg.  474,  §4  Pac.  76;  Bailey 
V.  Inland  Empire  Co.  (1915),  146  Pac.  991;  Clarinda  Trust  &  Sav.  Bk. 
V.  Doty  (1917),  163  Pac.  418. 

Pennsylvania. — Homewood  People's  Bk.  v.  Heckert  (1903),  207  Pa. 
231;  People's  Nat.  Bk.  of  Pensacola  v.  Hazard  (1911),  80  Atl.  554;  In 
re  Yomig's  Estate  (1912),  83  Atl.  201;  Wolfgang  v.  Shirley  (1913),  86 
Atl.  1011. 

Rhode  Island.— ShGtr  v.  Hall  &  Lyon  Co.,  36  R.  I.  47,  88  Atl.  801. 

South  Carolina— low&  City  State  Bk.  v.  Hoefer  (1915),  85  S.  E.  406. 

Tennessee.— Unaka  Nat.  Bk.  v.  Butler  (1904),  113  Tenn.  674,  83  S. 
W.  655;  Jefferson  Bk.  of  St.  Louis  v.  Chapman- White  Lyons  Co.  (1909), 
122  Tenn.  415,  123  S.  W.  641. 

Texas.— Lockney  State  Bk.  v.  Martin  (1917),  191  S.  W.  796  (Tex. 
Civ.  App.);  Sayles  v.  First  State  Bk.  of  Abilene  (1917),  195  S.  W.  230 
(Tex.  Civ.  App.)  ;  Zielinski  v.  Hernig  (1917),  195  S.  W.  952  (Tex.  Civ. 
App.   3. 

C;/o/i.— McCormick  v.  Swem  (1909),  36  Utah  6,  102  Pac.  626;  Smith 
v.  Brown  (1917),  165  Pac.  468;  Rosenblum  v.  Gonnell  (1918),  173  Pac. 
243. 

Virginia.— Arzgon  Cofifee  Co.  v.  Rogers  (1906),  105  Va.  51;  Pen- 
nington V.  Third  Nat.  Bk.  of  Columbus,  Ga.  (1913),  77  S.  E.  455;  Ander- 
son V.  Union  Bk.  of  Richmond  (1915),  83  S.  E.  1080;  Fleshman  v.  Bibb 
(1916),  88  S.  E.  64;  Colona  v.  Parksley  Nat.  Bk.  (1917),  92  S.  E.  979. 

Washington.— Mc^zmara  v.  Jose  (1902),  28  Wash.  461,  68  Pac.  303; 
Jamieson  and  McFarland  v.  Heim  (1906),  43  Wash.  153,  86  Pac.  165; 
Amer.  Sav.  Bk.  &  Tr.  Co.  v.  Helgesen  (1911),  64  Wash.  54,  116  Pac. 
837;  Schuhz  v.  Crewdson  (1917),  163  Pac.  734;  City  Nat.  Bk.  v.  Shelton 
Elec.  Co.  (1917),  96  Wash.  74,  164  Pac.  993. 

West  Virginia.— Interstate  Finance  Co.  v.  Schroder  (1914),  81  S.  E. 
552;  Rusmissell  v.  White  Oak  Stave  Co.  (1917),  92  S.  E.  672;  Nisson  v. 
Shaffer  (1918),  96  .  E.  1023. 

Wisconsin.— Qmgg\e  v.  Herman  (1907),  131  Wis.  379,  111  N.  W.  479; 
Pelton  V.  Spider  Lake  Co.,  132  Wis.  219,  112  N.  W.  29.  122  Am.  St.  Rep. 
963;  Arnd  v.  Sjoblom  (1907),  131  Wis.  642,  111  N.  W.  666;  Northfield 
Nat.  Bk.  V.  Arndt  (1907),  132  Wis.  383,  112  N.  W.  451;  Kipp  v.  Smith, 
137  Wis.  234,  118  N.  W.  484;  Samson  v.  Ward  (1911),  147  Wis. 
48,  132  N.  W.  629;  Green  v.  Gunsten  (1913),  142  N.  W.  261. 

Wyoming.— Holdsworth  v.  Blyth  and  Fargo  (1915),  146  Pac.  603. 

United  5"/a/r.y.— First  Nat.  Bk.  of  Shenandoah  v.  Linver  (1911),  187 
Fed.  16  (Neb.)  109  U.  S.  C.  C.  A.  70;  Amalgamated  Sugar  Co.  v.  U.  S. 
Nat.  Bk.  of  Portland,  Oreg.  (1911),  109  C.  C.  A.  494;  Nat.  Bk.  of  Com- 


§  58  RIGHTS   OF    HOLDER.  523 

merce  in  St.  Louis  v.  Sancho  Pag.  Co.  (1911),  110  C.  C  A.  112,  186  Fed. 
257  (La.);  Milton  v.  Pcnsacola  Bk.  &  Tr.  Co.   (1911),  190  Fed.  126,  111 

C.  C.  A.  166;  Standard  Trust  Co.  v.  Commercial   Nat.  Bk.    (1917),  240 
Fed.  303,  (C.  C.  A.,  4th  Ct.)  ;  Cutler  v.  Fry  (1917),  240  Fed.  238  (U.  S. 

D.  C.) ;  Worden  v.  Gillett,  275  Fell.  654. 

§  58.  When  subject  to  original  defenses.  In  the  hands 
of  any  holder  other  than  a  holder  in  due  course,  a  negotiable  in- 
strument is  subject  to  the  same  defenses  as  if  it  were  non-nego- 
tiable. But  a  holder  who  derives  his  title  through  a  holder  in 
due  course,  and  who  is  not  himself  a  party  to  any  fraud  or  ille- 
gality afifecting  the  instrument,  has  all  the  rights  of  such  former 
holder  in  respect  of  all  parties  prior  to  the  latter.^  *' 

See  text,  §  126. 

The  Illinois  act  inserts  the  word  "duress"  after  the  word  "fraud"  and 

substitutes  the  words  "such  holder"  for  the  words  "the  latter." 

In  North  Dakota  the  word  "holder"  is  substituted  for  the  word  "latter" 
at  the  end  of  the  section. 

The  Wisconsin  Act  (Sec.  1676-28),  inserts  after  "fraud"  "duress"  and 
substitutes  for  "the  latter  "such  holder." 

Corresponding  provision   of  English  Bills  of  Exchange  Act:  29   (3). 

•*•  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states  : 

Transfers,  by  party  charged  with  knowledge,  after  maturity  affect  the 
title.    Weil  v.  Carswell,  119  Ga.  873,  47  S.  E.  217. 

"Defenses"  construed.  Fox  v.  Terre  Haute  Nat.  Bank,  —  Ind.  App. 
— ,  129  N.  E.  33. 

When  former  holdings  in  due  course  not  beneficial  to  one  receiving 
note  from  maker.  Builders  Lime  &  Cement  Co.  v.  Weimer,  170  Iowa 
444,  151  N.  W.  100,  Ann.  Cas.  1917C,  1174. 

Transferee  of  holder  in  due  course  is  also  holder  in  due  coufsee. 
German-American  Nat.  Bank  v.  Kelley,  —  la.  — ,  166  N.  W.  1053. 

Purchaser  after  maturity  of  notes  procured  by  fraud  are  not  held 
in  due  course  unless  prior  indorser  held  in  due  course.  Ford  v.  Ott,  — 
la.  — ,  173  N.  W.  121. 

Transferee  after  maturity  occupies  same  position  whether  transferred 
by  payee  or  indorser.  Bank  of  Willard  v.  Pennsylvania,  Etc.,  Brick  Co. 
(Ky.),  194  S.  W.  110. 

Notes  assigned  after  due,  subject  to  original  defenses.  Sparr  v.  Fulton 
Nat.  Bank,  179  Ky.  755. 

One  acting  as  agent  of  indorsee  through  fraud  cannot  recover  al- 
though he  received  it  from  a  holder  in  due  course.  Berenson  v.  Conant, 
214  Mass.  127,  101  N.  E.  60. 

Bank  has  burden  of  showing  that  it  is  not  subject  to  original  de- 
fenses.   First  Nat.  Bank  v.  Anderson,  —  Minn.  — ,  175  N.  W.  544. 

Redelivery  of  note  with  old  blank  indorsement  is  equivalent  to  in- 
dorsement at  the  time  of  redelivery.  Hawkins  v.  Shields,  100  Miss. 
739,  57  So.  4. 


524  NEGOTIABLE    INSTRUMENTS.  §  58 

Return  of  note  to  hands  of  party  with  notice  of  equities  affects  all 
subsequent  transfers  by  him  after  maturity.  Booher  v.  Allen,  153  Mo. 
613,  55  S.  W.  238. 

Donee  of  note  is  not  charged  with  equities  against  the  note  when  the 
donor  was  not  so  charged.  Greer  v.  Orchards,  175  Mo.  App.  494,  161 
S.  W.  875. 

Purchaser  from  holder  in  due  course  may  recover  although  having 
knowledge  of  prior  fraud.  McMurry  v.  McMurry,  285  Mo.  App.  405, 
167  S.  W.  513. 

Indorsee  with  notice  of  separate  agreement  is  bound  by  the  agree- 
ment. Farmers  &  Traders  Bank  v.  Laird,  188  Mo.  App.  322,  175  S.  W. 
116. 

Defendant  who  signed  note  for  accommodation  is  not  bound  if  maker 
violates  accommodation  agreement  and  negotiates  it  for  different  pur- 
pose.    Schlamp  V.  Manewel   (Mo.  App.),  190  S.  W.  658. 

Payment  is  good  defense  against  one  not  holder  in  due  course.  Hoeley 
V.  South  Side  Bank  of  St.  Louis,  —  Mo.  — ,  217  S.  W.  504.  ^ 

Holder  in  due  course  has  burden  of  showing  such  as  against  original 
defenses.     Downs  v.  Horton,  —  Mo.  — ,  230  S.  W.  103. 

Burden  of  proving  plaintiff  holder  in  due  course  or  a  holder  from  a 
hoWer  in  due  course.  Ensign  v.  Crandall,  —  Mo.  App.  — ,  231  S.  W.  675. 
Where  payee  of  negotiable  note  secured  by  mortgage  indorsed  it 
without  recourse  and  assigned  mortgage,  indorsee  had  notice  of  mort- 
gage and  was  governed  by  statute  relating  to  mortgages.  Bukler  v. 
Loftres,  53  Mont.  546,  165  Pac.  601. 

Breach  of  warranty  properly  pleaded  as  a  defense.  American  Seed- 
ing Co.  v.  Slocum,  58  Misc.  Rep.  458,  108  N.  Y.  Supp.  1042. 

Indorsee  with  knowledge  of  fraud  may  transfer  it  to  holder  in  due 
course  and  later  purchase  the  note  back  relieved  of  the  knowledge. 
Horan  v.  Mason,  141  App.  Div.  89,  125  N.  Y.  Supp.  668. 

Where  indorsee's  officers  were  also  members  of  finance  committee  of 
payee  indorser  held  to  give  notice  of  equities.  Title  Guaranty  &  Trust 
Co.  V.  Pam,  155  N.  Y.  Supp.  333. 

Plaintiff  a  second  transferee  from  payee  of  note,  indorsed  by  payee  in 
blank,  cannot  recover  where  he  received  the  same  after  maturity.  Stein- 
berger  v.  Hittelman.  93  Misc.  Rep.  105,  156  N.  Y.  Supp.  320. 

Transferee  of  check  in  bad  faith  may  recover  the  amount  thereof 
less  the  amount  of  the  equities.  Lazarowitz  v.  Stafford,  167  N.  Y.  Supp. 
910. 

Where  donor  not  charged  with  notice  of  equities  the  donee  is  not. 
First  Nat.  Bk.  v.  Wood,  128  N.  Y.  35,  27  N.  E.  1020. 

Holder  in  due  course  of  note  as  collateral  is  not  affected  by  notice  of 
equity  before  becoming  absolute  holder  thereof.  City  Nat.  Bank  v. 
Kelly  (Okla.),  151  Pac.  1172. 

One  with  notice  is  not  bettered  by  selling  to  a  holder  in  due  course 
and  repurchasing.     Hoye  v.  Kalashian,  22  R.  T.  101,  46  Atl.  271. 

Sale  to  holder  in  due  course  and  repurchasing  does  not  clear  prior 
knowledge.  Aragon  Coffee  Co.  v.  Rogers,  105  Va.  51,  52  S.  E.  843,  8 
Ann.   Cas.  623. 

Where  accommodation  indorser  has  no  knowledge  that  proceeds  of 
note  are  to  be  used  in  gambling  he  may  recover.  Citizen's  Nat.  Bank 
V.  McDannald,  116  Va.  834.  83  S.  E.  389. 

Holder  in  due  course,  who  sold  and  repurchased  after  notice  of  de- 
fect, is  not  affected.    Ratcliffe  v.  Costello,  117  Va.  563,  85  S.  E.  469. 


§  58  RIGHTS   OF   HOLDER.  525 

Sale  to  holder  in  due  course  and  repurchase  does  not  destroy  equities. 
Andrews  v.  Robertson,  111  Wis.  334,  87  N.  W.  190,  87  Am.  St.  Rep.  870. 

Defenses  existing  at  time  of  transfer  are  only  ones  that  affect  note. 
Marling  v.  Fitzgerald,  138  Wis.  93,  120  N.  W.  388. 

Agent's  fraudulent  use  of  moneys  received  for  note  negotiated  are 
not  corrected  by  his  purchase  of  note  from  holder  in  due  course.  Corn- 
stock  V.  Buckley,  141  Wis.  228,  124  N.  W.  414. 

Transferee  from  holder  in  due  course  is  "holder"  although  without 
indorsement.  Smith  v.  Nelson  Land  &  Cattle  Co.,  212  Fed.  Rep.  56,  128 
C.  C.  A.  512. 

Effect  of  equities  against  note  in  hands  of  donee  where  they  do  not 
exist  as  against  donor.    Milne  v.  Dawson,  5  Exch.  948. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed; 

^/c&ojMa.— Stone  v.  Goldberg  &  Lewis  (1912),  6  Ala.  App.  249,  60  So, 
744;  Jones  v.  Bell  (1917),  11  So.  918. 

Arkansas.— Yiooxtn  v.  State  (1915),  178  S.  W.  310;  Dodd  v.  Axle  Nut 
Sign  Co.   (1916),  189  S.  W.  663. 

California.— Paho  Alto  &  L.  Assn.  v.  First  Nat.  Bk.  (1917),  164  Pac. 
1124. 

Connecticut— Mersick  v.  Alderman  (1905),  77  Conn.  634,  60  Atl.  109; 
Johnson  Co.  Sav.  Bk.  v.  Walker  (1909),  82  Conn.  24,  s.  c,  79  Conn, 
348,  65  Atl.  1906;  80  Conn.  509,  69  Atl.  15. 

F/orida.— Tucker  v.  Pouts   (1917),  76  So.  130. 

Georgia.— Weil  v.  Carswell,  119  Ga.  873,  47  S.  E.  217. 

///mow.— Strauss  v.  Citizen's  St.  Bk.  of  Elmhurst  (1911),  164  111.  App. 
420. 

Indiana.— 'Fox.  v.  Terre  Haute  Nat.  Bank,  129  N.  E.  33. 

/otw.— McKnight  v.  Parsons  (1907),  136  Iowa  390,  3  N.  W.  858,  125 
Am.  St.  265;  Fullerton  Lumber  Co.  v.  Snouffer  (1908),  139  Iowa  176, 
117  N.  W.  50;  City  Nat.  Bk.  v.  Jordan  (1908),  139  Iowa  499,  117  N.  W. 
578;  Citizen's  State  Bk.  v.  Lankin  (1912),  134  N.  W.  882;  German-Am. 
Bk.  V.  Kelley  (1917),  166  N.  W.  1053;  Builders  Lime  &  Cement  Co.  v. 
Weimer,  170  Iowa  444,  151  N.  W.  100,  Ann.  Cas.  1917C,  1174;  German- 
Am.  Nat.  Bank  v.  Kelley,  166  N.  W.  1053 ;  Ford  v.  Ott,  173  N.  .W  121, 

Kansas. — Underwood  v.  Fosha  (1913),  89  Kans.  768;  Rodgers  v. 
Slaveno  (1917),  165  Pac.  655;  Stevens  v.  Keegan  (1918),  172  Pac.  1025. 

Kentucky.— Austin  v.  First  Nat.  Bk.  of  Scottsville  (1912),  150  Ky. 
113;  Bernard  v.  Napier  (1916),  181  S.  W.  624;  Bk.  of  Willard  v.  Penn- 
sylvania &  Ky.  Firebrick  Co.  (1917),  194  S.  W.  110;  Ohio  Valley  Bk.  & 
Tr.  Co.  V.  Gt.  Southern  Fire  Ins.  Co.  (1917),  197  S.  W.  399;  Sparr  v. 
Fulton  Nat.  Bk.  (1918),  201  S.  W.  310,  179  Ky.  755. 
Ky.  755. 

Louisiana.— WoU  v.  Zachary  &  N.  E.  R.  Co.  (1911),  128  La.  1092, 
55  So.  685;  Dicks  v.  Johnson   (1913),  63  So.  700. 


526  NEGOTIABLE    INSTRUMENTS.  §  58 

Maryland.^SpoercT  v.  Wehland  (1917),  100  Atl.  287;  Herman  v. 
Combs  (1912),  119  Md.  41,  85  Atl.  1044. 

Massachusetts— Symonds  v.  Riley  (1905),  188  Mass.  470,  74  N.  E. 
926;  DeReiset  v.  Longhery  (1910),  205  Alass.  8,  91  N.  E.  297;  Berenson 
V.  Conant  (1913),  214  Mass.  127,  101  N.  E.  60. 

Michigan— Poss  v.  Meader  (1915),  155  N.  W.  425. 

Minnesota.— Bk.  of  Willow  River  v.  Pangerl  (1917),  165  N.  W.  479; 
First  Nat.  Bank  v.  Anderson,  175  N.  W.  544. 

Mississippi— Hawkins  v.  Shields,  100  Miss.  739,  57  So.  4;;  Adair  v. 
Bank  of  Hickory  Flat  (1917),  75  So.  759;  Homes  Bros.  v.  McCall  (1916), 
74  So.  786. 

Missouri.— McUmry  v.  McMurry,  285  Mo.  App.  405,  167  S.  W.  513; 
Greer  v.  Orchards,  175  Mo.  App.  494,  161  S.  W.  875;  Booher  v.  Allen 
153  Mo.  613,  55  S.  W.  238;  Long  v.  Shafer  (1914),  171  S.  W.  690; 
Farmers  &  Traders  Bk.  v.  Laird  (1915),  188  Mo.  App.  322,  175  S.  W. 
116;  Morbrose  Inv.  Co.  v.  Flick  (1915),  174  S.  W.  189;  Hadley  v.  Green- 
ville (1916),  187  S.  W.  597;  Miller  v.  People's  Sav.  Bk.  (1916),  186  S. 
W.  547;  Schlamp  v.  Manewel  (1916),  190  S.  W.  658;  Miller  v.  Chinn 
(1918),  203  S.  W.  212;  Hoeley  v.  South  Side,  Etc.,  217  S.  W.  504; 
Downs  V.  Horton,  —  Mo.  — .,  230  S.  W.  103;  Ensign  v.  Crandall,  —  Mo. 
App.  — ,  231  S.  W.  675. 

il/oH'/flna.— Baker  State  Bk.  v.  Grant  (1917),  166  Pac.  27;  Bukler  v. 
Loftres  (1917),  53  Mont.  546,  165  Pac.  601. 

Nebraska.— Ostenhcrg  v.  Kavka   (1914),  145  N.  W.  713. 

New  York.— Virst  Nat.  Bank  v.  Wood,  128  N.  Y.  35,  27  N.  E.  1020; 
M.  Groh's  Sons  Co.  v.  Schneider  (1901),  34  Misc.  195,  68  N.  Y.  Supp. 
682;  Jennings  v.  Carlucci  (1904),  87  N.  Y.  Supp.  475;  Steinberger  v. 
Hittelman,  156  N.  Y.  Supp.  320,  93  Misc.  Rep.  105;  Am.  Seeding  Machine 
Co.  V.  Slocum  (1907),  108  N.  Y.  Supp.  1042,  58  Misc.  458;  Weiss  v. 
Rieser  (1909),  62  Misc.  292,  114  N.  Y.  Supp.  983;  Bruck  v.  Lambeck 
(1909),  118  N.  Y.  Supp.  494;  Horan  v.  Mason  (1910),  125  N.  Y.  Supp. 
668,  141  A.  D.  89;  Royal  Bk.  of  N.  Y.  v.  Reinschreiber  (1911),  126  N.  Y. 
Supp.  749;  Title  Guaranty  &  Trust  Co.  v.  Pam,  155  N.  Y.  Supp.  333; 
Thornton  v.  Netherlands-Amer.  Steam  Nav.  Co.  (1917),  165  N.  Y.  Supp. 
682;  Kelso  &  Co.  v.  Ellis  (1919),  224  N.  Y.  528.  121  N.  E.  364;  Farmers 
State  Bk.  of  Cologne  v.  McGrath  (1919),  170  N.  W.  209;  Lazarowitz  v. 
Stafford,  167  N.  Y.  Supp.  910. 

North  Dakota.— Bank  v.  Garcean  (1912),  22  N.  Dak.  576,  134  N.  W. 
882;  McCarty  v.  Kepveta  (1913),  139  N.  W.  992. 

0/jio.— Thompson  v.  Citizens  Nat.  Bk.  of  Adams,  N.  Y.  (1909),  32 
O.  C.  C.  131;  Spring  Valley  Nat.  Bk.  v.  Somers  (1910),  21  Ohio  Dec.  772. 

Oklahoma.— City  Nat.  Bk.  v.  Kelly  (1915),  151  Pac.  1172;  Douglass 
v.  Brown  (1916),  155  Pac.  887;  Curless  v.  Ruland  (1916),  155  Pac.  1182; 
Deming  Investment  Co.  v.  Shannon   (1917),  162  Pac.  471. 

Oregon.— Run  v.  Agnus  (1911),  60  Greg.  95,  118  Pac.  284. 

Pennsylvania.— Undsay  v.  Dutton  (1907),  217  Pac.  148,  66  Atl.  250, 


I 


§  59  RIGHTS    OF    HOLDER.  527 

Rhode  Island.— Uoye  v.  Kalashian,  22  R.  I.  101,  46  Atl.  271. 

South  Dakota.— Mnschdwicz  v.  Tidrick    (1918),   167  N.  W.   499. 

r^;ira5.— Landon  v.  Huston  Drug  Co.  (1916),  190  S.  W.  534. 

Virginia.— Art^gon  Coffee  Co.  v.  Rogers  (1906),  105  Va.  51,  52  S.  E. 
843,  8  Ann.  Cas.  623;  Pennington  v.  Third  Nat.  Bk.  of  Columbus,  Ga. 
(1913),  77  S.  E.  455;  Cit.  Nat.  Bk.  v.  ]\ItDannald  (1914),  116  Va.  834, 
83  S.  E.  389;  Ratcliffe  v.  Costello,  117  Va.  563,  85  S.  E.  469. 

Washington. — Bradley  Engineering  &  Mfg.  Co.  v.  Heyburn  (1910), 
56  Wash.  628,  106  Pac.  170;  Moyses  v.  Bell  (1911),  62  Wash.  534,  114 
Pac.  193;  Wells  v.  Duffy  (1912),  69  Wash.  310;  Fournier  v.  Cornish 
(1913),  133  Pac.  9;  Metzger  v.  Sigall    (1914),  145  Pac.  72. 

IVisconsin.— Andrews  v.  Robertson  (1901),  111  Wis.  324,  87  N.  W. 
190,  87  Am.  St.  Rep.  870;  Marling  v.  Fitzgerald  (1909),  138  Wis.  93, 
120  N.  W.  388;  Comstock  v.  Buckley  (1910),  141  Wis.  228,  124  N.  W.  414. 

United  States.— Wirt  v.  Stubblefield  (1900),  17  A.  C.  (D.  C.)  283; 
Bryan  v.  Barr  (1903),  21  D.  C.  App.  190;  Amalgamated  Sugar  Co.  v. 
U.  S.  Nat.  Bk.  of  Portland,  Oreg.  (1911),  109  C.  C.  A.  494;  Nat.  Bk. 
of  Commerce  in  St.  Louis  v.  Sancho  Pag.  Co.  (1911),  110  C.  C.  A.  112, 
186  Fed.  257;  Smith  v.  Nelson  Land  &  Cattle  Co.  (1914),  212  Fed.  56; 
Cutler  V.  Frav  (1917),  240  Fed.  238;  Yates  Center  Nat.  Bk.  v.  Schaede 
(1917),  240  Fed.  240. 

§  59.  Who  deemed  holder  in  due  course.  Every  holder 
is  deemed  prima  facie  to  be  a  holder  in  due  course;  but  when 
it  is  shown  that  the  title  of  any  person  who  has  negotiated  the 
instrument  was  defective,  the  burden  is  on  the  holder  to  prove 
that  he  or  some  person  under  whom  he  claims  acquired  the  title 
as  a  holder  in  due  course.*-  ^^  But  the  last-mentioned  rule  does 
not  apply  in  favor  of  a  party  v.-ho  became  bound  on  the  instru- 
ment prior  to  the  acquisition  of  such  defective  title. 

See  text,  §  126. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

After  evidence  of  defense  and  the  proof  of  plaintiff  that  he  purchased 
for  value  before  maturity  the  burden  shifts.  German-American  Nat. 
Bank  v.  Lewis,  9  Ala.  App.  352,  63  So.  741. 

Reply  that  holder  is  bona  fide  purchaser  should  be  made  to  plea 
of  failure  of  consideration.  Tatum  v.  Commercial  Bank  &  Trust  Co.,  185 
Ala.  249,  64  So.  561. 

Bank  alleged  to  be  holder  is  presumed  holder  in  due  course.  Davies 
V.  Simpson,  —  Ala.  — ,  79  So.  48. 

Proof  as  to  holder  in  due  course  where  fraud  shown.  Deshazo  v. 
L.  &  E.  Lamar,  —  Ala.  App.  — ,  85  So.  586. 

Holder  has  burden  of  proving  itself  holder  in  due  course  nf  notes. 
Navajo-Apache  Bank  &  Trust  Co.  v.  Wakefield,  —  Ariz.  — ,  180  Pac.  529. 


528  NEGOTIABLE   INSTRUMENTS.  §  59 

Where  maker  shows  evidences  of  fraud  in  inception  holder  has  bur- 
den of  showing  his  good  faith  purchase.  Lentz  v.  Landers,  —  Ariz.  — , 
185  Pac.  821. 

When  holder  held  to  have  acquired  a  note  in  good  faith.  Kopperud 
V.  Cookson,  —  Cal.  App.  — ,  194  Pac.  748. 

When  burden  of  proving  himself  holder  in  due  course  is  on  indorsee 
although  maker  has  no  defenses.  Parsons  v.  Utica  Cement  Co.,  80  Conn. 
58,  66  Atl.  1024. 

Uncontradicted  evidence  of  witnesses  not  shown  to  have  been  falsely 
testifying  is  sufficient.  Southwest  Nat.  Bank  v.  Lindsley,  29  Idaho  343, 
158  Pac.  1082. 

Plaintiff  must  affirmatively  show  himself  holder  in  due  course.  First 
Nat.  Bank  of  Shenandoah,  Iowa,  v.  Hall,  —  Ida.  — ,  169  Pac.  936. 

Proof  as  to  being  holder  in  due  course.  Lutz  v.  Matheny,  208  111. 
App.  40. 

When  burden  of  proof  does  not  rest  on  holder  in  due  course.  Page 
v.  W.  F.  Hallam  &  Co.,  212  111.  App.  462. 

Defendant  has  burden  of  proving  fraud  in  inception  of  note.  Wells 
v.   Manufacturers'  &  Merchants'   Life   Ass'n,  213   111.  App.   549. 

Burden  of  showing  holder  a  holder  in  due  course.  Farmers  Trust 
Co.  v.  Sprowl,  —  Ind.  App.  — ,  126  N.  E.  81. 

In  suit  by  indorsee  on  notes  tainted  with  fraud  in  inception  the  plain- 
tiff has  burden  of  showing  good  faith.  City  Deposit  Bank  v.  Green,  138 
Iowa  156,  115  N.  W.  893. 

Defendant's  showing  of  fraud  places  on  plaintiff  burden  of  showing 
due  course  holding.     Cox  v.  Cline,  139  Iowa,  128,  117  N.  W.  48. 

Note  payable  to  A,  B  and  C,  abstracted  by  C  and  negotiated  later, 
C  fraudulently  recovers  note  and  returns  it.     Bona  fide  purchaser  sued 

A  and  B,  who  knew  of  transaction,  held  defendants  had  legal  title.  Voss 
V.  Chamberlain,  139  Iowa  569,  117  N.  W.  269. 

Defendant  should  show  plaintiff  indorsee  not  innocent  purchaser. 
Callendar  Savings  Bank  v.  Loos,  142  Iowa  1,  120  N.  W.  317. 

Plaintiff  must  show  more  than  the  indorsement  regular  in  forn«. 
O'Connor  v.  Kleiman,  143  Iowa  435,  121  N.  W.  1088. 

When  fraud  shown  the  burden  is  on  plaintiff  to  show  good  faith  and 
becomes  a  jury  question.  Arnd  v.  Aylesworth,  145  Iowa  185,  123  N.  W. 
1000.  29  L.  R.  A.  (N.  S.)  638. 

Negotiation  by  payee  to  prevent  defense  places  burden  on  indorsee 
to  show  himself  holder  in  due  course.  Bank  of  Bushnell  v.  Buck  Bros., 
161  Iowa  362,  142  N.  W.  1004. 

Uncontradicted  denial  of  notice  of  fraud  may  justify  direction  of 
verdict.     Robertson  v.  Stock  Co.,  164  Iowa  230,  145  N.  W.   535. 

Defendant  has  burden  of  proving  equitable  defenses.  Steele  v.  In- 
graham,  175  Iowa  653,  155  N.  W.  294. 

Where  no  fraud  at  inception  and  no  fraud  in  circulation  holder  is 
not  required  to  prove  self  holder  in  due  course.  Biggs  v.  Carter  (Iowa), 
161   N.  W.  322. 

Transferee  as  holder  in  due  course  from  prior  holder  in  due  course. 
German-American  Nat.  Bank  v.  Kelley,  —  Iowa  — ,  166  N.  W.  1053. 

Proof  of  acquisition  of  title  as  holder  in  due  course.  Illinois  State 
Bank  of  Chicago  v.  Boysen,  —  Iowa  — ,  168  N.  W.  786. 

Holder  acquiring  title  after  maturity  of  note  obtained  by  fraud  has 
burden  of  showing  his  predecessor  in  title  a  holder  in  due  course.  Ford 
V.  Ott,  —  Iowa  — ,  173  N.  W.  12L 


§  59  RIGHTS    OF    HOI.DEK.  529 

Holder  must  show  that  he  or  some  one  under  whom  he  claims,  ac- 
quired title  in  due  course.     Rinella  v.  Faylor,  —  Iowa  — ,  180  N.  W.  983. 

Effect  of  set-off  or  counter-claim  against  holder  in  due  course.  Stev- 
ens V.  Keegan,  103  Kan.  79. 

Bad  faith  is  derived  from  inference  of  fact  and  not  inference  of  law. 
Gigoux  V.   Moore,  —  Kan.  — ,  184  Pac.  637. 

Plaintiff's  showing  of  purchase  for  value  without  notice  of  infirmity 
court  may  direct  verdict  for  him.    Asbury  v.  Taube,  151  Ky.  142,  151  S. 

w.  zn. 

Transferee  after  maturity  not  holder  in  due  course,  Sparr  v.  Fulton 
Nat.  Bank,  179  Ky.  755. 

Legality  of  instrument  or  consideration  at  inception.  Commercial 
Sec.  Co.  v.  Archer,  179  Ky.  842. 

Maker  must  introduce  evidence  of  want  of  consideration  in  a  suit  by 
one  apparently  a  holder  in  due  course.  Lynchburg  Shoe  Co.  v.  Hens- 
ley,  —  Ky.  — ,  218  S.  W.  243. 

Where  plaintiff  has  burden  of  proving  himself  holder  in  due  course 
the  jury  is  not  bound  to  believe  plaintiff's  witnesses.  Phillips  v.  Eld- 
ridge,  221   Mass.   103,   108   N.  E.  909. 

Bank  has  burden  of  proving  the  good  faith  of  its  cashier  in  making 
purchase.     First  Nat.  Bank  v.  Anderson,  —  Minn.  — .  175  N.  W.  544. 

Representations  of  president  of  bank  which  were  fraudulent  affects  bur- 
den of  proof  of  holder  in  due  course.     State  Bank  of  Rogers  v.  Missia, 

—  Minn.  — ,  175  N.  W.  614. 

In  suit  to  recover  back  money  paid  on  forged  note  the  burden  is 
upon  defendant  to  show  himself  holder  in  due  course.  Jones  v.  Miners' 
&  Merchants'  Bank,  144  Mo.  App.  428,  128  S.  W.  829. 

Proof  of  failure  of  consideration  does  not  put  burden  of  proving 
himself  holder  in  due  course  upon  plaintiff.  Bank  of  Polk  v.  Wood, 
189  Mo.  App.  117,  173  S.  W.  1093. 

Defense  of  fraud  must  be  pleaded  and  proven.  German-American 
Bank  v.  Barnes   (Mo.  App.),  185  S.  W.  1194. 

When  pleadings  do  not  show  plaintiff  innocent  purchaser.  Stannard 
V.  Orleans  Flour  Co.,  93  Neb.  389,  140  N.  W.  dZ^i. 

When  burden  of  proof  of  being  holder  in  due  course  shifts  to  holder. 
Stevens  v.  Weinberg,  —  Mo.  App.  — ,  201  S.  W.  603. 

Burden  of  showing  himself  holder  in  due  course  is  upon  a  subsequent 
holder  of  fraudulently  executed  note.    Mechanics  Savings  Bank  v.  Feenej', 

—  N.  H.  — ,  108  Ati.  295. 

Indorsee  has  burden  of  showing  no  notice  that  corporation  could  not 
enforce  instrument.    Ensign  v.  Christiansen,  —  N,  H.  — ,  109  Atl.  857. 

Proof  of  lack  of  consideration  between  immediate  parties  does  not  af- 
fect presumption  as  to  indorsee  being  holder  in  due  course.  Mitchell  v. 
Baldwin.  88  App.  Div.  265  84  N.  Y.  Supp.  1043. 

Giving  of  value  before  maturity  not  proof  of  good  faith.  Natl.  Bank 
V.  Foley,  54  Misc.  Rep.  126,  103  N.  Y.  Supp.  553. 

When  introduction  of  note  and  indorsements  thereon  sufficient.  Beck 
V.  Mailer,  131  App.  Div.  243,  115  N.  Y.  Supp.  596. 

Where  no  evidence  offered  of  plaintiff  indorsee's  knowledge  of  fraud 
it  is  error  to  direct  verdict.     Barbieri  v.  Casazza,  115  N.  Y.  Supp.  1074. 

Testimony  of  plaintiff  that  he  purchased  for  value  before  maturity  is 
not  contradicted  by  evidence  of  fraud  without  further  showing  of  knowl- 
edge.    Eisenberg  v.  Lefkovitz,  142  App.  Div.  569,  127  N.  Y.  Supp.  595 

Indorsee  having  shown  transfer  of  note  for  adequate  consideration 
evidence  that  original  delivery  was  for  secret  preference  is  not  admissi- 
ble.    Bass  v.  Goldstein,  83  Misc.  Rep.  412,  145  N.  Y.  Supp.  38. 


530  NEGOTIABLE    INSTRUMENTS.  §  59 

When  plaintiff  proves  prima  facie  case  as  holder  in  due  course  the 
burden  shifts  to  defendant.  Title  Guarantee  &  Trust  Co.  v.  Pam,  155 
N.  Y.  Supp.  353. 

Showing  plaintiff  or  one  prior  indorser  a  holder  in  due  course  is 
sufficient.  A.  E.  McBee  Co.  v.  Shoemaker,  174  App.  Div.  291,  160  N.  Y. 
Supp.  251. 

Accommodation  note  obtained  from  accommodating  party  by  fraud  of 
payee  is  affected  by  this  section.  Kennedy  v.  Spilka,  72  Misc.  Rep.  89, 
129  N.  Y.  390. 

Fraud  must  be  against  maker  to  change  burden  of  proof.  Furton 
Bank  v.  Phenix  Bank,   1    (N.  Y.)    Hall  562. 

Circumstances  which  show  bad  faith  may  prevent  one  being  holder  in 
due  course.    Vogel  v.  Pyne,  189  N.  Y.  Supp.  285. 

Defense  of  lack  of  consideration  is  not  excluded  by  failure  of  answer 
to  deny  that  plaintiff  is  holder  in  due  course.  Bank  of  Coney  Island 
V.  Wunberg,  190  N.  Y.  Supp.  203. 

Purchaser  for  value  from  holder  of  defective  title  must  show  his 
good  faith.     Singer  Mfg.  Co.  v.  Summers,  143  N.  C.  102,  55  S.  E.  522. 

Instruction  that  prima  facie  case  of  plaintiff  is  restored  is  erroneous 
as  assuming  truth  of  evidence.  American  Nat.  Bank  v.  Fountain,  148 
N.  C.  590,  62  S.  E.  738. 

Burden  on  defendant  to  show  not  only  infirmity  in  paper  but  plain- 
tiff's knowledge  also.  First  Nat.  Bank  of  Fountain  v.  Brown,  160  N.  C. 
23,  75  S.  E.  1086. 

Qualified  instruction  as  to  holder's  being  prima  facie  holder  in  due 
course  is  erroneous.  Standard  Trust  Co.  v.  Commercial  Nat.  Bank,  167 
N.  C.  260,  83  S.  E.  474. 

When  presumption  that  one  is  holder  in  due  course  not  rebutted  by 
denial  in  answer  of  ownership.  Gulf  States  Steel  Co.  v.  Ford  (N.  C), 
91  S.   E.  844. 

Transferee  may  testify  as  to  his  good  or  bad  faith  after  an  attack 
thereon.     Smathers  v.  Toxaway  Hotel  Co.,  167  N.  C.  468. 

When  plaintiff  not  required  to  prove  himself  holder  in  due  course. 
Moon  V.  Simpson,  170  N.  C.  335,  87  S.  E.  118. 

Defendant  must  offer  evidence  of  defense  to  entitle  him  to  judgment 
although  jury  believe  plaintiff  not  holder  in  due  course.  Raleigh  Bank- 
ing &  Trust  Co.  V.  Clark   (N.  C),  90  S.  E.  200. 

Where  payer's  title  not  shown  defective  defendant  must  overthrow 
prima  facie  presumption  of  holder  in  due  course.  Commercial  Security 
Co.  V.  Jack,  29  N.  D.  67,  150  N.  W.  460. 

Error  to  direct  verdict 'for  plaintiff  when  evidence  tending  to  establish 
defense  introduced.  First  Nat.  Bank  v.  Carroll,  —  N.  D.  — ,  179  N.  W. 
664. 

Maker  must  deny  allegations  in  complaint  that  indorsee  is  holder  in 
due  course  if  he  would  avail  himself  of  plea  of  knowledge  of  equity  by 
plaintiff.     Brown  v.  Feldwert,  46  Ore.  363,  80  Pac.  414. 

Holder  of  defective  title  to  note  must  show  he  acquired  under  holder 
in  due  course.     State  v.  Emery,  —  Okla.  — ,  174  Pac.  770.  _ 

Taking  one  of  series  of  notes  after  part  are  due  as  notice  of  defective 
title  affecting  holder  in  due  course.  LeRoy  v.  Meadows,  —  Okla.  — , 
200  Pac.  858'. 

Who  are  holders  in  due  course.     Hill  v.  McCrow,  88  Ore.  299. 
Not  error  to  permit  case  to  go  to  jurv  upon  uncontradicted  evidence 
of  bank  cashier.    Second  Nat.  Bank  v.  Hoffman,  229  Pa.  429,  78  Atl.  1002. 


§  59  RIGHTS   OF    HOLDER.  531 

When  uncontradictedly  shown  by  cashier,  maker  and  another  witness 
that  bank  had  no  knowledge  of  fraud,  it  is  error  to  permit  case  to  go  to 
jury.     Second  Nat.  Bank  v.  Hoffman,  233  Pa.  390,  82  Atl.  463. 

Burden  of  proof  does  not  shift  only  the  burden  of  proceeding  where 
defendant  does  not  introduce  contradicting  evidence.  Leavitt  v.  Thurs- 
ton, 38  Utah  351,  113  Pac.  11. 

Undisputed  evidence  showing  plaintiff  holder  in  due  course  controls 
where  erroneous  instruction  as  to  burden  of  proof  given.  Miller  v. 
Marks,  46  Utah  257,  148  Pac.  412. 

Pledgee  as  holder  in  due  course.     Interstate  Trust  Co.  v.  Headlund, 

—  Utah  — ,  171  Pac.- 515. 

Transferee  before  maturity  for  value  presumed  holder  in  due  course. 
City  Savings  &  Trust  Co.  v.  Peck,  —  Vt.  — ,  103  Atl.  1020. 

Circumstances  which  do  not  show  knowledge  of  defects.  Duncan  v. 
Carson,  —  Va.  — ,  103  S.  E.  665. 

Defendant  entitled  to  verdict  if  no  evidence  of  good  faith  given  to 
offset  evidence  of  fraud.  Gottstein  v.  Simmons,  59  Wash.  178,  109  Pac. 
596. 

Transfer  of  note  before  maturity  and  before  time  for  performance  of 
consideration  does  not  put  burden  upon  indorsee  after  .maturity.  Moyses 
V.  Bell,  62  Wash.  534,  114  Pac.  193. 

When  reasonable  minds  would  not  differ  as  to  effect  of  uncontra- 
dicted evidence  verdict  may  be  directed.  McLaughlin  v.  Dopps,  84  Wash. 
422,  147  Pac.  6. 

Where  reasonable  men  might  differ  because  of  character  of  plaintiff's 
testimony  it  is  for  the  jury  to  determine  question  of  holder  in  due 
course.     Rohweder  v.  Titus,  85  Wash.  441,  148  Pac.  583. 

Holder's  testimony  alone  may  be  sufficient.  Fisk  Rubber  Co.  of  New 
York  V.  Pinkey,  —  Wash.  —    170  Pac.  581. 

Holder  deemed  prima  facie  to-be  good  faith  holder.    Larsen  v.  Betcher, 

—  Wash.  — ,  195  Pac.  27. 

Evidence  of  making  note  and  indorsement  makes  prima  facie  case  for 
plaintiff  against  pleas  that  plaintiff  is  not  holder  in  due  course.  Holds- 
worth  v.  Anderson  Drug  Co.  (W.  Va.),  87  S.  E.  565. 

Burden  of  showing  plaintiff  holder  in  due  course.  Jones  v.  Brandt, 
_  Wis.  — ,  181  N.  W.  813. 

In  Federal  Court  the  burden  of  proving  fraud  or  bad  faith  is  on  de- 
fendant.   Young  V.  Lowry,  192  Fed.  Rep.  825,  113  C.  C.  A.  149. 

Instruction  as  to  burden  of  proof  being  on  plaintiff  must  also  state  that 
this  is  after  showing  of  negotiation  in  fraud.  Crosby  v.  Reynolds,  196 
Fed.  Rep.  640,  116  C.  C.  A.  314. 

Proof  of  fraud  compels  holder  to  prove  payment  of  value  in  good 
faith  without  notice.     Tatam  v.  Haslar.  23  Q.  B.  D.  345. 

Payee  does  not  have  burden  of  proving  lack  of  knowledge  of  daress 
bv  husband  to  compel  wife  to  make  note.  Talbot  v.  Van  Boris  (1911), 
I'K.  B.  854. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

/^/a&ojnc— Bledsoe  v.  City  Nat.  Bk.  of  Selma  (1912),  7  Ala.  App. 
195,  60  So.  942;  Bruce  v.  Citizen's  Nat.  Bk.  of  Lineville  (1913),  6Z  So. 
82;  Ger.-Am.  Nat.  Bk.  v.  Lewis  (1913),  63  So.  741;  Tatum  v.  Commercial 
Bk.  &  Tr.  Co.  (1914),  (A  So.  561;  Ger.-Am.  Nat.  Bk.  v.  Lewis  (1^13),  9 


532  NEGOTIABLE    INSTRUMENTS.  §  59 

Ala  App.  352;  Hudson  v.  Repton  State  Bk.  (1917),  75  So.  695;  Davies 
V.  Simpson  (1918),  79  So.  48;  Miller  v.  Johnson.  189  Ala.  354,  357;  El- 
more Bank  v.  Avant.  189  Ala.  418,  66  So.  509;  Deshazo  v.  L.  &  E. 
Lamar,  85  So.  586. 

Arizona. — Navajo,  Etc.,  v.  Wakefield,  180  Pac.  529;  Lentz  v.  Landers, 
185  Pac.  821. 

Arkansas.— P'mson  v.  Cobb  (1914),  166  S.  W.  943;  Keathley  v.  Hol- 
land Banking  Co.  (1914),  166  S.  W.  953;  Williamson  v.  Miles  (1914), 
169  S.  W.  368;  Finney  v.  Rollins  (1917),  192  S.  W.  210. 

California. — Burns  v.  Bauer  (1918),  174  Pac.  346;  Kopperud  v.  Cook- 
son,  194  Pac.  748. 

Co /orarfo.— Johnson  Co.  Sav.  Bk.  v.  Gregg  (1911),  51  Colo.  358,  117 
Pac.  1003;  First  Nat.  Bk.  of  Iowa  City  v.  Smith  (1913),  136  Pac.  460; 
Irvine  v.  Minshull  (1915),  152  Pac.  1150. 

Connecticut. — Parsons  v.  Utica  Cement  Mfg.  Co.  (1907),  80  Conn. 
58,  66  Atl.  1024.  82  Conn.  333,  73  Atl.  785;  Johnson  Co.  Sav.  Bk.  v. 
Walker  (1909),  82  Conn.  24;  s.  c.  79  Conn.  348,  65  Atl.  132  (1906),  80 
Conn.  509,  69  Atl.  15;  Harris  v.  Johnson  (1915),  93  Atl.  126;  New  Haven 
Nat.  Banking  Assn.  v.  Jordan  (1918),  104  Atl.  392. 

Florida. — Berryhill-Cromatic  Co.  v.  Manitowoc  Shipbuilding  &  Dry 
Dock  Co.  (1913),  63  So.  720;  Bass  v.  Lee  (1917),  74  So.  7. 

Idaho.— Winter  v.  Nobs  (1910),  19  Ida.  18.  112  Pac.  525;  Park  v. 
Johnson  (1911),  20  Ida.  548,  119  Pac.  52;  Shellenberger  v.  Nourse  (1911), 
20  Ida.  323,  118  Pac.  508;  Brown  v.  Miller  (1912),  22  Ida.  307.  125  Pac. 
981;  Altschul  v.  Rogers  (1912),  63  Ida.  512,  126  Pac.  1048;  Southwest 
Nat.  Bank  v.  Lindsley,  29  Ida.  343,  158  Pac.  1082;  First  Nat.  Bank  of 
Shenandoah,  Iowa,  v.  Hall,  169  Pac.  936. 

Illinois.— Peterson  v.  Emery  (1910),  154  III.  App.  294;  Stitzel  v.  Mil- 
ler (1910),  157  111.  App.  401;  Black  v.  Downes  (1912),  176  111.  App.  358; 
Richter  v.  Burdock  (1913),  257  111.  410,  100  N.  E.  1063;  Christina  v. 
Cuseniano  (1912),  129  111.  873,  57  So.  157;  McClorv  v.  Towne  (1912),  173 
111.  App.  113;  Weir  &  Craig  Mfg.  Co.  v.  Bonus  (1913),  177  111.  App. 
626;  Justice  v.  Stonecipher  (1915),  108  N.  E.  722,  267  111.  448;  Lutz  v. 
Matheny,  208  111.  App.  40;  Page  v.  W.  F.  Hallam  &  Co.,  212  111.  App. 
462;  Wells  v.  Manufacturers'  &  Merchants*  Life  Assn.,  213  111.  App.  599. 

Indiana.— Bright  Nat.  Bk.  of  Flora  v.  Hartman  (1915),  109  N.  E. 
846;  Boxell  v.  Bright  Nat.  Bk.  (1916),  112  N.  E.  3;  Farmers'  Trust  Co. 
V.  Sprowl,  126  N.  E.  81. 

/oK'fl.— Keegan  v.  Rock  (1905),  128  Iowa  39,  102  N.  W.  805;  Vander 
Ploey  V,  Van  Zunk  (1907).  135  Iowa  350,  112  N.  W.  807;  McKnight  v. 
Parsons  (1907),  136  Iowa  390.  113  N.  W.  858,  125  Am.  St.  365;  Hawkins 
v.  Young  (1908),  114  N.  W.  1041;  City  Dept.  Bk.  v.  Green  (1908),  138 
Iowa  156,  lis  N.  W  893;  Cox  v.  Cline  (1908),  139  Iowa  128.  117  N.  W. 
48;  Voss  V.  Chamberlain,  139  Iowa  569,  117  N.  W.  269;  Citv  Nat.  Bk. 
v.  Jordan  (1908),  139  Iowa  499,  117  N.  W.  578;  Callendar  Savs.  Bank  v. 
Loos.  142  Iowa  1,  120  N  W.  317:  O'Connor  v.  Kleiman  (1909).  143 
Iowa  435.  121  N.  W.  1088;  Iowa  Nat.  Bk.  v.  Carter  (1909).  144  Iowa 
715,  123  N.  W.  237;  Arnd  v.  Aylesworth  (1909),  145.  Iowa  185,  123  N.  W. 


§  59  RIGHTS    OF    HOLDER,  533 

1000.  29  L.  R.  A.  (N.  S.)  638;  Kushner  v.  Abbott  (1912),  137 
N.  W.  913;  Bank  of  Bushnell  v.  Buck  Bros.  (1913),  161  Iowa  362, 
142  N.  W.  1004;  LeClere  v.  Philpott  (1915),  151  N.  W.  825;  Robertson 
V.  United  States  Live  Stock  Co.  (1914),  164  Iowa  230,  145  N.  W.  535; 
Stotts  V.  Fawfield  (1914),  145  N.  W.  61;  Biggs  v.  Carter  (1917),  161  N. 
W.  322;  State  v.  Wegener  (1917),  162  N.  W.  1040;  German-Am.  Bk.  v. 
Kelley  (1918),  166  N.  W.  1053;  Limdeau  v.  Hamilton  (1918),  169  N.  W. 
208;  Steele  v.  Ingraham,  175  Iowa  653,  155  N.  W.  294;  German- American 
Nat.  Bank  v.  Kelley,  166  N.  W.  1053;  Illinois  State  Bank  of  Chicago  v. 
Boysen,  168  N.  W.  786;  Ford  v.  Ott,  173  N.  W.  525;  Rinclla  v.  Faylor, 

180  N.  W.  983. 

Kansas.— Ahemeyer  v.  First  Nat.  Bk.  of  Horton  (1907),  76  Kans. 
877,  92  Pac.  1109;  Underwood  v.  Quantie  (1911),  116  Pac.  361;  Murchi- 
son  V.  Nies  (1912),  87  Kans.  77;  The  Stock  Ex.  Bk.  v.  Wykes  (1913), 
88  Kans.  750;  Ireland  v.  Shore  (1914),  137  Pac.  926;  Nat.  Bk.  v.  Lyons 
Exchange  Bk.  (1917).  164  Pac.  137;  Security  State  Bk.  of  Wichita  v. 
Seannier  (1919),  178  Pac.  239;  Stevens  v.  Keegan,  103  Kans.  79;  Gigout 
V.  Moore,  18  Pac.  637. 

Kentucky.— Wilkins  v.  Usher  (1906),  123  Ky.  696,  97  S.  W.  37; 
Citizens  Bk.  v.  Bk.  of  Waddy  (1907),  126  Ky.  169,  103  S.  W.  249;  Cal- 
laghan  v.  Louisville  Dry  Goods  Co.  (1910),  14  Ky.  712,  131  S.  W.  995; 
Campbell  v.  Fourth  Nat.  Bk.  of  Cincinnati  (1900),  137  Ky.  555,  126  S. 
W.  114;  Asbury  v.  Taube  (1912),  151  Ky.  142,  151  S.  W.  372;  Muir  v. 
Edelen  (1913),  160  S.  W.  1048;  Harrison  v.  Ford  (1914).  165  S.  W. 
663;  Pratt  v.  Rounds   (1914),  169  S.  W.  848;  Bernard  v.  Mapier  (1916), 

181  S.  W.  624;  Mackenzie  v.  Eschman's  Exrs.  (1917),  192  S.  W.  521; 
Commercial  Sec.  Co.  v.  Archer  (1918),  179  Ky.  842,  201  S.  W.  479; 
Sparr  v.  Fulton  Nat.  Bank,  179  Ky.  755 ;  Lynchburg  Shoe  Co.  v.  Hensley, 
218  S.  W.  243. 

Maryland. -Arnd  v.  Heckert  (1908),  108  Md.  300,  70  Atl.  417;  Weant 
V.  Southern  Tr.  &  Dep.  Co.  (1910),  112  Md.  463,  77  Atl.  289;  Stouffer  v. 
Alford  (1910),  114  Md.  110,  78  Atl.  387;  Wilson  v.  Kelso  (1911),  115 
Md.  62,  80  Atl.  895. 

Massachusetts.— Savage  v.  Goldsmith  (1902),  181  Mass.  420;  Reg- 
ester's  Sons  &  Co.  V.  Reed  (1904),  185  Mass.  226,  70  N.  E.  53;  Bass  v. 
Inhabitants  of  Wellesley  (1906),  192  Mass.  526;  Feigenspan  v.  McDon- 
ald (1909),  201  Mass.  341,  87  N.  E.  624;  Berenson  v.  Conant  (1913),  214 
Mass.  127,  101  N.  E.  60;  Lewiston  Trust  &  Safe  Dep.  Co.  v.  Shackford 
(1913),  213  Mass.  432;  Munroe  v.  Stanley  (1915),  107  N.  E.  1012;  Nat. 
Inv  &  Security  Co.  v.  Cirey  (1916),  111  N.  E.  357;  Colonial  Fur  Ranch- 
ing Co.  V.  First  Nat.  Bk.  (1917),  116  N.  E.  731;  Phillips  v.  Eldridge,  221 
Mass.  103,  108  N.  E.  909. 

Michigan. — Gen.  Conf.  Assn.  etc.  v.  Mich.  Sanitarium  (1911),  166 
Mich.  504;  Merchants  Nat.  Bk.  v.  Wadsworth  (1911),  166  Mich.  528, 
131  N  W.  1108;  Hakes  v.  Thayer  (1911),  131  N.  W.  174  Poss  v.  Meader 
(1915),  155  N.  W.  425;  Van  Slyke  v.  Rooks   (1914),  147  N.  W.  579. 

Minnesota.— Gcr.-Am.  Bk.  of  Ritzville  v.  Lyons  (1914).  149  N.  W. 
658;  Stevens  v.  Pearson  (1917),  163  N.  W.  770;  Rosenstein  v.  Berman, 
116  Minn.  231,  133  N.  W.  792;  First  Nat.  Bank  v.  Anderson,  175  N.  W. 
544;  State  Bank  of  Rogers  v.  Missia,  175  N.  W.  614. 


534  NEGOTIABLE    INSTRUMENTS.  §  59 

Missouri— Burchett  v.  Fink  (1909),  139  Mo.  App.  381;  Jobes  v.  Wil- 
son, 140  Mo.  App.  281,  124  S.  W.  548;  State  Nat.  Bk.  of  Shawnee  v. 
Levy  (1910),  141  Mo.  App.  288;  Johnson  Co.  Sav.  Bk.  v.  Redfearn  (1910), 
141   Mo.   App.   386;   Bk.   of   Ozark  v.   Hanks    (1910),   142   Mo.   App    110, 

125  S.  W.  221;  Reeves  v.  Litts  (1910),  143  Mo.  App.  196,  128  S.  W.  246; 
Johnson  Co.  Sav.  Bk.  v.  M|ills  (1910),  143  Mo.  App.  265,  127  S.  W. 
425;  Bk.  of  Ozark  v.  Tuttle  (1910),  144  Mo.  App.  294;  Settles  v.  Moore 
&  Scobee  (1910),  149  Mo.  App.  724;  Jones  v.  Miner's  &  Merchants  Bk. 
(1910),  144  Mo.  App.  428,  128  S.  W.  829;  Link  v.  Jackson  (1911),  158 
Mo.  App.  63,  139  S.  W.  588,  s.  c.  164  Mo.  App.  195,  147  S.  W.  1114; 
Birch  Tree  State  Bk.  v.  Dowler  (1912),  163  Mo.  65,  145  S.  W.  843; 
Hill  V.  Dillon  (1913),  161  S.  W.  881;  State  Bk.  of  Freeport  v.  Cape  Gir- 
ardeau &  C.  R.  Co.  (1913),  155  S.  W.  1111;  Nance  v.  Hayward  (1914), 
170  S.  W.  429;  Wade  v.  Boone  (1914),  168  S.  W.  360;  Wing  v.  Un.  Cent. 
Life  Ins.  Co.  (1914),  168  S.  W.  917;  Bank  of  Polk  v.  Wood  (1915). 
173  S.  W.  1093;  Chandler  v.  Hedrick  (1915).  173  S.  W.  93;  Farmers  & 
Merchants  Bk.  v.  Munson  (1915),  177  S.  W.  778;  German-American 
Bank  v.  Barnes  (Mo.  App.),  185  S.  W.  1194;  Engles  v.  Williams  (1918), 
203  S.  W.  671 ;  Bank  of  Polk  v.  Wood,  189  Mo.  App.  62,  173  S.  W  1093 ; 
Hill  V.  Dillon,  176  Mo.  App.  192,  161  S.  W.  881 ;  Stevens  v.  Weinberg, 
201   S.  W.  603. 

Montana—State  Bk.  of  Moore  v.  Forsythe  (1910),  41  Mont.  249;  Nj. 
W.  Improvement  Co.  v.  Rhoades  (1916),  158  Pac.  832;  Citizen's  State 
Bk.  of  Roundup  v.   Smelling   (1919),  178  Pac.  744. 

Nebraska.— Bolew  v.  Wright  (1911),  89  Neb.  116,  131  N.  W.  185; 
Central  Nat.  Bk.  v.  Ericson  (1912),  92  Neb.  396,  138  N.  W.  563;  Stan- 
nard  v.  Orleans  Flour  Co.,  93  Nebr.  389,  140  N.  W.  636;  Ostenberg  v. 
Kavka  (1914),  145  N.  W.  713;  Marshall  v.  Kirschbaum  (1917),  161  N. 
W.  577;  Douglass  v.  Burton   (Neb.),  154  N.  W.  718. 

New  Hampshire. — Mechanics  Savings  Bank  v.  Feeney,  108  Atl.  295 ; 
Ensign  v.  Christianson,  109  Atl.  857. 

New  Jersey. — Louis  Dejonge  &  Co.  v.  Woodport  Hotel  &  Land  Co. 
(1909),  77  N.  J.  L.  233,  72  Atl.  439. 

New  Mexico.— Gihhy  v.  Carrillo    (1919),   177  Pac.  894. 

Nezu  Fory^.— Lucker  v.  Iba  (1900),  54  A.  D.  566,  66  N.  Y.  Supp.  1019; 
Cahen  v.  Everitt  (1901),  67  A  D.  86;  Sutherland  v.  Mead  (1903),  80 
A.  D.  103,  80  N.  Y.  Supp.  504;  Karsch  v.  Pottier  &  Stymers  Mfg.  & 
Importing  Co.  (1903),  81  N.  Y.  782,  82  A.  D.  230  Mitchell  v.  Baldwin 
(1903),  88  A.  D.  265,  84  N.  Y.  Supp.  1043;  Packard  v.  Windholz  (1903), 
40  Misc.  347,  affirmed  88  A.  D.  365;  Benedict  v.  Kress  (1904),  89  N.  Y. 
Supp.  607;  Consolidated  Nat.  Bk.  v.  Kirkland  (1904),  99  A.  D.  121,  91 
N.  Y.  Supp.  353;  Engle  v.  Hyman  (1907),  104  N.  Y.  Supp.  390,  54  Misc. 
251;  Colborn  v.  Arbrean  (1907),  54  Misc.  623.  104  N.  Y.  Supp.  968;  Nat. 
Bk.  of  Barre  v.  Foley  (1907),  54  Misc.  126,  103  N.  Y.  Supp.  553;  Siegel 
V.  Oehl  (1908),  110  N.  Y.  Supp.  916;  Strauss  v.  St.  Louis  Co.  Bk.  (1908), 

126  A.  D.  647;  Joveshof  v.  Rockey,  109  N.  Y.  Supp.  818.  58  Misc.  Rep. 
559;  Packard  v.  Fielinolo  (1909),  114  N.  Y.  Supp.  753;  Barberi  v.  Cas- 
azza,  115  N.  Y.  Supp.  1074;  Beck  v.  Mailer  (1909),  115  N.  Y.  Supp.  596, 
131  A.  D.  243;  Becker  v.  Hart  (1909),  120  N.  Y.  Supp.  270;  Republic 
Life  Ins.  Co.  v.  Hudson  Trust  Co,  (1909),  130  A.  D.  618;  Manufactur- 


§  59  RIGHTS    OF    HOLDER.  535 

er's  Commercial  Co.  v.  Blitz  (1909), '131  A.  D.  17,  115  N.  Y.  Supp.  402; 
Midwood  Park  Co.  v.  Baker  (1910),  128  N.  Y.  Supp.  954;  Burst  v.  Lee 
(1911),  143  A.  D.  614,  127  N.  Y.  Supp.  1040;  Kennedy  v.  Spilka  (1911), 
129  N.  Y.  Supp.  390;  Eisenberg  v.  Lefkowitz  (1911),  127  N.  Y.  Supp. 
595,  142  A.  D.  569;  Bass  v.  Goldstein  (1913),  83  Misc.  412.  145  N.  Y. 
Supp.  38;  Laing  v.  Hudgens  (1913),  143  N.  Y.  Supp.  763,  82  Misc.  388; 
Nat.  Discount  Co.  v.  William  R.  Jenkins  Co.  (1913),  143  N.  Y.  Supp. 
996;  Spencer  &  Co.  v.  Brown  (1913),  143  N.  Y.  Supp.  994;  Waxberg  v. 
Stappler  (1913),  83  Misc.  78,  144  N.  Y.  Supo.  608;  Cleary  v.  Dykeman 
(1914),  146  N.  Y.  Supp.  611;  Peterson  v.  Alton  (1914),  147  N.  Y.  Supp. 
280;  Zivendling  v.  Kitrosser  (1914),  148  N.  Y.  Supp.  99;  Interboro 
Brewing  Co.  v.  Doyle  (1915).  151  N.  Y.  Supp.  325;  Ecks  v.  Montanara 
(1915),  152  N.  Y.  Supp.  1010;  Title  Guarantee  &  Tr.  Co.  v.  Pam,  155  N. 
Y.  Supp.  333,  339;  Mech.  &  Metals  Nat.  Bk.  v.  Termini  (1915),  156  N. 
Y.  Supp.  433;  A.  E.  McBee  Co.  v.  Shoemaker,  160  N.  Y.  Supp.  251,  174 
A.  D.  291;  Anchor  Realty  Co.  v.  Bankers  Trust  Co.  (1916),  161  N.  Y. 
Supp.  300;  Jarone  v.  Russo-Iodice  Realty  Co.  (1917),  164  N.  Y.  Supp. 
135;  Monk  v.  23d  Ward  Bank  (1917),  165  N.  Y.  Supp.  1055;  Thornton 
V.  Netherlands  Steam  Nav.  Co.  (1917),  165  N.  Y.  Supp.  682;  Kuflik  v. 
Vaccaro  (1918),  170  N.  Y.  Supp.  13;  Martindale  v.  DeKay  (1918),  166 
N.  Y.  Supp.  405;  Korn  v.  Davis  (1919),  172  N.  Y.  Supp.  440;  Robert 
G.  Thomas  Co.  v.  Zeiter  (1918),  171  N.  Y.  Supp.  244;  Vogel.  v.  Pyne, 
189  N.  Y.  Supp.  285;  Bank  of  Coney  Island  v.  Weinberg,  190  N.  Y. 
Supp.  203. 

North  Carolina.— Mayers  v.  McRimmon  (1906),  140  N.  Car.  640,  53 
S.  E.  447,  111  Am.  St.  879;  Singer  Mfg.  Co.  v.  Summers  (1906),  143  N. 
Car.  102,  55  S.  E.  522;  Am.  Nat.  Bk.  v.  Fountain  (1908).  62  S.  E.  738, 
148  N.  Car.  590;  Murchison  Nat.  Bk.  v.  Dunn  Oil  Mills  Co.  (1909),  150 
N  Car.  718  64  S.  E.,  885;  Johnston  Co.  Sav.  Bk.  v.  Chase  (1909),  151 
N.  Car.  108;  First  Nat.  Bk.  of  Kansas  City  v.  Griffin  (1910),  153  N.  Car. 
72;  Mvers  v.  Petty  (1910),  153  N  .Car.  462;  Chadwick  v.  Kirkman 
(1912),  159  N.  Car.  259,  74  S.  E.  968;  First  Nat.  Bk.  of  Lumberton  v. 
Brown  (1912),  160  N.  Car.  23;  Fidelity  Trust  Co.  v.  Ellen  (1913),  79 
S.  E.  263;  Standing  Stone  Nat.  Bk.  v.  Walser  (1913),  162  N.  Car.  53, 
77  S.  E.  1006;  Vaughan  v.  Exam.  (1913),  161  N.  Car.  492,  77  S.  E.  679; 
Smathers  v.  Toxaway  Hotel  Co.,  167  N.  Car.  468;  Third  Nat.  Bk.  of  St. 
Louis  V.  Exam.  (1913),  79  S.  E.  498;  First  Nat.  Bk.  v.  Warsaw  Drug  Co. 
(1914),  81  S.  E.  993;  Fidelity  Trust  Co.  v.  Whitehead  (1914),  80  S.  E. 
1065;  Merchants  Nat.  Bk.  of  Indianapolis  v.  Branson  (1914),  81  S.  E. 
410;  Standard  Trust  Co.  v.  Commercial  Nat.  Bank,  167  N.  Car.  260.  83 
S.  E.  474;  Raleigh  Banking  &  Tr.  Co.  v.  Clark  (1906),  90  S.  E.  200; 
Gulf  States  Steel  Co.  v.  Ford  (1917),  91  S.  E.  844;  Metropolitan  Dis- 
count Co.  V.  Becker  (1919),  97  S.  E.  495. 

North  Dakota.— DrenkaU  v.  Movins  State  Bk.  (1911),  118  N.  Dak. 
10,  88  N.  W.  724;  Tamlyn  v.  Peterson  (1906),  15  N.  Dak.  488,  107  N. 
W.  1081;  Kerr  v.  Anderson  (1907).  16  N.  Dak.  36,  111  N.  W.  614;  Mc- 
Carty  v.  Kepweta  (1913),  139  N.  W.  992;  Farmer's  Bank  of  Mercer  Co. 
V.  Riedlinger  (1914),  146  N.  W.  556;  Northern  Savings  Bk.  v.  Kellv 
(1915),  154  N.  W.  650;  Commercial  Security  Co.  v.  Jack.  29  N.  Dak. 
67,  150  N.  W.  460;  First  Nat.  Bank  v.  Carroll,  179  N.  W.  664. 

Ohio.— Wehrman  v.  Beech  (1906),  28  O.  C.  C.  128;  Carrara  Paint 
Agenvy  Co.  v.  Nat.  Bk.  of  Barberton  (1906),  29  O.  C.  C.  485;  Thompson 


536  NEGOTIABLE    INSTRUMENTS.  §  59 

V.  Citizens  Nat.  Bk.  of  Adams  (1909),  32  O.  C.  C.  131 ;  Spring  Valley  Nat. 
Bk.  V,  Somers  (1910),  21  Ohio  Dec.  772;  Hamilton  Mach.  Tool  Co.  v. 
Memphis  Nat.  Bk.   (1911),  84  Ohio  St.  184,  95  N.  E.  W. 

Oklahoma.— Wood  v.  Stickle  (1912),  128  Pac.  1082;  Hudson  v.  Moore 
(1913),  130  Pac.  774;  Jones  v.  Citizen's  State  Bk.  (1913),  135  Pac.  373; 
Western  Ex.  Bk.  of  Kansas  City  v.  Coleman  (1913),  132  Pac.  488;  Gour- 
ley  V.  Pioneer  Loan  Co.  (1915),  151  Pac.  1072;  Waldock  v.  Winkler 
(1915),  152  Pac.  99;  Barry  v.  Kniseley  (1916),  155  Pac.  1168;  Pittsburg 
Mfg.  Inst.  Co.  V.  Robins  (1916),  158  Pac.  929;  Mangold  &  Glandt  Bk. 
V.  Uterback  (1918),  174  Pac.  542;  State  v.  Emery,  174  Pac.  770;  LeRoy 
V.  Meadows,  —  Okla.  — ,  200  Pac.  858. 

Oregon.— Brown  v.  Feldwert  (1905)  ;  46  Ore.  363,  80  Pac.  414;  Ever- 
ding  &  Farrell  v.  Taft  (1916),  160  Pac.  1160;  Hill  v.  McCrow,  88  Oreg. 
299. 

Pennsvlvania. — Kensington  Nat.  Bk.  v.  Ware  (1906),  32  Pa.  Super. 
Ct.  247;  Hatboro  Nat.  Bk.  v.  Stevenson  (1907),  33  Pa.  Super.  Ct.  144; 
Stoufifer  v.  Kelchner  (1908),  38  Pa.  Super.  Ct.  475;  Lowry  Nat.  Bk.  v. 
Hazard  (1909),  223  Pa.  520;  Schultheis  v.  Sellers  (1909).  223  Pa.  506, 
72  Atl.  887;  Grange  Trust  Co.  v.  Brown  (1911),  49  Pa.  Super.  Ct.  274; 
Second  Nat  Bk.  of  Pittsburg  v.  Hofifman  (1911),  229  Pa.  Super.  Ct.  429, 
78  Atl,  1002;  First  Nat.  Bk.  of  Bangor  v.  Paff  (1913),  87  Atl.  841 ;  Levy  v. 
Gilligan  (1914),  90  Atl.  647;  Second  Nat.  Bank  v.  Hoffman,  233  Pa.  390, 
82  Atl.  463. 

Rhode  Island.— Cook  v.  Am.  Tubing  &  Webbing  Co.  (1906),  28  R.  L 
41,  65  Atl.  641. 

South  Dakota.— Barnard  v.  Tidrick  (1915).  152  N.  W.  690;  Peterson 
V.  Hoftiezer   (1915),  150  N.  W.  934;   Shade  v.  Barnes  Bros.   (1915),  151 

N.  W.  42. 

Texas.— Tuke  v.  Feagin  (1915),  181  S.  W.  805. 

Utah.— Cole  Banking  Co.  v.  Sinclair,  34  Utah  454,  98  Pac.  411 ;  War- 
ren V.  Smith  (1909),  35  Utah  455,  100  Pac.  1069;  McCormick  v.  Swem 
(1909),  36  Utah  6,  102  Pac  626;  Miller  v.  Marks  (1915),  46  Utah  257, 
148  Pac.  412;  Leavitt  v.  Thurston,  38  Utah  351,  113  Pac.  77;  Interstate 
Trust  Co.  v.  Headlund,  171  Pac.  515. 

Vermont.— City  Sav.  &  Trust  Co.  v.  Peck  (1918),  103  Atl.  1020. 

Virginia. — Aragon  Coffee  Co.  v.  Rogers  (1906),  105  Va.  51;  Hawse 
V.  First  Nat.  Bk.  of  Piedmont,  W.  Va.  (1912),  113  Va.  588;  Miller  v. 
Norton  &  Smith  (1913),  77  S.  E.  452;  Duncan  v.  Carson,  103  S.  E.  665. 

Washington.— Keene  v.  Behan  (1905),  40  Wash.  505,  82  Pac.  884; 
Gosline  v.  Dryfoos  (1907),  45  Wash.  396,  88  Pac.  634;  Ireland  v.  Scharp- 
enburg  (1909),  54  Wash.  558,  103  Pac.  801;  Bratiley  Engineering  &  Mfg. 
Co.  V.  Heyburn  (1013),  56  Wash.  628,  106  Pac.  170;  Cedar  Rapids  Nat. 
Bk.  V.  Myhre  (1910),  57  Wash,  596,  107  Pac.  518;  Gottstein  v.  Simmons 
(1910),  59  Wash.  178,  109  Pac.  596;  City  Nat.  Bk.  of  Lafayette  v.  Mason 
(1911),  58  Wash.  492,  108  Pac.  107;  Moyses  v.  Bell  (1911),  62  Wash.  534, 
114  Pac.  193;  Scandinavian  Am.  Bk.  v.  Johnston  (1911),  6  3Wash.  187,  115 
Pac.  102;  Wells  v.  Duffy  (1912),  69  Wash.  310;  Fournier  v.  Cornish 
(1913),  133  Pac.  9;  Union  Inv.  Co.  v,  Rosenzweig  (1914),  139  Pac,  874; 


§  59  RIGHTS    OF    HOLDER.  537 

McLaughlin  v.  Dopps  (1915),  84  Wash.  422,  147  Pac.  6;  City  Nat.  Bk.  of 
Shelton  Elec.  Co.  (1917),  164  Pac.  993;  Rohwedcr  v.  Titus,  85  Wash,  441, 
148  Pac.  583 ;  Fisk  Rubber  Co.  v.  Pinkey,  170  Pac.  581 ;  Larsen  v.  Betcher, 
195  Pac.  27. 

West  Virginia. — Interstate  Finance  Co.  v.  Schroder  (1914),  81  S.  E. 
552;  Holdsworth  v.  Anderson  Drug  Co.   (W.  Va.),  87' S.  E.  565. 

Wisconsin.— Kinney  v.  Kruse,  28  Wis.  183;  Hodge  v.  Smith  (1907), 
130  Wis.  326,  110  N.  W.  192;  Pclton  v.  Spider  Lake  S.  &  I.  L.  Co. 
(1907),  132  Wis.  219,  112  N.  W.  29,  122  Am.  St.  963;  Northfield  Nat.  Bk. 
V.  Arndt  (1907),  132  Wis.  383,  112  N.  W.  451;  Shaffer  v.  Peavey  (1915). 
152  N  .W.  829;  Jones  v.  Brandt,  181  N.  W.  813. 

Wyoming. — Acme  Coal  Co.  v.  Northrup  Nat.  Bk.  of  lola  (1915),  146 
Pac.  593;  Holdsworth  v.  BIyth  &  Fargo  (1915),  146  Pac.  603;  Capitol 
Hill  St.  Bk.  V.  Rawlings  Nat.  Bk.  (1916),  160  Pac.  1171. 

United  States.— Bryan  v.  Barr  (1903),  21  D.  C.  App.  190;  Johnson 
Co.  Sav.  Bk.  V.  Mendell  (1911),  36  A.  C  (D.  C.)  413;  Thompson  v. 
Franklin  Nat.  Bk.  (1917),  45  D.  C.  App.  218;  First  Nat.  Bk.  of  Shen- 
andoah V.  Linver  (1911),  187  Fed.  16,  109  U.  S.  C.  C.  A.  70;  Nat.  Bk.  of 
Com.  in  St.  Louis  v.  Sancha  Pag.  Co.  (1911),  110  C.  C.  A.  112,  106  Fed. 
257;  In  re  Hill  (1911),  187  Fed.  214;  Young  v.  Lowry,  192  Fed.  Rep. 
825,  113  C.  C.  A.  149;  Amalgamated  Sugar  Co.  v.  U.  S.  Nat.  Bk.  of 
Portland,  Oreg.  (1911).  109  C  C.  A.  494;  Crosly  v.  RejTiolds.  196  Fed. 
Rep.  640,  116  C.  C.  A.  314;  Mills  v.  Keep  (1912),  197  Fed.  360;  Washing- 
ton, Etc.  Ry.  Co.  V.  Murray,  211  Fed.  Rep.  440,  128  C.  C.  A.  112. 


ARTICLE  V. 


LIABILITY   OF   PARTIES. 


60.  Liability  of  maker. 

61.  Liability  of  drawer. 

62.  Liability   of    acceptor. 

63.  When     person     deemed     in- 

dorser. 

64.  Liability     of     irregular      in- 

dorser. 

65.  Warranty;  where  negotiation 

by   delivery,   et   cetera. 


§  66.  Liability    of    general    indors- 
ers. 

67.  Liability    of    indorser    where 

paper  negotiable  by  delivery. 

68.  Order     in     v/hich     indorsers 

are  liable. 

69.  Liability  of  agent   or   broker. 


Sections  60  to  69  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  law  in  the  various  states 
and  territories  beginning  on  page  261. 

§  60.  Liability  of  maker.  The  maker  of  a  negotiable  in- 
strument by  making  it  engages  that  he  will  pay  it  according  to  tis 
tenor;  and  admits  the  existence  of  tlie  payee  and  his  then  capacity 
to  indorse.^'  ^^ 

See  text,   §  120. 

Corresponding  provision  of  English  Bills  of  Exchange  Act :  See  88 
(1),  (2). 

•^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Where  statute  does  not  expressly  declare  contract  void  out  of  which  the 
note  arose  such  is  necessarily  implied.  Wheatehead  v.  Coker  (Ala.  App.), 
76  So.  484. 

Foreign  corporation  payee  not  complying  with  statutory  conditions 
as  to  right  to  do  business.  Citizens  Nat.  Bank  v.  Bucheit  (Ala.  App.), 
71  So.  82. 

Maker  refuses  payment  without  demanding  the  exhibition  of  note. 
Freudenberg  v.  Lucas,  —  Cal.  App.  — ,  175  Pac.  482. 

Payee  a  foreign  corporation  not  complying  with  statutory  conditions 
as  to  right  to  do  business.     McAIann  v.  Walker.  31   Colo.  261,   72   Pac. 

1055. 

Twenty  months  unreasonable  time  on  demand  note  for  negotiation. 
Title  Loan  &  Investment  Co.  v.  Fuller,  —  Kan.  — ,  184  Pac.  W. 

Evidence— Burden  of  Proof.  Harvey  v.  Squire,  217  Mass.  411,  105 
N.  E.  355. 


538 


§  60  LIABILITY    OF    PARTIES.  539 

Payee  partnership  doing  business  in  violation  of  law  does  not  make 
defense  against  holder  in  due  course.  Pontiac  Sav.  Bank  v.  Reinforced 
Concrete  Pipe  Co.,  178  Mich.  261,  144  N.  W.  486. 

Defense  that  corporation  has  not  filed  charter  is  not  good.  Despres, 
Bridges  &  Noel  v.  Hough  Drug  Co.,  —  Miss.  — ,  86  So.  359. 

Existence  of  payee.     Grover  v.  Muralt,  23  N.  D.  576,  137  N.  W.  830. 

Where  indorsee  was  not  an  innocent  purchaser  effect  of  statute  de- 
claring all  notes  null  and  void  made  under  the  prohibited  act.  Williams 
V.  Turnhill   (Okla.),   162  Pac.  770. 

Extension  of  time  liability  of  maker.  Oklahoma  State  Bank  of 
Sayer  v.  Seaton,  —  Okla.  — ,  170  Pac.  477. 

Maker  acknowledges  capacity  of  payee  to  receive  money  and  to  ne- 
gotiate instrument.     Hill  v.  McCrow.  88  Oreg.  299. 

Existence  of  payee.  Ingle  System  Co.  v.  Norris,  132  Tenn.  472,  178 
S.  W.  1113. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  v^'here  this  section  has  been  construed : 

Alabama.— Blethenthal  v.  City  of  Columbia,  175  Ala.  398,  402,  57  So. 
814;  Jefferson  Co.  Sav.  Bk.  v.  Compton  (1915),  68  So.  261;  Whitehead 
V.  Coker  (Ala.  App.),  76  So.  484.;  Citizens  Nat.  Bank  v.  Bucheit  (Ala. 
App.),  71  So.  82;  Jones  v.  Martin  (Ala.  App.),  74  So.  82. 

.^moMc— Cowan  v.  Ramsay  (1914),  140  Pac.  501. 

Cc///ormo.— Frendenburg  v.   Lucas    (Cal.   App.),   175   Pac.  482. 

Colorado.— McMann  v.  Walker  (1903),  31  Colo.  261,  72  Pac.  1055; 
Ullery  v.  Brohm  (1904),  20  Colo.  App.  389,  79  Pac.  180. 

Florida.— Uongh  v.  State  Bk.  of  New  Smyna  (1911),  61  Fla.  290,  155 
So.  461 ;  Commercial  Bank  v.  Jordan,  71  Fla.  566. 

Iowa.— Hoyt  v.  Griggs  (1914),  146  N.  W.  745. 

i^aMj-o.y.— German-American  State  Bk.  v.  Watsen  (1917),  163  Pac. 
737,  99  Kans.  686;  State  Bk.  v.  Jeltz  (1917),  167  Pac.  1067;  Conqueror 
Trust  Co.  v.  Danford  (1919),  177  Pac.  357;  Title  Loan  &  Investment 
Co.  V.  Fuller,  189  Pac.  727. 

Kentucky.— First  Nat.  Bank  v.  Utterback  (Ky.),  197  S.  W.  534. 

Massachusetts.— Union  Tr.  Co.  v.  McGinty  (1912),  212  Mass.  205,  98 
N.  E.  679;  Harvey  v.  Squire   (1914),  217  Mass.  411,  105  N.  E.  355. 

Michigan.— Neyens  v.  Worthington  (1908),  150  Mich.  580,  114  N.  W. 
404,  18  L.  R.  A.  (N.  S.),  142;  Pontiac  Sav.  Bank  v.  Reinforced  Concrete 
Pipe  Co.,  178  Mich.  261,  144  N.  W.  486. 

Minnesota. — Finseth  v.   Scherer   (Minn.),  165  N.   W.   124. 

Mississippi. — Moyse  Real  Est.  Co.  v.  First  Nat.  Bk.  of  Commerce 
(1916),  70  So.  821;  Despres,  Bridges  &  Noel  v.  Hough  Drug  Co.,  86  So. 
359. 

Missouri.— Young  v.  Gaus  (1908),  134  Mo.  App.  166,  113  S.  W.  735. 

Nebraska.— First  Nat.  Bk.  of  Shenandoah  v.  Kelgord  (1912),  91  Neb. 
178,  135  N.  W.  548.  '  ' 


540  NEGOTIABLE  INSTRUMENTS.  §  61 

New  Forife.— Halsey  v.  Henry  Jewett  Co.  (1907),  190  N.  Y.  231,  83 
N.  E.  25;  Ryan  v.  Sullivan  (1911),  143  A.  D.  471;  Sabine  v.  Paine 
(1915),  151  N.  Y.  Supp.  735;  Lazarowitz  v.  Stafford  (1917),  167  N.  Y. 
Supp.  910. 

North  Dakota— Nat.  Bk.  of  Commerce  v.  Pick  (1904),  13  N.  D.  74, 
99  N.  W.  63;  Grover  v.  Muralt  (1912),  23  N.  Datk.  576,  137  N.  W.  830. 

Ohio.—Spr'mg  Valley  Nat.  Bk.  v.  Soners  1910),  21  Ohio  Dec.  772. 

Oklahoma.— 'Norman  v.  Lambert  (1915),  153  Pac.  1097;  Oklahoma 
Bank  v.  Seaton  (1918),  170  Pac.  477;  Williams  v.  Turnhill  (Okla.),  162 
Pac.  770. 

Oregon.— m\\  v.  McCrow  (1918),  170  Pac.  306,  88  Oreg.  299. 

Pennsylvania. — Weiskucher  v.  Connelly  (1917),  100  Atl.  965;  Wos- 
tenholme  v.  Smith   (1908),  34  Utah  300,  97  Pac.  329. 

Tennessee. — Ingle  System  Co.  v.  Norris,  132  Tenn.  472,  178  S.  W. 
1113;  Edwards  v.  Hambly  Fruit  Products  Co.,  133  Tenn.  142,  180  S. 
W.  163. 

Washington.— RWXrnan  v.  Stanley  (1909),  56  Wash.  320,  105  Pac. 
816;  Fisk  Rubber  Co.  v.  Pinkey   (1918),  170  Pac.  581. 

West  Virginia.— Rusmlss^X  v.  White  Oak  Co.   (1917),  92  S.  E.  672. 

United  States.— 'Edv^avAs  v.  Goode  (1916),  228  Fed.  664;  First  Nat. 
Bk.  of  Memphis  v.  Towner  (1917),  239  Fed.  433;  Citizen's  Tr.  Co.  v. 
Abston   (1917),  242  Fed.  392. 

§61.  Liability  of  drawer.  The  drawer  by  drawing  the 
instrument  admits  the  existence  of  the  payee  and  his  then  capac- 
ity to  indorse;  and  engages  that  on  due  presentment  the  instru- 
ment will  be  accepted  and  paid,  or  both,  according  to  its  tenor, 
and  that  if  it  be  dishonored,  and  the  necessary  proceedings  on 
dishonor  be  duly  taken,  he  will  pay  the  amount  thereof  to  the 
holder,  or  to  any  subsequent  indorser  who  may  be  compelled  to 
pay  it.  But  the  drawer  may  insert  in  the  instrument  an  express 
stipulation  negativing  or  limiting  his  own  liability  to  the 
holder.*'  *' 

See  text,  §  121. 

Colorado  and  Illinois  omit  the  word  "subsequent"  before  "in\3orser," 
near  the  end  of  the  first  sentence. 

In  New  York,  District  of  Columbia,  North  Dakota  and  England  the 
word  "and"  has  been  substituted  for  "or"  between  the  words  "accepted" 
and  "paid." 

In  North  Carolina,  through  what  was  doubtless  an  error  in  engross- 
ing, the  word  "negotiating"  is  substituted  for  "negativing"  near  the  ^nd, 
of  the  section. 

Other  acts  read  "accepted  of  paid." 


§  62  LIABILITY    OF   PARTIES.  541 

The  Colorado  Act   (61)   omits   "subsequent." 

Corresponding  provision  in  English  Bills  of  Exchange  Act:  Sec. 
55  (1),  16  (1). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Drawer's  admission  as  to  existence  of  payee.  Robertson  Banking  Co. 
V.  Brasfield,  —  Ala.  — ,  79  So.  651. 

Purchaser  not  authorized  to  indorse  name  of  fictitious  payee.  Amer- 
ican Exp.  Co.  V.  People's  Sav.  Bank,  —  Iowa  — ,  181  N.  W.  701. 

Drawer  liable  as  principal  debtor  when  bank  has  no  funds  to  pay 
check  drawn.     Baxter  v.  Brandenburg   (Minn.),  163  N.  W.  516. 

Drawer  who  issued  bill  of  exchange  which  was  accepted  by  corpora- 
tion and  then  became  transferee  of  same  from  defendants  could  not 
hold  defendants.  U.  S.  Rail  Co.  v.  Wiener,  169  App.  Div.  561,  155  N.  Y. 
Supp.  425. 

Drawer  by  giving  checks  represents  that  he  has  money  from  which 
it  can  be  paid.  State  v.  Hammelsy,  52  Ore.  156,  96  Pac.  865,  17  L.  R.  A. 
(N.  S.)  244. 

Rights  of  holder  in  due  course.  First  Nat.  Bank  of  Price  v.  Parker, 
—  Utah  — ,  194  Pac.  661. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

/4/afeawa.— Robertson  Banking  Co.  v.  Rasfield,  79  So.  651. 

/rfoAo.— Armstrong  v.  Sleek  (1908),  14  Ida.  208,  93  Pac.  775. 

///jMow.— Simonoflf  v.  Granite  City  Nat.  Bk.  (1917),  116  N.  E.  636. 

Iowa. — American  Express  Co.  v.  People's  Savings  Bank,  181  N.  W. 
701. 

Mf c%an.— People's  State  Bk.  v.  Miller  (1915),  152  N.  W.  257. 

Minnesota.— Ed^xttr  v.  Brandenburg  (1917),  163  N.  W.  516. 

Nebraska. — Nat.  Bk.  of  Commerce  v.  Bossemeyer  (1917),  162  N.  W. 
503. 

New  Forife.— Weiss  v.  Rieser  (1909),  62  Misc.  292,  114  N.  Y.  Supp. 
983;  U.  S.  Rail  Co.  v.  Wiener  (1915),  155  N.  Y.  Supp.  425,  169  A.  D.  561. 

Oregon.— SiditQ  v.  Hammelsy  (1908),  52  Oreg.  156,  96  Pac.  865,  17 
L.  R.  A.  (N.  S.)  244. 

Utah.— First  National  Bank  of  Price  v.  Parker,  194  Pac.  661. 

§  62.  Liability  of  acceptor.  The  acceptor  by  accepting  the 
instrument  engages  that  he  will  pay  it  according  to  the  tenor  of 
his  acceptance ;  and  admits : 

1.  The  existence  of  the  drawer,  the  genuineness  of  his  signa- 
ture and  his  capacity  and  authority  to  draw  the  instrument,  and 


542  NEGOTIABLE    INSTRUMENTS.  §  62 

2.  The  existence  of  the  payee  and  his  then  capacity  to  in- 
dorse.*' *^ 

Sec  text,  §  122. 

Cross  sections  132,  142,  70,  187,  49:  Kentucky  and  Missouri  omit 
"then"  before  "capacity"  in  subdivision  2  above. 

Corresponding  provisions  of  the  English  Bills  of  Exchange  Act:  54, 
54  (2),   (a),   (b),   (c). 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states  : 

Drawee  liable  to  subsequent  holders  after  accepting  draft  with  sub- 
stituted payee.  National  City  Bank  of  Chicago  v.  Nat.  Bank  of  the  Re- 
public of  Chicago,  —  111.  — ,  123  N.  E.  832. 

Equitable  exceptions  admitted  by  court.  Farmers  Nat.  Bank  v. 
Farmers  &  Traders  Bank,  159  Ky.  141,  166  S.  W.  986,  L.  R.  A.  1915A,  11. 

Indorsement  by  bank  "Indorsement  guaranteed.  Pay  any  national 
or  state  bank  or  order"  not  a  guaranty  to  drawee,  but  to  indorsees  only 
National  Bank  of  Rolla  v.  First  Nat.  Bank  of  Salem,  141  Mo.  App. 
719,  125  S.  W.  513. 

Acceptor  engages  to  pay  according  to  the  tenor  of  his  acceptance. 
McLendon  v.  Bank  of  Advance,  188  Mo.  App.  417,  174  S.  W.  203. 

Right  of  acceptor  as  against  one  acquiring  paper  without  consid- 
eration. Title  Guarantee  &  Trust  Co.  v.  Haven,  196  N.  Y.  487,  89  N. 
E.  1082. 

Bank  paying  check  which  was  forged  and  given  in  payment  of  anoth- 
er's street  assessment  is  entitled  to  have  lien  of  assessment  reinstated 
and  be  subrogated  thereto.  Title  Guarantee  &  Trust  Co.  v.  Haven,  214 
N.  Y.  468,  108  N.  E.  819. 

Drawees  of  genuine  draft  could  not  recover  back  the  money  paid 
thereon  because  the  bills  of  lading  were  forged  which  accompanied  the 
draft.  Springs  v.  Hanover  Nat.  Bk.  209  N.  Y.  224,  103  N.  E.  156,  52 
L.  R.  A.   (N.  S.)  241. 

Indorsement  of  holder  of  forged  check  when  presented  for  pay- 
ment as  a  warranty  to  drawee.  Williamsburgh  Trust  Co.  v.  Turn  Suden, 
120  App.  Div.  18,  105  N.  Y.  Supp.  335. 

Acceptor  not  released  from  payment  by  failure  to  surrender  ware- 
house receipt  when  draft  presented  for  payment.  First  Nat.  Bank  v. 
Gidden,  175  App.  Div.  563,  162  N.  Y.  Supp.  317. 

Acceptor  liable  as  makers.  Anglo  &  London  Paris  Nat.  Bank  v.  S. 
A.  Jacobson  Co.,  187  N.  Y.  S.  508. 

Drawee  permitted  to  recover  money  paid  to  holder  of  forged  check. 
First  Nat.  Bank  v.  Bank  of  Wyndmere,  15  N.  D.  299,  108  N.  W.  540, 
10  L.  R.  A.  (N.  S.)  49. 

One  who  accepts  a  check  is  liable  to  the  full  amount  thereof  even 
though  it  had  been  raised.  Cherokee  Nat.  Bank  v.  Union  Trust  Co., 
ZZ  Okla.  342,  347,  125  Pac.  464. 

Drawee  of  forged  check  may  recover  money  paid  thereon.  Union 
Nat.  Bank  v.  Franklin  Nat.  Bank,  249  Pa.  375,  94  Atl.  1080 

Acceptance  as  follows,  "Accepted,  payable  at  Lloyd's  Bank,  Ltd., 
London,  against  indorsed  bills  of  lading,"  etc.,  held  conditional  on  de- 
livery of  genuine  bills  of  lading.  Guaranty  Trust  Co.  v.  Grotian,  114 
Fed.  Rep.  433,  52  C.  C.  A.  235. 


§  62  LIABILITY   OF    PARTIES.  543 

Acceptance  unconditional  and  acceptor  cannot  recover  the  money 
paid  to  the  holder  of  the  draft  accompanied  by  purported  bill  of  lading. 
Guaranty  Trust  Co.  v.  Hannay,  210  Fed.  Rep.  810. 

Secretary  of  Treasury  bound  by  payment  of  forged  draft  purporting 
to  be  drawn  by  the  American  consul  in  Argentine  United  States  v. 
Bank  of  New  York,  219  Fed.  Rep.  648,  134  C.  C  A.  579,  L.  R.  A.  1915D, 
797. 

Acceptor  of  forged  draft  cannot  recover  from  bank  who  was  bona 
fide  purchaser.  Postal  Telegraph-Cable  Co.  v.  Citizens'  Nat.  Bank,  228 
Fed.  Rep.  601,  143  C.  C.  A.  123. 

United  States  could  not  recover  money  back  after  Treasury  had 
paid  forged  draft.     United  States  v.  Chase  Nat.  Bank,  241  Fed.  Rep.  535. 

Application  of  section  to  payment  of  forged  check.  Price  v.  Neal,  3 
Burrow  1354. 

*■  The  following  is  a  complete  list  of  .the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Robinson  Banking  Co.  v.  Brasfield  (1918),  79  So.  651. 

Connecticut.— Ro^kms  v.  Merrill    (1907),  79  Conn.  626,  66  Atl.   174. 

/(/a/io.— Armstrong  v.   Sleek    (1908),   14  Idaho  208,  93    Pac.   775. 

///moij.— Noel  v.  Security  Bk.  of  Chicago  (1911),  163  111.  App.  82; 
National  City  Bank  of  Chicago  v.  Nat.  Bank  of  the  Republic  of  Chicago, 
—  111.  — ,  123  N.  E.  832. 

Kentucky. — Farmers  Nat.  Bank  v.  Farmers  &  Traders  Bank,  159  Ky. 
141,  166  S.  W.  986,  L.  R.  A.  1915A,  77. 

.  Missouri— ^zi.  Bank,  of  Rolla  v.  First  Nat.  Bank  of  Salem  (1910), 
141  Mo.  719,  125  S.  W.  513;  McLendon  v.  Bank  of  Advance,  188  Mo. 
App.  417,  174  S.  W.  203;  Nat.  Bank  of  Commerce  v.  Am.  Nat.  Bank 
(1910),  148  Mo.  App.  1,  127  S.  W.  429;  Stephens  v.  Bawles  (1919),  206 
S.  W.  589;  Missouri  Lincoln  Trust  Co.  v.  Third  Nat.  Bank,  154  Mo. 
App.  89. 

Nebraska. — State  Bank  of  Chicago  v.  First  Nat.  Bank  of  Omaha 
(1910),  87  Neb.  351,  127  N.  W.  244;  Nat'l,  Bank  of  Commerce  v.  Farmers, 
Etc.  Bank,  ^7  Neb.  841,  128  N.  W.  522. 

New  Mexico.—Stzie.  Bank  v.  Bank  of  Magdalena,  21  N.  M.  653,  157 
Pac.  498. 

New  Forife.— Meuer  v.  Phoenix  Nat.  Bank  (1904),  94  A.  D.  331,  88  N. 
Y.  Supp.  83;  Schlesinger  v.  Kurzvok  (190),  94  N.  Y.  Supp.  442,  47  Misc. 
634;  Williamsburgh  Tr.  Co.  v.  Turn  Suden,  105  N.  Y.  Supp.  335,  120  A.  D. 
518;  Title  Guarantee  &  Trust  Co.  v.  Haven  (1908),  126  A.  D.  802,  111  N. 
Y.  Supp.  305;  Trust  Co.  of  Amer.  v.  Hamilton  Bank  (1908),  127  A.  D. 
515,  112  N.  Y.  Supp.  84;  Consolidated  Nat.  Bank  of  N.  Y.  v.  First  Nat. 
Bank  of  Middleton,  N.  Y.  (1908),  129  A.  D.  538;  Title  Guarantee  &  Tr. 
Co.  V.  Haven  (1909),  196  N.  Y.  487,  89  N.  E.  1082;  Springs  v.  Hanover 
Nat.  Bk.  (1911),  130  N.  Y.  Supp.  87,  209  N.  Y.  224,  103  N.  E.  156,  52  L. 
R.  A.  (N.  S.)  241;  McMahony  v.  Roseville  Tr.  Co.  (1913),  125  A.  D. 
240,  144  N.  Y.  Supp.  841;  Morrison  v.  Chapman  (1913),  140  N.  Y.  Supp. 
700;  First  Nat.  Bank  v.   Gidden,   162   N.  Y.   Supp.  317,   175  App.   Div. 


544  NEGOTIABLE    INSTRUMENTS.  §  63 

563;  Anglo-South  Amer.  Bank.  v.  Nat.  City  Bank  of  N.  Y.  (1914),  146 
N.  Y.  Supp.  457,  161  A.  D.  268;  Anglo  &  London-Paris  Nat.  Bank  v.  S.  A. 
Jacobson  Co.,  187  N.  Y.  Supp.  502;  Bergstram  v.  Ritz-Carlton  Co.,  157  N. 
Y.  Supp.  959,  171  A.  D.  776. 

North  Carolina. — State  Bank  v.  Cumberland  Savings,  etc.,  Co.,  168  N. 
C.  605,  85  S.  E.    5. 

North  Dakota.— First  Nat.  Bank  of  Lisbon  v.  Bank  of  Windemere 
(1906),  15  N.  Dak.  299,  108  N.  W.  546. 

0/5r/a/»omo.— Cherokee  Nat.  Bank  v.  Union  Tr.  Co.  (1912),  33  Okla. 
342,  347,  125  Pac.  464;  Shaffer  v.  Govreau  (1912),  128  Pac.  507;  First 
Nat.  Bank  v.  Cummings    (1918),  171    Pac.  862. 

Oregon.— First  Nat.  Bank  v.  Bank  of  Cottage  Grove,  59  Ore.  388,  177 
Pac.  293. 

Pennsylvania. — Cunningham  v.  First  Nat.  Bank  of  Indiana  (1908), 
219  Pa.  310;  McNeely  Co.  v.  Bank  of  No.  Amer.  (1908),  221  Pa.  588; 
Colonial  Trust  Co.  v.  Nat.  Bank  of  Western  Pa.  (1912),  50  Pa.  Super  Ct. 
510;  Union  Nat.  Bank  v.  Franklin  Nat.  Bank,  249  Pa.  375,  94  Atl.  1080, 

Tennessee. — Farmers  Bank  v.  Bank  of  Rutherford,  115  Tenn.  64,  88 
S.  W.  939,  112  Am.  St.  Rep.  817;  Figuers  v.  Fly,  137  Tenn.  358,  193  S. 
W.  117. 

Washington. — Canadian  Bank  of  Commerce  v.  Bingham,  30  Wash. 
484,  71  Pac.  43. 

West  Virginia. — Bank  of  Williamson  v.  McDowell  County  Bank, 
W.  Va.  (1910),  66  S.  E.  761;  Interstate  Finance  Co.  v.  Schroeder  (1914), 
81  S.  E.  552. 

United  States. — Guaranty  Trust  Co.  v.  Grotian,  114  Fed.  Rep.  433,  52 
C.  C.  A.  235;  United  States  v.  Bank  of  New  York,  219  Fed.  Rep.  648, 
134  C.  C.  A.  579,  L.  R.  A.  1915D,  797;  United  States  v.  Chase  Nat. 
Bank,  241  Fed.  Rep.  535;  Postal  Telegraph-Cable  Co.  v.  Citizens'  Nat. 
Bank,  228  Fed.  Rep.  601,  143  C.  C.  A.  123. 

§  63.  When  person  deemed  indorser.  A  person  placing  his 
signature  upon  an  instrument  otherwise  than  as  maker,  drawer 
or  acceptor  is  deemed  to  be  an  indorser,  unless  he  clearly  indi- 
cates by  appropriate  words  his  intention  to  be  bound  in  some 
other  capacity.*'  *' 

See  text,  §  97. 

Cross  sections:    17,  sub.  64-1,  121,  66,  89,  17-6,  68. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

One  who  indorses  check  of  another  for  payment  in  compliance  with 
bank  rule  held  to  indemnify  the  bank.  Arkansas  Nat.  Bank  v.  Gunther, 
127  Ark.  149.  191   S.  W.  901. 

Persons  signing  on  back  of  note  are  indorsers  unless  a  showing -is 
made  that  they  were  not  to  be  bound  as  indorsers.  Bavarian  Brewing 
Co.  v.  Sobocienski,  —  Del.  Super,  — ,  109  A.  55. 


§  63  LIABILITY    OF   PARTIES.  545 

Release  far  failure  to  make  proper  demand  and  notice.  First  Nat. 
Bank  of  Lincoln  v.  Sandmeyer,  164  111.  App.  98. 

Lack  of  consideration  for  indorsing  does  not  affect  the  indorsement. 
Elgin  Nat.  Bank  v.  Goecke,  213  111.  App.  559. 

Placing  name  on  note  without  restriction  makes  one  an  indorser. 
Muntz  V.   Schmidt,  213  111.  App.  641. 

One  placing  signature  upon  instrument  is  indorser  unless  contrary 
intention  expressed.     Kroll  v.  Hoyt,  214  111.  App.  428. 

Where  defendant  indorsed  in  blank  to  enable  payee  to  collect  from 
other  party  he  can  make  such  showing  as  against  payee  of  note.  Sang- 
ster  V.  Bricker   (Ind.  App.),  118  N.  E.  383. 

Payee  indorsing  note  to  enable  maker  to  negotiate  it  is  liable  as  ac- 
commodation indorser.  Mechanics'  &  Farmers'  Savings  Bank  v.  Katter- 
john,  137  Ky.  427,  125  S.  W.  1071  App.  Cas.  1912A,  439. 

Intent  as  to  capacity  to  be  bound  by  an  indorsement  not  shown  by 
parol.    First  Nat.  Bank  v.  Bickel,  143  Ky.  754,  137  S.  W.  790. 

Intent  to  be  bound  otherwise  than  as  indorser  may  be  shown  by 
face  of  instrument.     Hibernia  Bank  v.  Dresser,  132  La.  532,  61  So.  561. 

In  solido  promise  may  deprive  an  indorser  of  his  rights  as  such. 
J.  M.  Dresser  Co.  v.  Hibernia  Bank,  136  La.  314.  67  So.   15. 

Parol  proof  will  not  change  status  of  indorser.  Lightner  v.  Roach, 
126  Md.  474,  95  Atl.  62. 

Proof  of  note  against  partner  individually  where  he  indorsed  part- 
nership note.  Fourth  Nat.  Bank  v.  Alead,  216  Mass.  521,  104  N.  E.  377, 
57  L.  R.  A.  (N.  S.)  225. 

Indorsement  in  blank  cannot  be  varied  bv  evidence  from  another 
source.     First  Nat.  Bank  v.  Korn  (Mo.  App.),  179  S.  W.  721. 

Recovery  as  against  an  anomalous  indorser.  Overland  Auto  Co.  v. 
Winters  (Mo.  App.),  180  S.  W.  561. 

Blank  indorser  cannot  show  that  he  was  merely  agent  for  another. 
Eaves  v.  Keeton   (Mo.  App.),  193  S.  W.  629. 

Signature  upon  back  of  negotiable  instrument  prior  to  delivery  to 
payee.     Wilson  v.  Hendee,  74  N.  J.  Law  640,  66  Atl.  413. 

Note  indorsed  by  third  party  in  blank  binds  him  as  indorser  and  not 
maker.    Roessle  v.  Lancaster,  130  App.  Div.  1,  114  N.  Y.  Supp.  387. 

President  of  corporation  is  indorser  unless  words  to  contrary  are 
added.     Mechanic  v.  Elgie  Iron  Works,   163  N.  Y.  Supp.  97. 

Accommodation  indorsers  who  are  directors  are  entitled  to  notice  of 
dishonor.  Houser  v.  Fayssoux,  168  N.  C.  1.,  83  S.  E.  692,  Ann.  Cas. 
191 7B,  835. 

When  person  deemed  to  be  indorser.  Critcher  v.  Ballard,  —  N.  C. 
— ,  104  S.  E.  134. 

Payee  who  signs  under  "Payment  guaranteed ;  protest  waived"  passes 
title  free  of  equities.  Mangold  and  Glandt  Bank  v.  Utterback  (Okla.), 
160  Pac.  713. 

Signer  of  instrument  is  indorser  unless  otherwise  designated.  Krumm 
v.  El  Reno  State  Bank.  —  Okla.  — ,  201  Pac.  364. 

Stranger  signing  "I  hereby  guarantee  payment  of  the  within  note" 
is  a  guarantor  only.  Noble  v.  Beeman-Spaulding  Co.,  65  Ore.  93,  131 
Pac.  1006,  46  L.  R.  A.  (N.  S.)  162. 

Partner  who  individually  indorses  is  liable  as  indorser.  Nat.  Exch. 
Bank  v.  Lubrano,  29  R.  I.  64,  68  Atl.  944. 

Signing  on  back  of  another's  note  before  delivery  makes  indorser. 
Shull  V.  Gladden,  —  S.  C.  — ,  95  S.  E.  521. 


546  NEGOTIABLE    INSTRUMENTS.  §  63 

When  indorser  of  note  not  injured  by  lack  of  dishonor  of  check 
and  his  rights  as  to  credit.  American  Nat.  Bank  v.  Nat.  Fertilizer  Co., 
125  Tenn.  328.  143  S.  W.  597. 

When  liable  both  as  indorser  and  guarantor.  Toler  v.  Sanders,  87 
W.  Va.  398,  87  S.  E.  462. 

One  placing  his  signature  in  blank  on  a  note  before  delivery  is  an 
indorser.  Farmers  &  Merchants  Bank  of  Reedsville  v.  Kingwood  Nat. 
Bank,  —  W.  Va.  — ,  101  S.  E.  734. 

Signing  at  place  for  maker's  name  is  not  indorsement.  Germania 
Nat.  Bank  v.  Mariner,  129  Wis.  544,  109  N.  W.  574. 

Officers  of  company  signed  note  so  money  could  be  secured  are  liable 
as  indorsers  and  are  entitled  to  notice  of  dishonor.  McDonald  v.  Luck- 
enback,  170  Fed.  Rep.  434,  95  C.  C.  A.  604. 

Directors  signing  upon  back  of  note  by  president  of  company.  Mur- 
ray V.  Third  Nat.  Bank,  234  Fed.  Rep.  481,  148  C.  C.  A.  247. 

la.  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Long  v.  Givin  (1919),  80  So,  440;  Zadek  v.  Forcheimer 
(1918),  77  So.  941. 

Arkansas. — Hodges  v.  Collison  (1915),  172  S.  W.  1147;  Tancred  v. 
First  Nat.  Bank  (1916),  187  S.  W.  160;  Arkansas  Nat.  Bank  v.  Gunther, 
127  Ark.  149,  191  S.  W.  901. 

Colorado.— Croshy  v.  Woodbury  (1906),  37  Colo.  1,  89  Pac.  34;  Ar- 
chuleta V.  Johnston   (1912),  127  Pac.  134. 

Connecticut.— Hopkins  v.  Merrill  (1907),  79  Conn.  626,  66  Atl.  174; 
Knapp  Co.   v.   Tidewater   Coal   Co.    (1912),   85    Conn.    147,   81    Atl.    1063. 

Delaware. — Bavarian   Brewing  Co.  v.   Sobocienski,  —  Del.    Super.  — , 
109A,  55. 

Florida.— Hough  v.  State  Bank  of  Smyna  (1911).  61  Fla.  290.  55 
So.  461;  Baumeister  v.  Kuntz  (1907),  53  Fla.  340,  42  So.  886;  Hop- 
kins V.  Commercial  Bank  (1912),  64  Fla.  310;  Williams  v.  Peninsular 
Grocery  Co.   (1917),  75  So.  517. 

Idaho. — Bank  of  Montpelier  v.  Montpelier  Lumber  Co.  (1909),  16 
Ida.  730,   102  Pac.  685. 

Illinois.— Ugin  Nat.  Bank  v.  Goecke,  213  111.  App.  559,  129  N.  E.  149; 
First  Nat.  Bank  of  Lincoln  v.  Sandmeyer,  164  111.  App.  98;  Muntz  v. 
Schmitz,  213  111.  App.  641  ;  Kroll  v.  Hoyt,  214  111.  App.  428. 

Indiana.— Sangster  v.  Bricker   (Ind.  App.),  118  N.  E.  383. 

/otwi.— Allison  V.  Hollembeak  (1908).  138  Iowa  479,  114  N.  W.  1059; 
Porter  v.  Moles  (1911),  151  Iowa  279,  131  N.  W.  23;  Devoy  &  Kuhn  v. 
Huttig  (1916),  156  N.  W.  412. 

Kentucky.— Diai-nond  Distilleries  Co.  v.  Gott  (1910),  137  Ky.  585, 
126  S.  W.  131;  Mechanics'  &  Farmers'  Sav.  Bank  v.  Katterjohn  (1910), 
137  Ky.  427.  125  S.  W.  1071;  Hoyland  v.  Nat.  Bank  of  Middleborough 
(1910),  137  Ky.  682,  126  S.  W.  356;  First  Nat.  Bank  v  Bickel 
(1911),   143    Ky.  754,     137   S.  W.   790;    Williams  v.    Paintsville    Nat. 


§63  Liability  of  parties.  547 

Bank  (1911).  143  Ky.  781,  137  S.  W.  535;  Lyons  Lumber  Co.  v.  Stewart 
(1912),  147  Ky.  653,  145  S.  W.  376;  Elsey  v.  People's  Bank  of  Hard- 
well  (1916),  182  S.  W.  873. 

Louisiana.— Parker  v.  Guillot  (1907),  118  La.  223;  Pugh  v.  Sample 
(1909),  123  La.  791,  49  So.  526;  Hackley  State  Bank  v.  Magee  (1911) 
128  La.  1008;  J.  M.  Dresser  v.  Hibernia  Bank  &  Tr.  Co.  (1915), 136  La. 
314,  67  So.  15;  Hibernia  Bank  v.  Dresser,  132  La.  532,  61  So.  561 ;  Bonart  v. 
Rabito,  141  La.  970,  76  So.  166. 

Maryland.— Ughtner  v.  Roach  (1915),  126  Md.  474,  95  Atl.  62. 

Massachusetts.— Qulmhy  v.  Vermum  (1906),  190  Mass.  211.  76  N. 
E.  671;  Toole  v.  Crafts  (1906),  193  Mass.  110,  78  N.  E.  775,  118  Am. 
St.  455;  Bamford  v.  Boynton  (1909),  200  Mass.  560,  86  N.  E.  900;  Arling- 
ton Nat.  Bank  v.  Bennett  (1913),  214  Mass.  352,  101  N.  E.  982;  Fourth 
Nat.  Bank  v.  Mead  (1914),  216  Mass.  521,  104  N.  E.  377,  57  L.  R.  A.  (N. 
S.)  225;  Aronson  v.  Uurenburg  (1914),  IDS  N.  E.  1056;  Lankofsky  v. 
Raymond  (1914),  104  N.  E.  489. 

Michigan.— Ensign  v.  Fogg   (1913),  143  N.  W.  82. 

Missouri.— Walker  v.  Dunham  (1909),  135  Mo.  App.  396,  115  S. 
W.  1086,  Phoenix  Nat.  Bank  v.  Hanlon,  183  Mo.  App.  243,  166  S.  W. 
B30;  Hawkins  v.  Wiest  (1912),  167  Mo.  App.  439;  First  Nat.  Bank 
V.  Korn  (1915),  179  S.  W.  721;  Eaves  v.  Keeton  (Mo.  App.),  193  S.  W. 
629;  Overland  Auto  Co.  v.  Winters  (Mo.  App.),  180  S.  W.  561. 

New  Hampshire.— Trahon  v.   Garnsey   (1916),  99  Atl.  290. 

New  Jersey.— Wilson  v.  Hendee  (1907),  74  N.  J.  L.  640,  66  Atl.  413; 
Gibbs  V.  Guaraglis  (1907),  75  N.  J.  L.  168,  67  Atl.  81;  Mackintosh  v. 
Gibbs  (1909),  79  N.  J.  L.  40,  74  Atl.  708;  Morris  Co.  Brick  Co.  v. 
Austin   (1910),  75  Atl.  550. 

New  York.— Howard  v.  Van  Gieson  (1899),  46  A.  D.  77;  Williams- 
burg Tr.  Co.  v.  Tum  Sudei;  (1907),  120  A.  D.  518,  105  N.  Y.  Supp.  335; 
Haddock,  Blanchard  &  Co.  v.  Haddock  (1908),  192  N.  Y.  499,  82  N.  E. 
682,  103  N.  Y.  Supp.  584;  Roessle  v.  Lancaster  (1909),  130  A.  D.  1,  114 
N.  Y.  Supp.  387;  Blanchard  v.  Blanchard  (1911),  201  N.  Y.  134,  94  N. 
E.  630,  affirming,  133  A.  D.  937,  without  an  opinion ;  Bender 
V.  Bahr  Trucking  Co.  (1911),  144  A.  D.  742;  Yonkers  Nat.  Bank  v. 
Mitchell  (1913),  141  N.  Y.  Supp.  128;  Carnegie  Trust  Co.  v.  Kistler 
(1915),  152  N.  Y.  Supp.  240;  Mechanic  v.  Elgic  Iron  Works  (1917),  163 
N.  Y.  Supp.  97 ;  Bennett  v.  Kistler,  163  N.  Y.  Supp.  555. 

North  Carolina.— Rouse  v.  Wooten  (1906),  140  N.  Car.  557,  53  S.  E. 
430,  111  Am.  St.  875;  Perry  Co.  v.  Taylor  (1903),  148  N.  Car.  362,  62  S. 
E.  423;  Sykes  v.  Everett  (1914),  83,  3  S.  E.  585;  Meyers  Co.  v.  Battic 
(1915),  170  N.  C.  168;  86  S.  E.  1034;  Critcher  v.  Ballard,  104  S.  E.  134; 
Houser  v.  Faysson,  168  N.  C.  1,  83  S.  E.  692,  Ann  Cas.  1917B,  835. 

0/ito.— Dollar  Sav.  Bank  v.  Barberton  Pottery  Co.  (1907),  17  Ohio 
Dec.  539;  Rockfield  v.  First  Nat.  Bank  of  Springfield  (1907),  77  Ohio 
St.  311,  83  N.  E.  392,  14  L.  R.  A.  (N.  S.)  842. 

Oklahoma. — Shaffer  v.  Govreau  (1912),  128  Pac.  507;  Howard  v. 
Kincaid  (1916),  156  Pac.  628;  Mangold  and  Glandt  Bank  v.  Utterback 
(Okla.),  160  Pac.  713;  Krumm  v.  El  Reno  State  Bank  (Okla.),  201 
Pac.  364. 


54S  NEGOTIABLE    INSTRUMENTS.  §64 

Ores/Ion.— Hunter  v.  Harris  (1912),  63  Oreg.  505,  127  Pac.  786; 
Noble  V.  Beeman-Spaulding-Woodward  Co.  (1913),  65  Oreg.  93,  131 
Pac.  1006. 

Rhode  Island.— McLean  v.  Bryer  (1903),  24  R.  I.  599,  54  Atl.  373; 
Deahey  v.  Choquet  (1907),  28  R.  I.  338;  Nat.  Ex.  Bank  v.  Lubrano 
(1908),  29  R.  I.  64,  68  Atl.  944. 

South  Carolina.— ¥o\k  v.  Moore  (1916),  88  S.  E.  18;  Norwood  Nat. 
Bank  v.  Piedmont  Pub.  Co.  (1917),  91  S.  E.  866;  Shull  v.  Gladden,  95 
S.  E.  521. 

Tennessee. — Mercantile  Bank  of  Memphis  v.  Busby  (1908),  120  Tenn. 
652,  113  S.  W.  390;  Pharr  v.  Stevens  (1911),  124  Tenn.  670,  139  S.  W.  730; 
Am.  Nat.  Bank  v.  Nat.  Fertilizer  Co.  (1911),  125  Tenn.  329,  143  S.  W. 
597;  Nolan  v.  H.  E.  Wilcox  Motor  Co  (1917),  137  Tenn.  667,  195  S.  W. 
581. 

Texas.— Borshow  v.  Wilson    (1916),  190  S.  W.  202. 

Virginia. — Colley  v.  Summers  Parrott  Hardware  Co.  (1916),  119  Va. 
439,  89  S.  E.  906;  Colona  v.  Parksley  Nat.   Bank   (1917),  92  S.  E.  979. 

West  Virginia.— First  Nat.  Bank  of  Hinton  v.  Plumley  (1915),  87  S. 
E.  94;  Toler  v.  Sanders  (1915),  87  W.  Va.  398,  87  S.  E.  462;  Thomp- 
son V.  Curry  (1917),  91  S.  E.  801;  Bank  of  Greenville  v.  Lowry  (1917), 
94  S.  E.  985;  Farmers'  &  Merchants'  Bank  of  Reedsville  v.  Kingwood 
Nat.  Bank,  101  S.  E.  734. 

IVisconsin.—Germania  Nat.  Bank  v.  Mariner  (1906),  129  Wis.  544, 
109  N.  W.  574,  Union  Bank  of  Milwaukee  v.  Commer.  Securities  Co. 
(1916),  147  N.  W.  510. 

t//oA.— Wostenholme  v.  Smith   (1908),  34  Utah  300,  97  Pac.  329. 

United  States.— McDonald  v.  Luckenbach  (1909),  170  Fed.  434,  95 
C.  C.  A.  604;  Murray  v.  Third  Nat.  Bank  of  St.  Louis  (1916),  234  Fed. 
481;  First  Nat.  Bank  v.  Towner  (1917),  239  Fed.  433. 

§  64.  Liability  of  irregular  indorser.  Where  a  person,  not 
otherwise  a  party  to  an  instrument,  places  thereon  his  signature 
in  blank  before  delivery,  he  is  liable  as  indorser  in  accordance 
with  the  following  rules : 

1.  If  the  instrument  is  payable  to  the  order  of  a  third  person, 
he  is  liable  to  the  payee  and  to  all  subsequent  parties. 

2.  If  the  instrument  is  payable  to  the  order  of  the  maker  or 
drawer,  or  is  payable  to  bearer,  he  is  liable  to  all  parties  subse- 
quent to  the  maker  or  drawer. 

3.  If  he  signs  for  the  accommodation  of  the  payee,  he  is  lia- 
ble to  all  parties  subsequent  to  the  payee.*'  ** 

See  text,  §   109. 


§  64  LIABILITY    OF    PARTIES.  549 

Cross  sections:  52,  64-1,  120-1,  121,  89,  63,  68,  66,  53,  82-3,  89,  109,  124. 

The  Illinois  statute  substitutes  for  subdivisions  1  and  2  the  follow- 
ing: "1.  If  the  instrument  is  a  note  or  bill  payable  to  the  order  of  a 
third  person,  or  an  accepted  bill  payable  to  the  order  of  the  drawer,  he 
is  liable  to  the  payee  and  to  all  subsequent  parties.  2.  If  the  instru- 
ment is  a  note  or  unaccepted  bill  payable  to  the  order  of  the  maker 
or  drawer,  or  is  payable  to  bearer,  he  is  liable  to  all  parties  subsequent 
to  the  maker  or  drawer." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Parol  to  show  irregular  indorser  a  maker  or  indorser.  Long  v. 
Gwin,  188  Ala.  196,  66  So.  88. 

Is  one  indorsing  before  delivery  a  joint  maker.  Burke  v.  Jefferson 
Bank,  180  S.  W.  500,  121  Ark.  633. 

Status  of  one  indorsing  note  before  delivery  to  payee.  Tancred  v. 
First  Nat.  Bank,  124  Ark.  154,  187  S.  W.  160. 

Parol  evidence  as  to  contrary  intention  inadmissible.  Baumeister  v. 
Kuntz,  53  Fla.  340,  42  So.  886. 

Inadmissible  evidence  as  to  intention  of  indorser.  Hopkins  v.  Oym- 
mercial  Bank,  64  Fla.  310,  60  So.  183. 

Holder  may  recover  against  accommodation  indorser  where  he  did 
not  know  of  restrictions  of  indorsement.  Elgin  Nat.  Bank  v.  Goecke, 
—111.  — ,  129  N.  E.  149. 

Status  presumed  as  to  party  indorsing  before  delivery.  Van  Kleek 
V.  Channon,  175  111.  App.  626. 

Placing  signature  on  note  in  blank  before  delivery  makes  one  liable 
to  payee  as  indorser.     KroU  v.  Hoyt,  214  111.  App.  428. 

Effect  of  maker  of  note  or  drawer  of  bill  writing  name  on  back 
thereof.     Pickering  v.  Cording,  92  Ind.  306,  47  Am.   Rep.   145. 

Parol  evidence  as  to  indorser's  intention  inadmissible.  Porter  v. 
Moles,  151  Iowa  279,  131  N.  W.  23. 

Holder  through  forged  indorsement  cannot  recover.  American  Exp. 
Co.  v.  People's  Sav.  Bank,  —  Iowa  — ,  181   N.  W.  701. 

Purpose  and  liability  of  one  placing  name  upon  back  of  promissory 
note.     Pineland  Realty  Co.  v.  Clements,  —  La.  — ,  88  So.  818. 

Stranger  to  bill  who  indorses  name  thereon  must  be  maker.  Phoenix 
Co.  V.  Fuller   (Mass.),  3  Allen  441. 

Irregular  indorser  entitled  to  same  defenses  as  maker.  Leonard  v. 
Draper,  187  Mass.  536,  73  N.  E.  644. 

Where  agreement  to  indorse  before  delivery  is  carried  out  after  de- 
livery to  payee.  American,  etc.,  Co.  v.  Grant,  135  Minn.  208,  160  N.  W. 
676. 

Renewal  note  after  Negotiable  Instruments  Law  affects  irregular  in- 
dorser.   Walker  v.  Dunham,  135  Mo.  App.  396.  115  S.  W.  1086. 

Liability  of  irregular  indorser  to  payee.  Wilson  v.  Hendee,  74  N. 
J.  Law,  640,  66  Atl.  413. 

Allegation  and  evidence  of  indorser's  intention  of  liability  to  payee 
unnecessary.  Far  Rockaway  Bank  v.  Norton,  186  N.  Y.  484,  79  N.  E. 
709.  f 

Liability  of  indorser  in  blank  to  drawer-payee.  Haddock,  Blanchard 
&  Co.  V.  Haddock,  192^  N.  Y.  499.  85  N.  E.  682. 

Evidence  may  show  indorser  before  delivery  and  accommodation  in- 
dorser.   Franklin  v.  Kidd,  219  N.  Y.  409,  114  N.  E.  839. 


550  NEGOTIABLE    INSTRUMENTS.  §  64 

Effect  of  signature  after  instrument  in  possession  of  payee.  Kohn 
V.  Consolidated  Co.,  30;  Misc.  Rep.  725,  63  N.  Y.  Supp.  265. 

Unnecessary  allegations  and  proof  as  to  indorser's  intention.  Corn 
V.  Levy,  97  App.  Div.  48,  89  N.  Y.  Supp.  658.  ! 

Payee  to  hold  indorser  before  delivery  has  burden  of  showing  in- 
dorsement.    Bender  v.  Bahr  Trucking  Co.,  144  App.  Div.  472,  129  N.  Y. 

Supp.  in . 

Accommodation  indorsement  after  delivery  to  payee  creates  no  lia- 
bility to  payee.     Flinch, v.  Wood,  145  N.  Y.  Supp.  51. 

Effect  of  stranger  to  bill  placing  name  on  back  thereof.  Church  v. 
Swope,  38  Ohio  St.  493. 

Maker  of  note  or  drawer  of  bill  not  indorsers.  Ewan  v.  Brooks- 
Waterfield  Co.,  55  Ohio  St.  596,  45  N.  E.  1094,  35  L.  R.  A.  786,  60  Am. 
St.   Rep.  719. 

Irregular  indorser  is  bound  as  indorser.  Krumm  v.  El  Reno  State 
Bank,  —  Okla.  —   201  Pac.  364. 

Oral  evidence  admissible  to  show  indorser  co-maker  and  entitled 
to  contribute.    Hunter  v.  Harris,  63  Ore.  505,  127  Pac.  786. 

When  irregular  indorsing  directors  become  principals.  In  re  Aldred's 
Estate,  229  Pa.  627,  79  Atl.  141. 

Indorsement  in  possession  of  pavee  as  per  prior  agreement  to  do  so. 
Downey  v.  O'Keefe,  26  R.  I.  571,  59  Atl.  929. 

Indorser  before  maturity  entitled  to  notice  of  dishonor.  Shull  v. 
Gladden,  —  S.  Car.  — ,  95  S.  E.  521. 

Parol  evidence  of  indorser's  intention  admissible.  Mercantile  Bank 
V.  Busby,  120  Tenn.  652,  113  S.   W.  390. 

Evidence  admitted  to  show  intention.  Pharr  v.  Stevens,  124  Tenn. 
669,  139  S.  W.  670. 

Maker  engages  to  pay  instrument  according  to  its  terms.  First  Nat. 
Bank  of  Price  v.   Parker,  —   Utah  —    194  Pac.  661. 

What  parties  are  indorsers.  Farmers  &  Merchants  Nat.  Bank  of 
Reedsville  v.  Kingwood  Nat.  Bank,  —  W.  Va.  — ,  101  S.  E.  734. 

Proof  of  omission  of  official  title  by  mistake,  allowed  against  holder 
in  due  course.  Germania  Nat.  Bank  v.  Mariner,  129  Wis.  544,  109  N. 
W.  574. 

Indorser  before  delivery  is  liable  to  payee.  Robinson  v.  Mann,  31 
Canada  Supreme  Court  Reports  484. 

Defendant  who  indorsed  blank  bill  form  after  acceptance,  plaintiff 
filled  in  form  payable  to  himself,  is  liable.  Glenie  v.  Bruce  Smith  (1908), 
1  K,  B.  263. 

Backer  to  acceptor  not  recognized  at  common  law.  Steele  v.  McKinley, 
5  App.  Cas.  754. 

Irregular  indorser's  liability  where  he  indorses  after  payee's  indorse- 
ment.    Jenkins  v.  Coomber    (1898),  2  Q.  B.  168. 

*"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— Long  v.  Gwin  (1914),  188  Ala.  196,  66  So.  88;  Schillinger 
V.  Wickersham  (1917),  75  So.  11. 

Arkansas.— Bmke  v.  Jefferson  Bank,  121  Ark.  633,  180  S.  W.  500; 
Tancred  v.  First  Nat.  Bank,  124  Ark.  154,  187  S.  W.  160;  Vandeventer 
V.  Davis,  92  Ark.  604. 


§  64  LIABILITY   OF   PARTIES.  551 

Connecticut.— Peck  v.  Easton  (1902),  74  Conn.  456,  51  Atl.  134;  Knapp 
Co.  V.  Tidewater  Coal  Co.   (1912),  85  Conn.  147,  81  Atl.  1063. 

Florida.— Baume'ister  v.  Kuntz  (1907),  53  Fla.  340,  42  So.  886;  Hough 
V.  State  Bank  of  New  Smyna  (1911),  61  Fla.  290,  55  So.  461;;  Hopkins 
V.  Commercial  Bank,  64  Fla.  310,  60  So.  183. 

Illinois.— E\gm  Nat.  Bank  v.  Goecke,  129  N.  E.  149;  First  Nat.  Bank 
of  Lincoln  v.  Sandmeyer  (1911),  164  111.  App.  98;  Justice  v.  Stone- 
cipher  (1915),  108  N.  E.  722,  267  111.  448;  Kroll  v.  Hoyt,  214  111.  App. 
428;  Van  Kleek  v.  Channon,   175  111.  App.  626;. 

Iowa.— Devoy  &  Kuhn  Coal  &  Coke  Co.  v.  Huttig  (1916),  156  N. 
W.  412 ;  Porter  v.  Moles,  151  Iowa  279,  131  N.  W.  23 ;  American  Express 
Co.  V.  Peoples'  Sav.  Bank,  181  N.  W.  701. 

Indiana. — Pickering  v.   Cording,  92   Ind.  306,  47  Am.  Rep.   145. 

Kentucky.— FWst  Nat.  Bank  v.  Bickel  (1911),  143  Kv.  754,  137  S. 
W.  790;  Lyons  Lumber  Co.  v.  Stuart,  147  Ky.  653,  145  S.  W.  376; 
Young  V.  Exchange  Bank  of  Ky.,  152  Ky.  293,  153  S.  W.  444,  Ann.  Cas. 
1915  B,   148. 

Louisiana. — Taylor  v.  Vossburg  Mineral  Spring  Co.  (1911),  128  La. 
364,  54  So.  907;  Nesho  Milling  Co.  v.  Farmers  Co.,  130  La.  949,  58 
So.  825;  Lowry  v.  Wilkinson,  135  La.  105,  64  So.  1003;  Pinelaw  Realty 
Co.  V.  Clements   (La.),  88  So.  818. 

Maryland.— Lightner  v.  Roach,  126  Md.  474,  95  Atl.  62. 

Massachusetts.— Leonard  v.  Draper  (1905),  187  Mass.  536,  73  N.  E. 
644;  Thorpe  v.  White  (1905),  188  Mass.  333,  74  N.  E.  592;  Quimby  v. 
Varnum  (1906),  190  Mass.  211,  76  N.  E.  671;  Toole  v.  Crafts  (1906), 
193  Mass.  110,  78  N.  E.  775,  118  Am.  St.  455;  Bamford  v.  Boynton 
(1909),  200  Mass.  560,  86  N.  E.  900;  Winthrop  Nat.  Bank  v.  Mead 
(1913),  102  N.  E.  69;  Fourth  Nat.  Bank  v.  Mead  (1914),  104  N.  E. 
377;  Lankofsky  v.  Raymond  (1914),  104  N.  E.  489;  Conners  v.  Sulli- 
van  (1915),   108  N.  E.  503;. 

Michigan. — Ensign  v.  Flagg,  177  Mich.  317,  143  N.  W.  82 ;  Ensign  v. 
Dunn  (1914),   148  N.  W.  343. 

Minnesota. — American,  etc.,  Co.  v.  Grant,  135  Minn.  208,  160  N.  W. 
676. 

Missouri.— Walker  v.  Dunham  (1909),  135  Mo.  App.  396,  115  S.  W. 
1086;  Overland  Auto  Co.  v.  Winters   (1915),  180  S.  W.  561. 

New  Jersey.— Wilson  v.  Hendee  (1907),  74  N.  J.  L.  640,  66  Atl.  413; 
Gibbs  v.  Guaragalia  (1907),  75  N.  J.  L.  168,  67  Atl.  81;  Morris  Co. 
Brick  Co.  v.  Austin   (1910),  75  Atl.  550. 

New  York.— Moore  v.  Cross,  19  N.  Y.  227,  75  Am.  Dec.  326;  How- 
ard v.  Van  Gieson  (1899),  46  A.  D.  77,  67  N.  Y.  Supp.  620,  56  A.  D. 
217;  Kohn  v.  The  Consolidated  Butter  &  Egg  Co.  (1900),  63  N.  Y. 
Supp.  265;  30  Misc.  725;  Corn  v.  Levy  (1904),  97  A.  D.  48,  89  N.  Y. 
Supp.  658;  McMoran  v.  Lange,  48  N.  Y.  Supp.  1000,  25  A.  D.  77; 
Far  Rockaway  Bank  v.  Norton  (1906),  186  N.  Y.  484,  79  N.  E.  709; 
Williamsburg  Tr.  Co.  v.  Tum  Suden  (1907),  120  A.  D.  518,  105  N.  Y. 
Supp.  335;  Haddock,  Blanchard  &  Co.  v.  Haddock    (1908),   192  N.  Y. 


552  NEGOTIABLE   INSTRUMENTS.  §  65 

499,  85  N.  E.  682,  103  N.  Y.  Supp.  584;  Roessale  v.  Lancaster  (1909), 
130  A.  D.  1,  114  N.  Y.  Supp.  387;  Bender  v.  Bahr  Trucking  Co.  (1911), 
129  N.  Y.  Supp.  IZl,  144  A.  D.  742;  Abbott  v.  LeProvost  (1915),  151 
N.  Y.  Supp.  616;  Flinch  v.  Wood  (1913),  145  N.  Y.  Supp.  51,  Yonkers 
Nat.  Bank  v.  Mitchell  (1913),  141  N.  Y.  Supp.  128;  Franklin  v.  Kidd 
(1917),  219  N.  Y.  409,  114  N.  E.  839;  Mechanic  v.  Elgie  Iron  Works, 
163  N.  Y.  Supp.  97,  98  Misc.  Rep.  620. 

l^orth  Carolina.— Rouse  v.  Wooten  (1906),  140  N.  Car.  557,  53  S. 
E.  430,  111  Am.  St.  875;  Perry  Co.  v.  Taylor  (1908),  148  N.  Car.  362, 
62  S.  E.  423 ;  Myers  Co.  v.  Battle,  170  N.  C.  168,  86  S.  E.  1034. 

North  Dakota.— Farquhar  Co.  v.  Highem  (1907).  16  N.  Dak.  106,  112 
N.  W.  557;  Harris  v.  Jones   (1912),  23  N.  Dak.  488,  136  N.  W.  1080. 

Ofe'o.— Dollar  Sav.  Bank  v.  Barberton  Pottery  Co.  (1907),  17  Ohio 
Dec.  539;  Church  v.  Swope,  38  Ohio  St.  493;  Evans  v.  Brooks- Waterfield 
Co.,  55  Ohio  St.  596,  45  N.  E.  1094,  35  L.  R.  A.  786,  60  Am.  St.  Rep. 
719;  Rockfield  v.  First  Nat.  Bank  of  Springfield  (1907),  77  Ohio  St. 
311,  83  N.  E.  392,  14  L.  R.  A.   (N.  S.)  842. 

Oklahoma. — Krumm  v.  El  Reno  State  Bank  (Okla.),  201  Pac.  364. 

Oregon.— Hunter  v.  Harris  (1912),  63  Ore.  505,  127  Pac.  786;  Moll 
V.  Roth  Co.  (1915),  152  Pac.  235. 

Pennsylvania.— In  re  Aldred's  Estate,  229  Pa.  627,  79  Atl.  141. 

Rhode  Island.— McLean  v.  Bryer.  24  R.  I.  599,  54  Atl.  373;  Downey 
V.  O'Keefe  (1905),  26  R.  I.  571.  59  Atl.  929;  Deahy  v.  Choquet  (1907), 
28  R.  I.  338,  67  Atl.  421,  14  L.  R.  A.  (N.  S.)  847. 

South  Carolina.— Bank  of  Inman  v.  Elliott  (1915),  84  S.  E.  996; 
Norwood  Nat.  Bank  v.  Piedmont  Pub.  Co.  (1917),  91  S.  E.  866;  Shull 
V.  Gladden,  95  S.  E.  521. 

Tennessee.— Mercantile  Bank  of  Memphis  v.  Busby  (1908),  120  Tenn. 
652,  113  S.  W.  390;  Pharr  v.  Stevens  (1911),  124  Tenn.  670,  139  S.  W. 
730;  Cohn  v.  Hitt  (1916),  182  S.  W.  235;  Nolan  v.  Wilcox  Co^  137 
Tenn.  667,  195  S.  W.  581. 

Utah.— First  Nat.  Bank  of  Price  v.  Parker,  194  Pac.  661. 

West  Virginia. — Thompson  v.  Curry  (1917),  91  S.  E.  801;  Farmers 
and  Merchants  Nat.  Bank  of  Reedsville  v.  Kingwood  Nat.  Bank,  101 
S.  E.  734. 

Wisconsin. — Germania  Nat.  Bank  v.  Mariner  (1906),  129  Wis.  544, 
109  N.  W.  574;  Union  Bank  v.  Commercial  Securities  Co.,  163  Wis. 
470,  157  N.  W.  510. 

United  States.— In  re  Swift  (1901),  106  Fed.  65;  Richards  v.  Street 
(1908),  31  App.  D.  C.  427;  Am.  Trust  Co.  v.  Canevin  (1911),  107  C.  C.  A. 
543;  In  re  McCorti  (1909),  174  Fed.  72;  Wilson  v.  Knowles  (1914),  213 
Fed.  782;  Murray  v.  Third  Nat.  Bank,  234  Fed.  Rep.  481,  148  C.  C.  A.  247.- 

§  65.    Warranty ;  where  negotiation  by  delivery,  et  cetera. 

Every  person  negotiating  an  instrument  by  delivery  or  by  a  quali- 
fied indorsement  ,warrants : 


§65  LIABILITY  OF   PARTIES.  553 

1.  That  the  instrument  is  genuine  and  in  all  respects  what 
it  purports  to  be,  and 

3.  That  all  prior  parties  had  capacity  to  contract;  and    , 

4.  That  he  has  no  knowledge  of  any  fact  which  would  impair 
the  validity  of  the  instrument  or  render  it  valueless. 

But  when  the  negotiation  is  by  delivery  only,  the  warranty  ex- 
tends in  favor  of  no  holder  other  than  the  immediate  transferee. 
The  provisions  of  subdivision  three  of  this  section  do  not  apply 
to  persons  negotiating  public  r  corporate  securities,  other  than 
bills  and  notes.**  ** 

See  text,  §  123. 

Cross  section :  (^. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  See  58 
(1).   (2),   (3). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Subsequent  transfer  or  indorsement  is  not  of  itself  an  assignment  of 
the  warranty  of  an  indorser  without  recourse.  Watson  v.  Cheshire,  18 
Iowa  202,  87  Am.  Dec.  382. 

Action  for  cancellation  of  note  because  checks  received  therefor 
valueless.  Dille  v.  White,  132  Iowa  327,  109  N.  W.  909,  10  L.  R.  A. 
(N.  S.)   510. 

Where  all  parties  ignorant  of  forgery  payment  of  interest  and  ex- 
tending time  does  not  relieve  transferor.  Cluseau  v.  Wagner,  126  La. 
375,  52  So.  547. 

Indorser  for  collection  warrants  genuineness.  In  re  Ziegenheim 
(Mo.  App.),  187  S.  W.  893. 

Seller  warrants  genuineness  of  signature.  Hunt  v.  Sanders,  —  Mo. 
— ,  232  S.  W.  456. 

Eflfect  of  indorsement  "By  agreement  with  recourse  after  all  security 
has  been  exhausted  waiving  protest."  Smith  v.  Bradlev,  16  N.  D.  306, 
112  N.  W.  1062. 

Transferor's  warranty  as  to  signature.  Vogel  v.  Payne,  189  N.  Y.  S. 
285. 

Indorser  without  recourse  warrants  that  instrument  is  genuine.  State 
Exch.  Bank  of  Elk  City  v.  Nat.  Bank  of  Commerce  of  St.  Louis,  Mo., 

—  Okla.  — ,  174  Pac.  796. 

What  indorsement  without  recourse  warrants.  State  Exch.  Bank 
of  Elk  City  v.  Traders'  Nat.  Bank  of  Kansas  City,  Mo.,  —  Okla.  — , 
174   Pac.  799. 

Liability  of  indorser  without  recourse.     Cressler  v.  Brown,  —  Okla. 

—  192  Pac.  417. 

No  implied  warranty  created.     Smith  v.  Earner,  —  Ore.  — ,  188  Pac. 

216. 

Warranty  of  genuineness  of  negotiable  instrument  is  to  holders.  First 
Nat.  Bank  v.  Brule  Nat.  Bank  of  Chamberlain,  —  S.  D.  — ,  168  N.  W. 
1054. 


554  NEGOTIABLE    INSTRUMENTS.  §65 

Payee's  indorsement  forged  each  indorsee  can  recover  from  his  in- 
dorsers.    Main  St.  Bank  v.  Planters  Nat.  Bank,  116  Va.  137,  81  S.  E.  24. 

Indorser  of  draft  does  not  warrant  genuineness  to  drawee.  Ameri- 
can Hominy  Co.  v.  Millikin  Nat.  Bank,  273  Fed.  550. 

*"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Connecticut.— Hopkins  v.  Merrill   (1907),  79  Conn.  626,  66  Atl.   174. 

Illinois.— Graves  v.  Neeves   (1913),  183  111.  App.  235. 

/ow;o.— Watson  v.  Cheshire,  18  Iowa  202,  87  Am.  Dec.  382;  Dille  v. 
White  (1906),  132  Iowa,  327,  109  N.  W.  909,  10  L.  R.  A.  (N.  S.)  510; 
State  ex  rel.  Carroll  v.  Corning  St.  Sav.  Bank.  (1908),  139  Iowa  338, 
115  N  W.  937;  Porter  v.  Moles  (1911),  151  lov/a  279,  131  N.  W.  23; 
Devoy  &  Kuhn  C.  &  C.  Co.  v.  Huttig  (1916),  156  N.  W.  412. 

Louisiana.— Ouseau  v.  Wagner,  126  La.  375,  52  So.  547;  Taylor  v. 
Vossburg  Mineral  Spring  Co.   (1911),  128  La.  364,  54  So.  907, 

Massachusetts.— M\dd\ehorough  Nat.  Bank  v.  Cole  (1906),  191  Mass. 
161,  77  N.  E.  781;  Lankofsky  v.  Raymond   (1914),  104  N.  E.  489. 

Michigan.—Shefier  v.  Fleischer  (1909),  158  Mich.  270,  122  N.  W.  543. 

Missouri.— Hawkins  v.  Wiest  (1912),  167  Mo.  App.  439;  In  re  Ziegen- 
heim  (1916),  187  S.  W.  893;  Dominick  v.  Farmer  (1918),  201  S.  W.  955; 
Hunt  V.  Sanders  (Mo.),  232  S.  W.  456;  State  Exch.  Bank  of  Elk  City 
V.  Traders'  Nat.  Bank  of  Kansas  City  (Mo.),  174  Pac.  799;  State  Exch. 
Bank  of  Elk  City  v.  Nat.  Bank  of  Commerce  of  St.  Louis,  Mo.,  174 
Pac.  786. 

Nebraska.— 'i<^at.  Bank  of  Commerce  v.  Farmers  Merchants  Bank 
(1910),  87  Neb.  841. 

Nevada.— Jensen  v.   Wilslef    (1913),   132   Pac.    16. 

New  Jersey.— Morris  Co.  Brick  Co.  v.  Austin   (1910),  75  Atl.  550. 

Nezv  Forife  — Littaner  v.  Godman,  72  N.  Y.  506,  28  Am.  St.  Rep.  171; 
Williamsburg  Tr.  Co.  v.  Turn  Suden  (1907),  120  A.  D.  518,  105  N.  Y. 
Supp.  335;  Steinbcrger  v.  Hittelman  (1915),  156  N.  Y.  Supp.  320;  Vogel 
V.   Payne,   189  N.  Y.   S.  285. 

North  Dakoia.—Smith  v.  Bradley  (1907),  16  N.  Dak.  306,  112  N.  W. 
1062. 

0A'/a/;0M!O..— Cressler  v.  Brown,  192  Pac.  417. 
Oregon.— Smith  v.  Barner,  188  Pac.  216. 

South  Dakota.— First  Nat.  Bank  v.  Brule  Nat.  Bank  of  Chamberlain 
(1918),  168  N.  W.  1054. 

Tennessee.— Litchfield  Shuttle  Co.  v.  Cumberland  Valley  Nat.  Bank 
(1916),  134  Tenn.  379,  183  S.  W.  1006;  Figures  v.  Fly  (1917),  193  S.  W. 
117. 

Virginia.— Main  St.  Bank  v.  Planters  Nat.  Bank  of  Richmond  (1914), 
116  Va.  137,  81  S.  E.  24. 


§  66  LIABILITY    OF    PARTIES.  555 

Washington.— UiMman  v.  Stanley  (1909),  56  Wash.  320,  105  Pac. 
816;  Fidelity  Nat.   Bank  v.  Hosea  (1916),  160  Pac.  960. 

Wyoming.— Hamilton  v.  Drefenderfer    (1913),  131   Pac.  37. 

United  States.— WiWard  v.  Crook  (1903),  21  App.  D.  C.  237;  Ameri- 
can Hominy  Co.  v.  Millikin  Nat.  Bank.  273  Fed.  550. 

§  66.  Liability  of  general  indorser.  Every  indorser  who 
indorses  without  qualifications,  warrants  to  all  subsequent  hold- 
ers in  due  course : 

1.  The  matter  and  things  mentioned  in  subdivisions  one,  two, 
and  three  of  the  next  preceding  section :  and 

2.  That  the  instrument  is  at  the  time  of  his  indorsement  valid 
and  subsisting. 

And,  in  addition,  he  engages  that  on  due  presentment  it  shall 
be  accepted  or  paid,  or  both,  as  the  case  may  be,  according  to  its 
tenor,  and  that  if  it  be  dishonored,  and  the  necessary  proceed- 
ings on  dishonor  be  duly  taken,  he  will  pay  the  amount  thereof 
to  the  holder,  or  to  any  subsequent  indorser  who  may  be  com- 
pelled to  pay  it.*'  ^^ 

See  text,  §  123. 

Cross  sections:     64,  124,  89,  109,  119-5,  2. 

The  Illinois  statute  adds  "not  an  accommodation  party"  between  the 
words  "mdorser"  and  "who"  in  the  first  line ;  adds  "and  four"  after 
"three"  in  subdivision  one  and  substitutes  "every  indorser"  for  "he" 
in  the  first  line  of  the  last  paragraph. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  Sec. 
55    (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Unqualified  indorser  of  a  secured  installment  note  cannot  vary  his 
indorsement  contract  by  parol.  Hopkins  v.  Merrill,  79  Conn.  636,  66 
Atl.  174. 

Allegations  as  to  liability  of  indorser  "according  to  the  tenor."  Done- 
gan  v.  Dekle  Inv.  Co.  (Fla.)   74  So.  11. 

Indorser  without  qualification  not  entitled  to  defense  of  non-execution 
of  note.     Williams  v.   Peninsular  Grocery  Co.    (Fla.),   75  So.  17. 

Effect  of  fraud  in  transfer  upon  plaintiff  as  holder  in  due  course. 
Beachy  v.  Jones,  —  Kans.  — ,  195   Pac.  184. 

Holder  not  required  to  show  maker's  insolvency  to  hold  indorser. 
V/illiams  v.  Paintsville  Nat.  Bank,  143  Ky.  781,  137  S.  W.  535,  Ann. 
Cas.  1912D,  350. 


556  NEGOTIABLE    INSTRUMENTS.  §66 

Indorsers  before  delivery  to  payee  not  bound  where  payee  knew  of 
illegality  and  want  of  consideration.  Burke  v.  Smith,  111  Md.  624,  75 
Atf.  114. 

Indorser  of  corporation  note  cannot  defend  on  ground  treasurer 
had  no  authority  to  execute.  Leonard  v.  Draper,  187  Mass.  536,  7Z  N. 
E.  64. 

Indorsement  guarantees  previous  indorsements.  State  v.  Merchants' 
Nat.  Bank  of  St.  Paul,  —  Minn.  — ,  177  N.  W.  135. 

Indorser  without  qualification  can  not  indirectly  contradict  his  writ- 
ten contract.     People's  Bank  v.  Baker    (Mo.   App.),   193   S.  W.  632. 

Conflict  of  laws  in  different  jurisdictions  as  affecting  indorsers  lia- 
bilities. Mackintosh  v.  Gibbs,  79  N.  J  .Law,  40,  74,  Atl.  708. 

Accommodation  indorser  guarantees  paj^ees  signature  as  to  future 
holders  in  good  faith.  Packard  v.  Windholz,  88  App.  Div.  365,  84  N. 
Y.  Supp.  666.    Affirmed  180  N.  Y.  549. 

One  of  joint  executives  cannot  without  consent  of  others  indorse 
note.     Union  Bank  v.  Sullivan,  214  N.  Y.  332,  108  N.  E.  558. 

Maker's  insolvency  no  defense  for  indorser.  Curtis  v.  Davidson,  215 
N.  Y.  395,  109  N.  E.  281. 

Maker's  indorsement  is  no  stronger  than  his  original  contract  as 
maker.  Sabine  v.  Paine,  166  App.  Div.  9,  151  N.  Y.  Supp.  735.  Affirmed 
223  N.  Y.  401,  119  N.  E.  849. 

Alteration  of  note  by  striking  out  the  name  of  one  of  several  payees 
as  affecting  indorser's  liability.  First  Nat.  Bank  v.  Gridley,  112  App.  Div. 
398,  98  N.  Y.  Supp.  445. 

Where  indorser  negligent  as  to  discovery  of  forgery  drawee  may  re- 
cover back  the  money.  Williamsburgh  Trust  Co.  v.  Turn  Suden,  120  App. 
Div.  518.  105  N.  Y.  Supp.  335. 

Unqualified  indorsement  prevents  defense  of  usury  at  inception. 
Horowitz  V.  Wollowitz,  59  Misc.  Rep.  520,  110  N.  Y.  Supp.  972. 

Maker  cannot  sue  indorser  on  note  as  such.  Abramowitz  v.  Abramo- 
witz,  113  N.  Y.  Supp.  798. 

Indorsers  warranty  does  not  run  to  plaintiff  who  discounts  for 
maker  of  usurious  note.  Bruck  v.  Lambeck,  63  Misc.  Rep.  117,  118  N. 
Y.  Supp.  494. 

Defendant  bank  indorsing  forged  check  "Received  payment  through 
New  York  Clearing  House.  Indorsements  Guaranteed,"  must  refund  to 
plaintiff  drawee  bank.  N.  Y.  Produce  Exch.  Bank  v.  Twelfth  Ward 
Bank.  134  App.  Div.  953,  119  N.  Y.  Supp.  988. 

Effect  of  purchaser  requiring  indorsement  of  note  upon  the  sale  of 
the  note.     Sedbury  v.  Duffy,  158  N.  C.  432,  74  S.  E.  355. 

Parol  evidence  admissible  as  between  indorser  and  immediate  in- 
dorsee.    Sykes  v.  Everett.  167  N.  C.  600,  83  S.  E.  585. 

Indorsement  bv  nominal  payee  to  real  owner  of  note  creates  no 
liability.  Sawyer' State  Bank  v.  Sutherland,  36  N.  D.  493,  162  N.  W 
696.  Indorsee's  knowledge  of  incapacity  of  prior  party  does  not  de- 
stroy indorser's  liability.  In  re  Young's  Estate,  234  Pa.  287.  83  Atl.  201. 
Indorser  engages  that  on  due  presentment  note  shall  be  paid.  Helf- 
rich  v.  Snyder,  —  Pa.  — .  112  A.  749. 

Drawee  upon  acceptance  of  check  becomes  the  guarantor  thereof. 
Farmers'  Bank  v.  Bank  of  Rutherfoili,  115  Tenn.  64,  88  S.  W.  939,  112 
Am.  St.  Rep.  817. 

Drawee  not  holder  in  due  course  and  presentment  for  payment  is  not 
negotiation.    Figures  v.  Fly,  137  Tenn.  358,  193  S.  W.  117. 


§  66  LIABILITY    OF    PARTIES.  557 

Indorser's  agreement  is  a  new  one  although  the  indorsee  knew  of 
agreement  to  take  land  in  payment  of  note.  Fidelity  Nat.  Bank  v. 
Hosea    (Wash.),   160  Pac.  960. 

Drawee  is  not  a  holder  within  the  meaning  of  the  term.  Nat.  Bank 
of  Commerce  of  Seattle  v.  Seattle  Nat.  Bank,  —  Wash.  — ,  187  Pac. 
342. 

■**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— Hudson  v.  Repton  St.  Bank  (1917),  75  So.  695. 

Colorado.— Marks  v.  Munson  (1915).  149  Pac.  440;  First  Nat.  Bank 
of  Denver  v.  Cripple  Creek  Bank   (1917),  163  Pac.  1134. 

Connecticut.— Hopkins  v.  Merrill    (1907),   79  Conn.  626,  66  Atl.    174. 

Florida.— Wodev  v.  Johnson  (1910),  53  So.  542;  Hough  v.  State 
Bank  of  New  Smyna  (1911),  61  Fla.  290,  55  So.  461;  Donegan  v.  Dekle 
Inv.  Co.  (1917),  74  So.  11;  Williams  v.  Peninsular  Grocery  Co.  (1917), 
75  So.  17. 

/(fa/io.— Armstrong  v.  Sleek  (1908),  14  Ida.  208,  93  Pac.  775. 

Illinois.— Graves  v.  Neeves   (1913),  183  111.  App.  235. 

/ozm.— Allison  v.  Hollenbeak  (1908),  138  Iowa  479,  114  N.  W.  1059; 
Porter  v.  Moles  (1911),  151  Iowa  279,  131  N.  W.  23;  Park  v.  Best 
(1916),  157  N.  W.  233. 

Kansas. — Beachy  v.  Jones,  195  Pac.   184. 

Kentucky.— Wmiams  v.  Paintsville  Nat.  Bank  (1911),  143  Ky.  781, 
137  S.  W.  535;  Riordan  v.  Thornburg  (1917),  198  S.  W.  920. 

Louisiana. — Atkins  v.  Dixie  Fair  Co.  (1914),  65  So.  762;  Farmers 
&  Merchants  Bank  v.   Davis    (1919),  80  So.  713. 

Maryland.— Bmke  v.   Smith,   111   Md.  624,  75  Atl.  114. 

Massachusetts.— Leonard  v.  Draper,  187  Mass.  536,  73  N.  E.  64 ;  Wolf- 
boro  Loan  &  Banking  Co.  v.  Rollins  (1907),  195  Mass.  323;  Demelman  v. 
Brazier  (1908),  198  Mass.  458,  84  N.  E.  856;  State  Bank  &  Trust  Co. 
v.  Evans  (1900),  198  Mass.  11;  Dexter  v.  Fuller  (1914),  217  Mass.  219; 
Lankefsky  v.  Raymond   (1914),  104  N.  E.  489. 

MmM^.jo;a.— State  v.  Merchants  Nat.  Bank  of  St.  Paul,  177  N.  W.  135. 

Missourl—t^at.  Bank  of  Rolla  v.  First  Nat.  Bank  of  Salem  (1910), 
141  Mo.  719,  125  S.  W.  513;  People's  Bank  v.  Baker  (Mo.  App.),  193  S. 
W.  632. 

Nevada.— Jensen  v.  Wilslef   (1913),  132  Pac.  16. 

New  Jersev.—Mackintosh  v.  Gibbs  (1909),  79  N.  J.  L.  40,  74,  Atl.  708; 
Morris  Co.  Brick  Co.  v.  Austin    (1910),  75  Atl.  550. 

New  For^.— Packard  v.  Windholz,  84  N.  Y.  Supp.  666,  88  A.  D.  365, 
affirmed  180  N.  Y.  549;  Gardner  v.  Pitcher  (1905),  109  A.  D.  106;  First 
Nat.  Bank  of  the  City  of  Brooklyn  v,  Gridley  (1906),  112  A.  D.  398,  98 


558  NEGOTIABLE   INSTRUMENTS.  §66 

N  Y  Supp.  445;  Oriental  Bank  v.  Gallo,  98  N.  Y.  Supp.  561,  112  A. 
D.  360;  Williamsburg  Tr.  Co.  v.  Turn  Suden  (1907),  120  A  D.  518, 
105  N.  Y.  Supp.  335;  Horowitz  v.  Wollowitz  (1908),  59  Misc.  520,  110 
N.  Y.  Supp.  972;  Gilpin  v.  Savage  (1908),  60  Misc.  605,  112  N.  Y. 
Supp.  802;  Abramowitz  v.  Abramowitz  (1908),  113  N.  Y.  Supp.  798;^ 
Bruck  V.  Lambeck  (1909),  118  N.  Y.  Supp.  494,  63  Misc.  Rep.  117;  Klar- 

V  Kostink  (1909),  119  N.  Y.  Supp.  683;  New  York  Produce  Ex.  Bank 

V  Twelfth  Ward  Bank  (1909),  135  A.  D.  52,  119  N.  Y.  Supp.  988; 
Gilpin  V.  Savage  (1911),  201  N.  Y.  167,  94  N.  E.  656;  Blanchard  v. 
Blanchard  (1911),  201  N.  Y.  134,  94  N.  E.  630;  Yonkers  Nat.  Bank  v. 
Mitchell  (1913),  141  N.  Y.  Supp.  128;  First  Nat.  Bank  of  Binghamton  v. 
Baker  (1914),  148  N.  Y.  Supp.  352,  163  A.  D.  72;  Baruck  v.  Buckley 
(1915)  151  N  Y.  Supp.  853;  Union  Bank  v.  Sullivan,  214  N.  Y.  332,  108 
N.  E.  558;  Curtis  v.  Davidson,  215  N.  Y.  395,  109  N.  E.  281. 

North  Carolina—State  Bank  of  Chicago  v.  Carr  (1902),  130  N 
Car.  479;  Sedbury  v.  Duffy  (1912),  158  N.  Car.  432;  Sykes  v.  Everett 
(1914),  167  N.  C.  600;  83  S.  E.  585;  Edwards  v.  Jefiferson  Standard  Life 
Ins.  Co.   (1917),  92  S.  E.  695. 

North  Dakota.— Farquhar  Co.  v.  Higham  (1907),  16  N.  Datk.  106, 
112  N.  W.  657;  Sawyer  State  Bk.  v.  Sutherland,  36  N.  D.  493,  162  N.  W. 
696. 

0/tio.— Dollar  Sav.  Bank  v.  Barberton  Pottery  Co.  (1907),  117  Ohio 
Dec.  539;  Rockfield  v.  First  Nat.  Bank  of  Springfield  (1907),  77  Ohio 
St.  311,  83  N.  E.  392. 

Pennsylvania. — Helfrich  v.  Snyder,  112A  749. 

Oklahoma.— Cherokee  Nat.  Bank  v.  Union  Trust  Co.,  33  Okla.  342, 
125  Pac.  464;  Mangold  &  Glandt  Bk.  v.  Utterback  (1916),  160  Pac.  713. 

Oregon.— First  Nat.  Bank  of  Cottage  Grove  v.  Bank  of  Cottage 
Grove  (1911),  59  Ore.  388,  117  Pac.  293;  Peterson  v.  Thompson  (1915), 
78  Ore.  158,  151  Pac.  721. 

Pennsylvania. —Savings  Inst,  of  the  City  of  Williamsport  v.  Folk 
(1909),  38  Pa.  Super  Ct.  54;  In  re  Young's  Estate  (1912).  234  Pa.  287, 
83  Atl.  201;  Weiskucker  v.  Connelly   (1917),  100  Atl.  965. 

South  Dakota.— Astoria  State  Bank  v.  Markwood  (1917),  161  N. 
W.  815. 

Tennessee —Farrr\ers  &  Merchants  Bank  v.  Bank  of  Rutherford 
(1905),  115  Tenn.  64,  88  S.  W.  939;  112  Am.  St.  Rep.  817;  Figures  v. 
Fly  (1917),  193  S.  W.  117. 

Texas.— Pruder\t\a\  Life  Ins.  Co.  v.    Smyer    (1916),  183   S.  W.  825. 

Washingt oii.-mWrr^an  v.  Stanley  (1909),  56  Wash.  320,  105  Pac.  816; 
Gleeson  v.  Lichty  (1911),  62  Wash.  656,  114  Pac.  518;  Fidelity  Nat.  Bank 
V  Hosea  (Wash.),  160  Pac.  960;  Natl.  Bank  of  Commerce  of  Seattle 
V.  Seattle  Natl.  Bank,  187  Pac.  342. 

V/est  FjV(7»n'a.— Rusmissell  v.  White  Oak  Stave  Co.  (1917),  92  S.  W. 
672. 

United  States.— WiWard  v.  Crook   (1903),  21  App.  D.  C.  237. 


§§  67-68  LIABILITY   OF   PARTIES.  559 

§  67.  Liability  of  indorser  where  paper  negotiable  by  de- 
livery. Where  a  person  places  his  indorsement  on  an  in- 
strument negotiable  by  delivery  he  incurs  all  the  liabilities  of 
an  indorser.*'  *' 

See  text,  §  123. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabavta.—Long  v.   Givin    (1919),  80  So.  440. 

Kentucky.— Riordan  v.  Thornburg   (1917),   198  S.  W.  920. 

Louisiana.— Farker  v.   Guillot    (1907),   118  La.  223. 

Michigan.— Ensign  v.  Fogg  (1913),  143  N.  W.  82. 

New  For^.— Williamsburg  Tr.  Co.  v.  Turn  Suden  (1907),  120  A.  D. 
518,  105  N.  Y.  Supp.  335. 

0/i«o.— Dollar  Sav.  Bk.  v.  Barberton  Pottery  Co.  (1907),  117  Ohio 
Dec.  539. 

Texas.— First  Nat.  Bk.  of  Garner  v.  Smith  (1916),  183  S.  W.  862. 

Washington.— Gleeson  v.  Lichty    (1911),  62  Wash.  656,   114  Pac.  518. 

§  68.  Order  in  which  indorsers  are  liable.  As  respects 
one  another,  indorsers  are  liable  prima  facie  in  the  order  in  which 
they  indorse ;  but  evidence  is  admissible  to  show  that  as  between 
or  among  themselves  they  have  agreed  otherwise.  Joint  payees 
or  joint  indorsees  who  indorse  are  deemed  to  indorse  jointly  and 
severally.*'  ** 

See  text,  §  123. 

Cross  sections:     64-12,  109,  120-4,  63. 

The  Illinois  statute  substitutes  for  the  last  sentence  the  following: 
"All  parties  jointly  liable  on  a  negotiable  instrument  are  deeemd  to  be 
jointly  and  severally  liable." 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  See 
32    (5). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Indorsers  are  jointly  and  severally  liable.  Bavarian  Brewing  Co.  v. 
Sobocienski,  —  Del.  Super.  — ,  109  Atl.  55. 

Joint  payees  become  joint  indorsers  and  notice  to  one  binds  him  even 
though  others  are  discharged.  Williams  v.  Paintsville  Nat.  Bank,  143 
Ky.  781,  137  S.  W.  535,  Ann.  Cas.  1912D,  350. 

Agreement  as  to  liability  may  be  inferred  from  circumstances.  Weeks 
v.  Parsons,  176  Mass.  570.  58  N.  E.  157. 


560  NEGOTIABLE    INSTRUMENTS.  §68 

In  suit  between  indorscrs  oral  agreements  as  to  liability  may  be  shown. 
Shea  V.  Vahey,  215  Mass.  80,  102  N.  E.  119. 

Effect  of  notice  of  dishonor  to  one  of  two  joint  indorsers.  Eaves  v. 
Keeton   (Mo.  App.),   193  S.  W.  629. 

Controversy  between  indorsers  is  no  defense  against  holder's  claim. 
State  Bank  v.  Huffman,   100  Neb.  396,   160  N.  W.   115. 

Action  on  implied  promise  of  indemnity  between  indorsers.  Morgan 
v.  Thompson,  72  N.  J.  Law  244,  62  Atl.  410. 

Written  or  parol  evidence  admissible  between  accommodation  in- 
dorsers.    Wilson  V.  Hendee,  74  N.  J.  Law  640,  66  Atl.  413. 

Application  as  to  renewal  of  note  after  negotiable  instruments  law. 
Schneider  v.  Mueller,  82  N.  J.  Law  503,  81  Atl.  863. 

Parol  evidence  between  drawer  of  accepted  bill  and  anomalous  in- 
dorser.  Haddock,  Blanchard  &  Co.  v.  Haddock,  192  N.  Y.  499,  85  N. 
E.  682. 

Parol  evidence  to  show  that  joint  indorsers  are  guarantors.  Hodgens 
V.  Jennings,  148  App.  Div.  879,  133  N.  Y.  Supp.  584. 

Common  interest  in  corporation  whose  note  was  indorsed  affects  con- 
tribution recoverable.  Strasburger  v.  Meyer-Strasburger  Co.,  167  App. 
Div.  198,  152  N.  Y.  Supp.  757. 

Contribution  by  surety  indorser  makes  notice  of  dishonor  necessary. 
Bennett  v.  Kistler,  163  N.  Y.  Supp.  555. 

Declaration  by  prior  indorser  in  suit  against  a  subsequent  one  must 
aver  an  agreement  as  to  liability  other  than  in  order  of  indorsement. 
Lynch  v.  Loftin,  153  N.  C.  270,  69  S.  E.  143. 

Parol  evidence  admissible  to  show  liability  as  between  indorsers. 
Hunter  v.  Harris,  63  Ore.  505,  127  Pac.  786. 

As  between  indorsers  parol  evidence  admissible  to  show  agreement 
as  to  order  of  liability.  Noble  v.  Beeman-Spaulding  Co.,  65  Ore.  63, 
131  Pac.  1006. 

Plaintiff  may  recover  where  he  indorsed  after  defendant  who  in- 
dorsed before  delivery  to  payee.  Cohn  v.  Hitt,  133  Tenn.  466,  ^2  S. 
W.  235. 

Oral  promise  between  accommodation  indorsers  is  admissible.  Hand- 
saker  v.  Pederson,  71  Wash.  218,  128  Pac.  230. 

Circumstances  to  show  accommodation  indorser's  liability  other  than 
in  the  inverse  order  of  indorsement.  Plumley  v.  First  Nat.  Bank,  76 
W.  Va.  635,  87  S.  E.  94. 

Liability  of  prior  indorsers  to  subsequent  indorsers  who  paid  note. 
In  re  McCord,  174  Fed.  72. 

Evidence  as  to  agreement  of  defendant  indorser  as"  to  payment  of 
renewal  notes.     Goldman  v.  Goldberger,  208  Fed.  877,  126  C.  C.  A.  35. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Delaware. — Bavarian  Brewing  Co.  v.  Sobocienski.  109  Atl.  55. 

F/oncfa.— Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886. 

Illinois.— Trego  v.  Estate  of  Cunningham,  267  111.  367,   108  N.  R  350. 

;^^n/Mri^V.— First  Nat.  Bk.  v.  Bickel  (1911),  143  Ky.  754,  137  S.  W. 
790;  Williams  v.  Paintsville  Nat.  Bk.  (1911),  143  Ky.  781,  137  S.  W. 
535,  Ann.  Cas.  1912D,  350. 


§  69  LIABILITY   OF   PARTIES.  561 

Louisiana.— Parker  v.  Guillot   (1907),   118  La.  223. 

Massachusetts.— Weeks  v.  Parsons,  176  Mass.  570,  58  N.  E.  157 ;  Bank 
of  America  v.  Wilson  (1904),  186  Mass.  214;  Bamford  v.  Boynton  (1909), 
200  Alass.  560,  86  N.  E.  900;  Enterprise  Brewing  Co.  v.  Canning  (1911), 
210  Mass.  285;  Shea  v.  Vahey  (1913),  215  Mass.  80,  102  N.  E.  119. 

Michigan.— Ensign  v.  Fogg  (1913),  143  N.  W.  82;  Butterfield  v.  Rey- 
nolds  (1917),  163  N.  W.  86. 

Missouri.— Eaves  v.  Keeton   (1917),  193  S.  W.  629. 

Nebraska.—State  Bank  v.  Huffman,  100  Neb.  396,  160  N.  W.  115. 

New  Jersey.— Morgan  v.  Thompson  (1905),  72  N.  J.  L.  244,  62  Atl. 
410;  Wilson  v.  Hendee  (1907),  74  N.  J.  L.  640,  66  Atl.  413;  Morris  Co. 
Brick  Co.  v.  Austin  (1910),  75  Atl.  550;  Schneider  v.  Mueller  (1911), 
82  N.  J.  L.  503,  81  Atl.  863;  Nat.  Newark  Banking  Co.  v.  Sweeney  (1916), 
88  N.  J.  Law  140,  96  Atl.  86. 

New  York.— State  Bank  v.  Kahn  (1906),  49  Misc.  500,  98  N.  Y.  Supp. 
858;  Haddock,  Blanchard  &  Co.  v.  Haddock  (1908),  192  N.  Y.  499,  85 
N.  E.  682,  103  N.  Y.  Supp.  584;  George  v.  Bacon  (1910),  123  N.  Y.  Supp. 
103,  138  A.  D.  208;  Hodgens  v.  Jennings  (1912),  148  A.  D.  879,  133  N. 
Y.  Supp.  584;  Myer  v.  Strasburger  &  Co.  (1915),  152  N.  Y.  Supp.  757, 
167  A.  D.  198;  Bennett  v.  Kistler,  163  N.  Y.  Supp.  555. 

North  Carolina.— Lynch  v.  Loftin  (1910),  153  N.  Car.  270,  69  S.  E. 
143. 

North  Dakota.— Karris  v.  Jones  (1912),  23  N.  Dak.  488,  136  N.  W. 
1080. 

Oregon.— Hunter  v.  Harris  (1912),  63  Oreg.  505,  127  Pac.  786;  No- 
ble V.  Beeman-Spaulding- Woodward  Co.  (1913),  65  Ore.  63,  131  Pac. 
1006. 

Tennessee.— Cohn  v.  Hitt  (1916),  133  Tenn.  466,  182  S.  W.  235;  Mer- 
rimon  v.  Parkey  (1917),   191  S.  W.  327. 

West  Virginia.— P\um\ey  v.  First  Nat.  Bank,  76  W.  Va.  635,  87  S. 
E.  94. 

Washington.— Handsaker  v.   Pederson,  71   Wash.  218,  128  Pac.  230. 

United  States.— In  re  McCord  (1909),  174  Fed.  72;  Goldman  v.  Gold- 
berger  (1913),  208  Fed.  877,  126  C.  C  A.  35. 

§  69.  Liability  of  agent  or  broker.  Where  a  broker  or 
other  agent  negotiates  an  instrument  without  indorsement,  he 
incurs  all  the  liabilities  prescribed  by  section  115,  of  this  act, 
unless  he  discloses  the  name  of  his  principal,  and  the  fact  that  he 
is  acting  only  as  agent.*-  ** 

See  text,  §  123. 

Section  115  was  "Section  65"  in  original  New  York  act  by  mistake. 

In  Illinois  a  new  section  is  interpolated  at  this  place  as  69a,  which 
reads  as  follows :  "Whenever  any  bill  of  exchange  drawn  or  indorsed 
within  this  state  and  payable  without  this  state  is  duly  protested  for  non- 


562  NEGOTIABLE    INSTRUMENTS.  §69 

acceptance  or  non-payment,  the  drawer  or  indorser  thereof,  due  notice 
being  given  of  such  non-acceptance  or  non-payment,  shall  pay  such  bill 
at  the  current  rate  of  exchange  and  with  legal  interest  from  the  time 
such  bill  ought  to  have  been  paid  until  paid,  together  with  the  costs  and 
charges  of  protest,  and  on  bills  payable  in  the  United  States  in  case  suit 
has  to  be  brought  thereon  and  on  bills  payable  without  the  United  States 
with  or  without  suit  5  per  cent,  damages   in  addition." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Notes  admissible  where  genuineness  of  signature  not  disputed.  Dean 
V.  Vice,  —  Mass.  — ,  124  N.  E.  673. 

Parol  evidence  not  admissible  to  relieve  a  broker  who  has  indorsed. 
People's  Bank  v.  Baker   (Mo.  App.),   193  S.  W.  632. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Massachusetts.— Cheney  v.  Taber  (1915),  108  N.  E.  1072;  Dean  v. 
Vice,  124  N.  E.  673. 

Missouri. — People's  Bank  v.  Baker  (Mo.  App.),  193  S  W.  632. 


ARTICLE  VI. 


PRESENTMENT   FOR  PAYMENT. 


§  70.  Effect  of   want    of   demand 
on  principal   debtor. 

71.  Presentment    where    instru- 

ment is  not  payable  on  de- 
mand. 

72.  What     constitutes     a     suffi- 

cient presentment. 
IZ.  Place    of   presentment. 

74.  Instrument   must   be    exhib- 

ited. 

75.  Presentment    where     instru- 

ment payable  at  bank. 

Id.  Presentment  where  princi- 
pal debtor  is   dead. 

11.  Presentment  to  persons  lia- 
ble as  partners. 

78.  Presentment    to   joint    debt- 

ors. 

79.  When    presentment   not    re- 

quired to  charge  the  draw- 
er. 


§  80.  When  presentment  not  re- 
quired to  charge  the  in- 
dorser. 

81.  When  delay  in  making  pre- 

sentment is  excused. 

82.  When    presentment   may   be 

dispensed  with. 

83.  When     instrument     dishon- 

ored  by   non-payment. 

84.  Liability     of     persons     sec- 

ondarily   liable,    when    in- 
strument  dishonored. 

85.  Time  of  maturity. 

86.  Time;  how   computed. 

87.  Rule  where  instrument  pay- 

able at  bank. 

88.  What     constitutes     payment 

in  due  course. 


Sections  70  to  88  above  are  the  sections  used  by  the  com.missioners. 

See  table  of  corresponding  sections  of  the  law  in  the  various  states 
and  territories  beginning  on  page  261. 

§  70.  Presentment  for  payment — Effect  on  parties.  Pre- 
sentment for  payment  is  not  necessary  in  order  to  charge  the 
person  primarily  Hable  on  the  instrument ;  but  if  the  instrument 
is,  by  its  terms,  payable  at  a  special  place,  and  he  is  able  and 
willing  to  pay  it  there  at  maturity,  such  ability  and  willingness 
are  equivalent  to  a  tender  of  payment  upon  his  part.  But  except 
as  herein  otherwise  provided,  presentment  for  payment  is  neces- 
sary in  order  to  charge  the  drawer  and  indorsers.^'  ** 

See  text,  §  156. 

Cross  sections:     61.  66,  82-3,  89,  1Z,  75,  64-1,  109,  82-3. 

In  Illinois  the  words  "except  in  case  of  bank  notes"  are  interpolated 
after  the  words  "primarily  liable  on  the  instrument.'' 

The  Wisconsin  act  (§  1678)  omits  that  part  of  the  first  sentence  fol- 
lowing the  words  "primarily  liable  on  the  instrument." 

563 


564  NEGOTIABLE  INSTRUMENTS.  §  70 

Kansas,  New  York  and  Ohio  add  the  words  "and  has  funds  there 
available  for  that  purpose"  after  the  words  "at  maturity." 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
52  (1),  (2);  45,  87  (2);  87  (1). 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

If  payment  awaits  holder  he  forfeits  cost  of  collection  if  he  does  not 
present  it.     Moore  v.  Alton,  196  Ala.  158,  70  So.  681. 

Pleading.  Florence  Oil  Co.  v.  First  Nat.  Bank,  38  Colo.  119,  88  Pac. 
182. 

Pleading— When  payable  at  a  particular  place.  Shaw  v.  Newton,  5 
Del.  19,  90  Atl.  465. 

Holder  of  collateral  note  should  make  presentment.  State  Bank  of 
Clinton  V.  Parkhurst,  155  111.  App.  101. 

No  demand  necessary  as  to  one  primarily  liable  on  note  payable  on 
demand.     Lebanon  State  Bank  v.  Garber,  —  Kan.  — ,  181  Pac.  572. 

Presentment  for  payment  unnecessary  as  to  person  primarily  liable, 
althougli  made  payable  at  a  particular  place.  Farmers'  Nat.  Bank  v. 
Venner,  192  Mass."  531,  78  N.  E.  540. 

Presentment  on  demand  note.  United  States  Nat.  Bank  of  Red 
Lodge  V.  Shupak,  54  Mont.  542. 

Where  maker  and  indorsers  liable  collectively  presentment  not  neces- 
sary.    Union  Bank  v.   Sullivan,  214  N.  Y.  332,  108  N.  E.  558. 

Indorser  secured  by  mortgage  entitled  to  presentment  and  notice. 
First  Nat.  Bank  v.  Baker,  163  App.  Div.  72,  148  N.  Y.  Supp.  372. 

Also  forfeits  damages.  Gordon  v.  Benguiat,  95  Misc.  Rep.  132,  159 
N.  Y.   Supp.  1. 

Absence  of  proof  of  presentment  for  payment.  O'Kane  v.  North 
American  Distilling  Co.,  171   N.  Y.  S.  275. 

Demand  note  drawing  interest  needs  no  presentment  as  between  orig- 
inal parties.  Shuman  v.  Citizens  Bank,  27  N.  D.  599,  147  N.  W.  388, 
L.  R.  A.  1915A,  728. 

Failure  to  present  before  bank  fails.  Binghampton  Pharmacy  v.  First 
Nat.  Bank,  131  Tenn.  711,  176  S.  W.  1038. 

Presentment  where  whole  sum  due  for  non-payment  of  interest.  Gal- 
braith  v.  Shepard,  43  Wash.  698.  86  Pac.  1113. 

No  place  of  payment  named,  payable  at  residence  or  place  of  business. 
Bardsley  v.  Washington  Mill  Co.,  54  Wash.  553,  103  Pac.  822. 

Demand  note  bearing  interest— effect  as  to  immediate  or  early  de- 
mand.   Murray  v.  Third  Nat.  Bank,  234  Fed.  Rep.  481.  148  C.  C.  A.  247. 

Not  necessary  to  present  to  maker  though  payable  at  a  particular 
place.    Gordon  v.  Kerr,  25  Sess.  Gas.  570  (Scotland). 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— Moore  v.  Alton,  196  Ala.  158.  70  So.  681 ;  Hall  v.  First  Nat. 
Bk.  of  Crossville  (1916),  72  So.  171. 

California.— mchols  v.  Asbeck  (1919),  178  Pac.  705. 

Colorado.— Florenct  O.  &  R.  Co.  v.  First  Nat.  Bk.  (1905).  38  Colo. 
n9,  88  Pac.  182;  Sykes  v.  Krym  (1911),  49  Colo.  560,  113  Pac  10O3, 


§  70  PRESENTMENT    FOR    PAYMENT.  565 

Delaware.— Shaw  v.  Newton,  5  Del.  19,  90  Atl.  465. 

Florida. — Worley  v.  Johnson,  (1910),  53  So.  542;  Baumeister  v. 
Kurtz,  53  Fla.  340,  42  So.  886. 

Illinois.—State  Bk.  of  Clinton  v.  Parkhurst  (1910),  155  111.  App.  101; 
J'irst  Nat.  Bk.  of  Lincoln  v.  Sandmeyer  (1911),  164  111.  App.  98;  Selree 
V.  Thomas   (1911),   166  111.  App.  427. 

Kansas.— The  N.  E.  Nat.  Bk.  of  Kansas  City,  Mo.  v.  Dick  (1911),  84 
Kans.  252,  114  Pac.  378;  Lebanon  State  Bank  v.  Garber,  181   Pac.  572. 

Kentucky.— Fritts  v.  Kirchdorfer  (1910),  124  S.  W.  882;  Williams  v. 
Paintsville  Nat.  Bk.  (1911),  143  Ky.  781,  137  S.  W.  535;  Prov.  Mming 
Co.  V.  Glass  Bros.   (1918),  201  S.  W.  308. 

Masaschusetts.—Demdman  v.  Brazier  (1908),  198  Mass.  458,  84  N. 
E.  856;  Farmers  Nat.  Bk.  v.  Venner  (1906),  192  Mass.  531,  78  N.  E.  540. 

Montana.— \J.  S.  Nat.  Bank  of  Red  Lodge  v.  Shupak  (1918),  54  Mont. 
542. 

New  York.-Badt  v.  Miller  (1912),  135  N.  Y  .Supp.  13,  150  A.  D. 
920;  Beall  v.  Russell  (1912),  134  N.  Y.  Supp.  633;  Bennett  v.  Kisler 
(1917),  163  N.  Y.  Supp.  555;  Cohen  v.  Chelsea  Ex.  Bk.of  N.  Y.  (1917), 
164  N.  Y.  Supp.  75;  Ger.-Am.  Bk.  v.  Milliman  (1900),  65  N.  Y.  Supp. 
242,  31  Misc.  87;  Gilpin  v.  Savage  (1908),  60  Misc.  605,  112  N.  Y.  Supp. 
802;  Gilpin  v.  Savage  (1911),  201  N.  Y.  167,  94  N.  E.  656;  Hyman  v. 
Doyle  (1907),  53  Misc.  597.  103  N.  Y.  Supp.  778;  O'Brannon  J.  W.  Co. 
V.  Curran  (1908),  129  A.  D.  90,  113  N.  Y.  Supp.  359;  State  of  N.  Y. 
Nat.  Bk.  V.  Kennedy  (1911),  130  N.  Y.  Supp.  412,  145  A.  D.  669;  Gordon 
V.  Benguiat,  159  N.  Y.  Supp.  1,  95  Misc.  Rep.  132:  Union  Bk.  of  Brook- 
lyn V.  Sullivan  (1915).  108  N.  E.  558.  214  N.  Y.  332;  Van  Vlict  v.  Kan- 
ter  (1910),  124  N.  Y.  Supp.  63;  First  Nat.  Bank  v.  Baker.  163  A.  D. 
72.  148  N.  Y.  Supp.  372;  O'Kane  v.  North  American  Distilling  Co. 
(1918),  171  N.  Y.  Supp.  275. 

North  Carolina.— Myers  Co.  v.  Battle  (1915).  86  S.  E.  1034;  Perry 
Co.  V.  Taylor  (1908),  148  N.  Car.  362;  Rouse  v.  Wooten  (1906).  140  N. 
Car.  557,  53  S.  E.  430,  111  Am.  St.  875;  Walter  v,  Earnhart  (1916),  88 
S.   E.  753. 

North  Dakota.— Nelson  v.  Grondahl  (1904).  13  N.  Dak.  363.  100  N. 
W.  1093;  Sawyer  State  Bk.  v.  Sutherland  (1917).  162  N.  W.  696;  Shu- 
man  V.  Citizens  Bank.  27  N.  Dak.  599,  147  N.  W.  388,  L.  R.  A.  1915A.  728. 

.      Or^^oM.— Hodges  v.  Blaylock  (1916).  161  Pac.  396. 

Pennsylvania. — In  re  Aldred's  Estate  (1911).  229  Pa.  627;  DeWees  v. 
Middle  States  C.  &  I.  Co.  (1915),  93  Atl.  958;  First  Nat.  Bk.  v.  McBride 
(1911),  230  Pa.  261;  Dominion  Trust  Co.  v.  Hildner,  243  Pa.  253,  90 
Atl.  69. 

South  Carolina. — Farmers  Bk.  v.  Crawford   (1916),  88  S.  E.   13. 

South  Dakota.—Scrihner  State  Bk.  v.  Ransom  (1915),  151  N.  W. 
1023. 

Tennessee. — Pharmacy  v.  First  Nat.  Bk.  (1915),  131  Tenn.  711,  176 
S.  W.  1038;  Waterhouse  v.  Sterchi  Bros.   (1918),  201  S.  W.  150. 


566  NEGOTIABLE    INSTRUMENTS.  §71 

Washington— Bradshzw  v.  Chaffee  (1916),  90  Wash.  404,  156  Pac. 
388;  Bardsley  v.  Washington  Mill  Co.  (1909),  54  Wash.  553,  103  Pac. 
822;  Galbraith  v.  Shepard  (1906),  43  Wash.  698,  88  Pac.  1113;  Hillman 
V.  Stanley  (1909),  56  Wash.  320,  105  Pac.  816. 

Wisconsin. — Schoenwetter  v.  Schoenwetter  (1916),  164  Wis.  131,  159 
N.  W.  737;  Welsch  v.  Kukuk  (1906),  128  Wis.  419,  107  N.  W.  301. 

United  States. — Grandison  v.  Robertson  (1916),  231  Fed.  785;  In  re 
Swift  (1901),  106  Fed.  65  (Dt.  Mass.)  ;  Murray  v.  Third  Nat.  Bk.  «f 
St.  Louis   (1916),  234  Fed.  481,  148  C.  C.  A.  247. 

§  71.  Presentment  where  instrument  is  not  payable 
on  demand;  (where  payable  on  demand).  Where  the  instru- 
ment is  not  payable  on  demand,  presentment  must  be  made  on 
the  day  it  falls  due.  Where  it  is  payable  on  demand,  present- 
ment must  be  made  within  a  reasonable  time  after  Its  issue, 
except  that  in  case  of  a  bill  of  exchange,  presentment  for  pay- 
ment will  be  sufficient  if  made  within  a  reasonable  time  after 
the  last  negotiation  thereof.*'  ■** 

See  text,  §  159. 

Cross  sections :    85,  193,  144,  186,  7-1,  73,  72-2,  82-3,  75. 
The  Nebraska  act  omits  the  remainder  of  this  section  after  the  words, 
"time  after  its  issue." 

In  New  Hampshire  the  following  is  added :  "Upon  a  promissory  note 
payable  on  demand,  a  demand  made  at  the  expiration  of  sixty  days  from 
the  date  thereof,  without  grace,  or  at  any  time  within  that  term,  shall 
be  deemed  to  be  made  within  a  reasonable  time;  and  any  act,  neglect  or 
other  thing,  which  by  the  provisions  of  this  act  is  deemed  equivalent  to 
a  presentment  and  demand  on  a  note  payable  at  a  fixed  time,  or  which 
would  dispense  with  such  presentment  and  demand,  if  it  occurs  at  or 
within  the  sixty  days,  shall  be  a  dishonor  thereof,  and  shall  authorize 
the  holder  of  the  note  to  give  notice  of  the  dishonor  to  the  indorser  as 
upon  a  presentment  to  the  promisor,  and  his  neglect  or  refusal  to  pay 
the  same.  No  presentment  of  the  note  to  the  promisor  and  demand  for 
payment  shall  charge  the  indorser  unless  made  on  or  before  the  last 
day  of  the  sixty  days." 

In  South  Dakota  a  new  section  fixes  the  maturity  of  demand  instru- 
ments.    This  is  set  out  under  section  193. 

The  Vermont  act  omits  the  following  words,  "the  last  negotiation 
thereof,"  and  the  following  words  are  substituted,  "its  issue  in  order 
to  charge  the  drawer." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Failure  of  bank  cashier  to  present  check  for  payment  on  day  of  re- 
ceiving same  unreasonable  delay  where  he  knows  bank's  failing  condi- 
tion.    Babcock  v.  Rocky  Ford,  25  Colo.  App.  312,  137  Pac.  899. 


g  71  PRESENTMENT   FOR   PAYMENT.  567 

Indorsement  of  note  after  maturity  makes  it  payable  on  demand  and 
presentment  for  payment  must  be  within  reasonable  time.  Sheffield  v. 
Cleland,   19  Idaho  612,  115  Pac.  20.  . 

Indorser  discharged  when  check  not  presented  withm  reasonable  time 
after  issue.    First  Nat.  Bank  of  Chadwick  v.  Mackey,  157  111.  App.  408. 

Check  forwarded  for  collection  in  usual  commercial  route  is  suffi- 
cient.    Sublette  Exch.  Bank  v.  Fitzgerald,  168  111.  App.  240. 

Unreasonable  delay  in  presentment  discharges  indorser.  Swift  &  Co. 
V.  Miller,  62  Ind.  App.  312,  113  N.  E.  447. 

Presentment  in  usual  commercial  route  is  sufficient  although  a  more 
direct  presentment  could  have  been  made.  Plover  Savings  Bank  v. 
Moodie,  135  Iowa  685,  110  N.  W.  29,  113  N.  W.  476. 

Certificate  of  deposit  payable  on  demand  must  be  presented  within 
reasonable  time  after  issue.  Anderson  v.  First  Nat.  Bank,  144  Iowa  251, 
122  N.  W.  918. 

Presentment  for  payment  of  demand  note.  American  Nat.  Bank  v. 
Patterson,  —  La.  — ,  83  So.  218. 

Presentment  of  demand  instrument  must  be  in  reasonable  time  and 
holder  has  burden  of  proving  same.  Merritt  v.  Jackson,  181  Mass.  69, 
62  N.  E.  987. 

Burden  of  proof  of  notice  of  dishonor  is  on  holder.  First  Nat.  Bank 
V.  Star  Watch  Case  Co.,  187  Mich.  224,  153  N.  W.  722. 

Loan  association  by-law  as  affecting  presentment  for  payment.  Hill 
Savings,  Etc.,  Club  v.  Barnowitz   (N.  J.),  97  Atl.  28. 

Presentment  for  payment  must  be  within  reasonable  time.  Commer- 
cial Nat.  Bank  v.  Zimmerman,  185  N.  Y.  210,  11  N.  E.  1020. 

Burden  is  upon  indorser  to  prove  that  presentment  was  unreasonably 
delayed.  German-American  Bank  v.  Mills,  99  App.  Div.  312,  91  N.  Y. 
Supp.  142. 

Presentment  within  ten  months  sufficient  to  hold  indorser.  Schlesm- 
ger  v.  Schultz,  110  App.  Div.  356,  96  N.  Y.  Supp.  383. 

Evidence  as  to  custom  of  banks  in  handling  indorsed  demand  notes 
admissible  as  to  reasonable  time.  State  of  New  York  Nat.  Bank  v. 
Kennedy,  145  App.  Div.  669,  130  N.  Y.  Supp.  412. 

Presentment  for  payment  not  necessary.  Van  Buren  v.  Wensley,  169 
N.  Y.  S.  789. 

It  was  question  for  jury  whether  note  in  bank's  possession  for  pre- 
sentment on  date  due.     Nickell  v.  Bradshaw,  —  Ore.  — ,  183  Pac.  12. 

Demand  note  should  be  presented  at  place  of  payment  and  notice  of 
non-payment  given  to  bind  indorser.  Davis  Nat.  Bank  of  Piedmont  v. 
Knight,  —  W.  Va.  — .  103  S.  E.  482. 

Presentment  of  demand  draft  within  reasonable  time  after  last  in- 
dorsement sufficient.  Columbian  Banking  Co.  v.  Bowen,  134  Wis.  218, 
114  N.  W.  451. 

Insolvency  of  maker  does  not  excuse  presentment  for  payment  as  to 
indorser.     Grandison  v.  Robertson,  231  Fed.  Rep.  785,  145  C.  C.  A.  605. 

*"  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Co/ora^o .—Babcock  v.  City  of  Rocky  Ford  (1914),  25  Colo.  App.  312, 
137  Pac.  899. 

Connecticut. — Hampton  v.  Miller,  78  Conn.  267,  61  Atl.  952. 

/da/io.— Sheffield  v.  Cleland  (1911),  19  Ida.  612,  115  Pac.  20. 


56S  Negotiable  iNsxRuMfiNts.  §  72 

Illinois— First  Nat.  Bk.  of  Chadwick  v.  Mackey  (1910),  157  111.  App. 
408;  Greer  v.  Downing  (1912),  176  111.  App.  355;  Sublette  Exch.  Bk.  v. 
Fitzgerald,  168  111.  App.  240. 

Indiana.—Svfih  &  Co.  v.  Miller,  62  Ind.  App.  312,  113  N.  E.  447. 

Iowa. — Anderson  v.  First  Nat.  Bk.  of  Chariton  (1909),  144  Iowa  251, 
122  N.  W.  918;  Citizens  Bk.  of  Pleasantville  v.  First  Nat.  Bk.  of 
Pleasantville  (1907),  135  Iowa  605,  13  L.  R.  A.  (N.  S.)  303,  113  N.  W. 
481;  Plover  Savings  Bank  v.  Moodie,  135  Iowa  685,  110  N.  W.  29,  113 
N.  W.  476. 

Louisiana.— Lty/y  v.  Wilkinson  (1914),  64  So.  1003;  American  Nat. 
Bank  v.  Patterson,  83  So.  218. 

Massachusetts.— Mtrrin  v.  Jackson  (1902),  181  Mass.  69,  62  N.  E. 
987;   Plymouth  County  Trust  Co.  v.  Scanlon   (1917),   116  N.  E.  468. 

Michigan.— ¥\Ts.i  Nat.  Bank  v.  Star  Watch  Case  Co.,  187  Mich.  224, 
153  N.  W.  722. 

New  Jersey. — Hill  Savings  &  Drawing  Club  v.  Baronowitz  (1916), 
97  Atl.  28. 

New  For;^.— Becker  v.  Horowitz  (1909),  114  N.  Y.  Supp.  161,  61 
Misc.  608;  Columbia-Knickerbocker  Tr.  Co.  v.  Miller  (1913),  142  N.  Y. 
Supp.  440;  Commercial  Nat.  Bk.  v.  Zimmerman  (1906),  185  N.  Y.  210, 
77  N.  E.  1020;  Congress  Brewing  Co.  v.  Habenicht  (1903),  83  A.  D. 
141,  82  N.  Y.  Supp.  481;  German- Am.  Bk.  v.  Milliman  (1900),  65  N.  Y. 
Supp.  242,  31  Misc.  87;  German- Am.  Nat.  Bk.  v.  Mills  (1904),  99  A  .D. 
312,  91  N.  Y.  Supp.  142;  Hussey  v.  Sutton  (1916),  160  N.  Y.  Supp.  934; 
McBride  v.  Illinois  Nat.  Bk.  (1910),  138  A.  D.  339;  Schlesinger  v.  Schultz 
(1905),  10  A.  D.  356,  96  N.  Y.  Supp.  383;  Young  v.  Am.  Bk.,  No.  82 
(1904),  44  Misc.  308,  89  N.  Y.  Supp.  915;  Van  Buren  v.  Wensley,  169  N. 
Y.  S.  789;  State  of  New  York  Nat.  Bank  v.  Kennedy,  130  N.  Y. 
Supp.  412,  145  A.  D.  669. 

Orr^o«.— Robinson  v.  Holtnes  (1910),  57  Oreg.  5,  109  Pac.  754;  Nick- 
ell  V.  Bradshaw,  183  Pac.  12. 

Tennessee.— hm.  Nat.  Bk.  v.  Nat.  Fertilizer  Co.  (1911),  125  Tenn. 
328.  143  S.  W.  597. 

West  Virginia.— Davis  Natl.  Bank  of  Piedmont  v.  Knight,  103  S.  E. 
482. 

Wisconsin.— Columh'ian  Banking  Co.  v.  Bowen  (1908),  134  Wis.  218, 
114  N.  W.  451. 

United  States.— Grandison  v.  Robertson,  231  Fed.  Rep.  785,  145  C 
C.  A.  605;  Murray  v.  Third  Nat.  Bk.  of  St.  Louis   (1916),  234  Fed.  481. 

§  72.  What  constitutes  sufficient  presentment.  Present- 
ment for  payment,  to  be  sufficient,  must  be  made: 

1.  By  the  holder,  or  by  some  person  authorized  to  receive  pay- 
ment on  his  behalf ; 


§  72  PRESENTMENT    FOR    PAYMENT.  569 

2.  At  a  reasonable  hour  on  a  business  day 

3.  At  a  proper  place  as  herein  defined ; 

4.  To  the  person  primaril}^  liable  on  the  instrument,  or  if  he 
is  absent  or  inaccessible,  to  any  person  found  at  the  place  where 
the  presentment  is  made.*'  ■** 

See  text,  §  158. 

Cross    sections :      IZ,    75,    71. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  Sec.  45  (3). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Presentation  of  promissory  note  for  payment  by  one  having  it  for 
collection.    Fowler  Paper  Co.  v.  Best  Jones,  Etc.,  Co.,  183  111.  App.  310. 

Complaint  that  presentment  not  made  sooner.  United  States  Nat. 
Bank  of  Red  Lodge  v.  Shupak,  54  Mont.  542. 

Note  payable  in  bank  is  sufBciently  presented  if  in  bank  on  date  of 
maturity.     Nickell  v.  Bradshaw,  —  Oreg.  — ,  183  Pac.  12. 

Presentment  at  Chicago  bank  between  3  and  6  o'clock  was  reasonable 
hour  where  they  were  open  for  collection  of  paper  refuseti  in  clearings 
of  day.    Columbian  Banking  Co.  v.  Bowen,  134  Wis.  218,  114  N.  W.  451. 

*^  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

California. — Freudenberg  v.   Lucas    (1918),   175   Pac.  482. 

Co/oraJo.— Archuleta  v.  Johnston    (1912),   127  Pac.   134. 

Illinois.— Fo\\\&r  Paper  Co.  v.  Best  Jones,  Etc.,  Co.,  183  111.  App.  310. 

■   Kentucky.— Tiohtny  v.  First  Nat.  Bk.   (1916),  186  S.  W.  937. 

Massachusetts.— In  re  Poole  (1917),  116  N.  E.  227. 

Montana. — United  States  Nat.  Bank  of  Red  Lodge  v.  Shupak,  54 
Mont.  542. 

New  York. — Columbian-Knickerbocker  Trust  Co.  v.  Miller  (1915), 
215  N.  Y.  191,  109  N.  E.  179;  German- Am.  Bk.  v.  Milliman  (1900),  65 
N.  Y.  Supp.  242,  31  Misc.  S7 ;  Gilpin  v.  Savage  (1908),  60  Misc.  605, 
112  N.  Y.  Supp.  802;  Giloin  v.  Savage  (1911),  201  N.  Y.  167,  94  N.  E. 
656;  McBride  v.  Illinois  Nat.  Bk.   (1910),   138  A.  D.  339. 

North  Dakota.— Ndson  v.  Grondahl  (1904),  13  N.  Dak.  363,  100  N. 
W.  1093. 

Ohio.— UockMd  v.  First  Nat.  Bk.  of  Springfield  (1907),  77  Ohio  St. 
.^11,  83  N.  E.  392. 

Or^^ofz.— Hodges  v.  Blaylock  (1916),  161  Pqc.  396;  Nickel!  v.  Brad- 
shaw, 183  Pac.  12. 


570  NEGOTIABLE    INSTRUMENTS.  §  73 

Pennsylvania.— McNcdy  Co.  v.  Bk.  of  No.  Am.   (1908),  221   Pa.  588. 

South  Dakota.— Uaup'm  v.  Mobridge   (1917),  161  N.  W.  332. 

Washington.— North  Western  Nat.  Bk.  of  Portland  v.  Pearson  (1918), 
173  Pac.  730. 

Wisconsin. — Columbian  Banking  Co.  v.  Bowen  (1908)  ,134  Wis.  218, 
114  N.  W.  451. 

§  73.  Place  of  presentment.  Presentment  for  payment  is 
made  at  the  proper  place ; 

1.  Where  a  place  of  payment  is  specified  in  the  instrument 
and  it  is  there  presented ; 

2.  Where  no  place  of  payment  is  specified,  but  the  address  of 
the  person  to  make  payment  is  given  in  the  instrument  and  it  is 
there  presented ; 

3.  Where  no  place  of  payment  is  specified  and  no  address 
is  given  and  the  instrument  is  presented  at  the  usual  place  of 
business  or  residence  of  the  person  to  make  payment ; 

4.  In  any  other  case  if  presented  to  the  person  to  make  pay- 
ment wherever  he  can  be  found,  or  if  presented  at  his  last  known 
place  of  business  or  residence.*'  ■** 

See  text,  §  161. 

Cross  sections :     75,  7-1,  71,  82-3. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sees. 
45  (4)   (a),  45   (4)    (b),  45  (4)    (c),  45  (4)   (d). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Note  payable  at  First  Nat.  Bank  and  dated  at  Hornell,  N.  Y.,  is  prop- 
erly presented  for  payment  to  First  Nat.  Bank  of  Hornell,  N.  Y.  Finch 
V.  Calkins,  183  Mich.  298,  149  N.  W.  1037. 

Note  payable  at  bank  is  properly  presented  for  payment  at  the  bank 
although  it  is  in  hands  of  receiver  and  closed.  Schlesinger  v.  Schultz, 
110  App.  Div.  356,  96  N.  Y.  Supp.  383. 

Note  payable  at  branch  oftice  is  not  presented  for  payment  when 
presented  at  principal  office.  Ironclad  Mfg.  Co.  v.  Sackin,  129  App.  Div. 
555,  114  N.  Y.  Supp.  43. 

Waiver  of  notice  of  dishonor  does  not  v/aive  presentment  for  pay- 
ment.   Bear  v.  Hoffman.  150  App.  Div.  475,  135  N.  Y.  Supp.  28. 

Presentment  is  sufficient  where  it  is  presented  to  some  one  connected 
with  store  where  it  is  made  payable.  Nelson  v.  Grondahl,  13  N.  D.  363, 
100  N.  W.   1093. 


§  74  PRESENTMENT    FOR    PAYMENT.  571 

Possession  by  bank  of  note  payable  at  its  office  is  presentment.  Nor- 
wood Nat.  Bank.  v.  Piedmont  Co.   (S.  C),  91  S.  E.  866. 

**  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Co/oro Jo.— Archuleta  v.  Johnston    (1912),   127  Pac.   134. 

Florida.— Ryan  v.  State  (1910),  60  Fla.  25,  53  So.  448. 

///mow.— Kewanee  Nat.  Bk.  v.  Ladd  (1912),  175  111.  App.  151;  Stew- 
art V.  Soenksen   (1912),  173  111.  App.  1. 

Kentucky.— Doherty  v.  First  Nat.  Bk.   (1916),  186  S.  W.  937. 

LoMt.ffaKa.— Smith  v.  Shippers  Oil  Co.  (1908),  120  La.  640,  45  So.  533. 

Massachusetts.— In  re  Poole  (1917),  116  N.  E.  227. 

^Michigan.— Finch  v.   Calkins    (1914),    149   N.   W.    1037. 

New  York.— Bear  v.  Hoffman  (1912),  135  N.  Y.  Supp.  28,  150  A.  D. 
475;  Columbia-Knickerbocker  Tr.  Co.  v.  Miller  (1915),  215  N.  Y.  191, 
109  N.  E.  179;  Congress  Brewing  Co.  v.  Habenicht  (1903),  83  A.  D. 
141,  82  N.  Y.  Supp.  481;  German- Am.  Bk.  v.  Milliman  (1900),  65  N.  Y. 
Supp.  242,  31  Misc.  87;  Gilpin  v.  Savage  (1908),  60  Misc.  605,  112  N. 
Y.  Supp.  802;  Gilpin  v.  Savage  (1911),  201  N.  Y.  167,  94  N.  E.  656;  Iron 
Clad  Mfg.  Co.  V.  Sackin  (1908),  110  N.  Y.  Supp.  161,  114  N.  Y.  Supp. 
43,  129  A.  D.  555;  McBride  v.  Illinois  Nat.  Bk.  (1910),  138  A.  D.  339; 
Schlesinger  v.   Schultz   (1905),  10  A.  D.  356,  96  N.  Y  .Supp.  383. 

North  CarolinG.—Myers  Co.  v.  Bottle,  170  N.  C.  168,  86  S.  E.  1034. 

North  Dakota.— Nelson  v.  Grondahl  (1904),  13  N.  Dak.  363,  100  N. 
W.  1093. 

South  Carolina.— Norwood  Nat.  Bk.  v.  Piedmont  Pub.  Co.  (1917)  91 
S.  E.  866. 

Washington.— Bards\ey  v.  Washington  Mill  Co.   (1909).  103  Pac.  822. 

§  74.  Instrument  must  be  exhibited.  The  instrument 
must  be  exhibited  to  the  person  from  whom  payment  is  de- 
manded, and  when  it  is  paid  must  be  delivered  up  to  the  party 
paying  it.*'  ** 

See  text,  §  158. 

Cross  section :     82-3. 

Corresponding  provisions  in  English  Bills  of  Exchange  Act:  Sec. 
52  (4). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Not  necessary  to  allege  in  pleading  that  presentment  was  made  or 
note  exhibited.  Church  v.  Stevens,  56  Misc.  Rep.  572,  107  N.  Y.  Supp. 
310. 


572  NEGOTIABLE    INSTRUMENTS.  §  75 

Loss  of  note  excuses  presentment  but  notice  of  dishonor  must  be 
given  to  bind  indorser.     Klots  v.  Silver,  127  N.  Y.  Supp.  1090. 

Informal  talk  is  not  a  presentment.  State  of  New  York  Nat.  Bank 
V.  Kennedy,  145  App.  Div.  669,  130  N.  Y.  Supp.  412. 

When  notes  were  not  in  readiness  for  exhibition  or  surrender,  but 
could  not  have  been  exhibited  or  surrendered  it  is  not  a  presentment  for 
payment.     Greco  v.  Lo  Monte,  162  N.  Y.  Supp.  982. 

Calling  maker  up  at  place  of  payment  asking  what  he  would  do  is  not 
sufficient  to  sliow  waiver  of  presentment.  Gilpin  v.  Savage,  201  N.  Y. 
167.  94  N.  E.  656. 

Maker  waives  exhibition  of  note  bv  not  asking  for  it  and  refusmg 
payment.    Hodges  v.  Blaylock,  82  Ore.  179,  161  Fac.  396. 

**  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Cc/j'/orMia.— Freudenberg  v.   Lucas    (1918),  175  Pac.  482. 

New  For/?.— Congress  Brewing  Co.  v.  Habenicht  (1903),  83  A.  D. 
141,  82  N.  Y.  Supp.  481;  German-Am.  Bk.  v.  Milliman  (1900),  65  N.  Y. 
Supp.  242,  31  Misc.  87;  Church  v.  Stevens,  107  N.  Y.  Supp.  310,  56  Misc. 
Rep.  572;  Greco  v.  Lo  Monte  (1917),  162  N.  Y.  Supp.  982;  Klots  v.  Sil- 
ver (1911),  127  N.  Y.  Supp.  1090;  Gilpin  v.  Savage.  201  N.  Y.  167,  94  N. 
E.  656;  McBride  v.  Illinois  Nat.  Bk.  (1910).  138  A.  D.  339;  State  of  N. 
Y.  Nat.  Bk.  V.  Kennedy  (1911),  130  N.  Y.  Supp.  412,  145  A.  D.  669. 

North  Z)affO/a.— Shuman  v.  Citizen's  State  Bk.  of  Rugby  (1914),  147 
N.  W.  388. 

Oregon.— RoAgts  v.  Blaylock,  82  Ore.  179,  161  Pac.  396. 

§  75.  Presentment  where  instrument  payable  at  bank. 
Where  the  instrument  is  payable  at  a  bank,  presentment  for 
payment  must  be  made  during  banking  hours,  unless  the  person 
to  make  payment  has  no  funds  there  to  meet  it  at  any  time  dur- 
ing the  day,  in  which  case  presentment  at  any  hour  before  the 
bank  is  closed  on  that  day  is  sufficient.*'  ** 

See  text,  §  161. 

Nebraska  omits  the  remainder  of  the  section  after  the  words  "during 
banking  hours." 

*  Digest  of  some  of  the  decisions  in  which  this  section  Is  con- 
strued arraiT^ed  alphabetically  by  states: 

Presumption  is  that  presentment  was  during  business  hours  unless 
contrary  shown.    Archuleta  v.  Johnston,  53  Colo.  393.  127  Pac.  134. 

If  note  payable  at  bank  is  in  bank  ready  to  be  delivered  it  is  pre- 
sentment. De  La  Vergne  v.  Globe  Printing  Co.,  27  Colo.  App.  308,  148 
Pac.  923. 

Deposit  of  m.oney  to  pay  note  before  close  of  banking  hours  is  suffi- 
cient to  render  demand  earlier  in  day  premature.  German-American 
Bank  v.  Milliman,  31  Misc.  Rep.  87,  65  N.  Y.  Supp.  242, 


§§  76-77  PRESENTMENT    FOR    PAYMENT,  573 

**  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Colorado. — De  La  Vergne  v.  Globe  Printing  Co.,  27  Colo.  App.  308, 
148  Pac.  923 ;  Archuleta  v.  Johnston,  53  Colo.  393,  127  Pac.  134. 

Kentucky.— Doherty  v.  First  Nat.  Bank,  170  Ky.  810,   186  S.  W.  937. 

New  For/fe.— German-American  Bank  v.  Milliman,  65  N.  Y.  Supp.  242, 
31  Misc.  Rep.  87;  Columbia- Knickerbocker  Tr.  Co.  v.  Miller  (1913),  142 
N.  Y.  Supp.  440,  215  N.  Y.  191,  156  A.  D.  810;  McBride  v.  Illinois  Nat. 
Bk.  (1913),  183  A.  D.  339;  Schlesinger  v.  Schultz  (1905),  10  A.  D.  256, 
96  N.  Y.  Supp.  383. 

Wisconsin. — Columbia  Banking  Co.  v.  Bowen,  134  Wis.  218,  114  N. 
W.  451. 

§  76.  Presentment  where  principal  debtor  is  dead.  Where 
the  person  primarily  liable  on  the  instrument  is  dead,  and  no 
place  of  payment  is  specified,  presentment  for  payment  must  be 
made  to  his  personal  representative,  if  such  there  be,  and  if  with 
the  exercise  of  reasonable  diligence  he  can  be  found.'*'  *• 

See  text,  §.  162 

Cross  sections :     98,  96. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
45  (7). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Instrument  must  be  exhibited  to  person  from  whom  payment  demand- 
ed.   Porter  v.  East  Jordan  Realty  Co.,  —  Mich.  — ,  177  N.  W.  987. 

Reasonable  diligence  as  to  presentment  to  administrator.  Reed  v. 
Spear,  107  App.  Div.  144,  94  N.  Y.  Supp.  1007. 

**  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Michigan. — Porter  v.  East  Jordan  Realty  Co.,  177  N.  W.  987. 

New  York.— Reed  v.  Spear  (1905),  107  A.  D.  144,  94  N.  Y.  Supp.  1007. 

§  77.  Presentment  to  persons  liable  as  partners.  Where 
the  persons  primarily  liable  on  the  instrument  are  liable  as  part- 
ners ,and  no  place  of  payment  is  specified,  presentment  for  pay- 
ment may  be  made  to  any  one  of  them,  even  though  there  has 
been  a  dissolution  of  the  firm. 

See  text,  §  162. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
45  (6). 


574  NEGOTIABLE    INSTRUMENTS.  §§  78-79 

§  78.  Presentment  to  joint  debtors.  Where  there  are  sev- 
eral persons  not  partners,  primarily  liable  on  the  instrument,  and 
no  place  of  payment  is  specified,  presentment  must  be  made  to 
them  all.i-  la 

See  text,  §  162. 

In  North  Carolina  the  word  "parties"  is  used  for  "partners."  This  is 
likely  a  clerical  error. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
45  (6). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Demand  on  one  of  two  joint  makers  not  sufficient  to  charge  indorsers. 
State  of  New  York  Nat.  Bank  v.  Kennedy,  145  App.  Div.  669,  130  N.  Y. 
Supp.  412. 

*'  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Colorado.— FrioT  v.   Simonson   (1916),  160  Pac.  1035. 

New  York.—State  of  N.  Y.  Nat.  Bk.  v.  Kennedy  (1911),  130  N.  Y. 
Supp.  412,  145  A.  D.  669. 

North  Dakota.— Shuman  v.  Cit.  State  Bk.  of  Rugby  (1914),  147  N. 
W.  388. 

§  79.  When  presentment  not  required  to  charge  the 
drawer.  Presentment  for  payment  is  not  required  in  order  to 
charge  the  drawer  where  he  has  no  right  to  expect  or  require 
that  the  drawee  or  acceptor  will  pay  the  instrument.*'  ** 

See  text,  §  156. 

Cross  sections:     114-4,  64-1,  82-3. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
46  (2),  (c). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Presentment  of  check  on  which  payment  stopped  not  necessary.  Si- 
bree  v.  Thomas,  166  111.  App.  422. 

Drawer's  lack  of  funds  in  hands  of  drawee  does  not  excuse  present- 
ment.    Simonoff  v.  Granite  City  Nat.  Bank,  279  111.  246,  116  N.  E.  636. 

Where  payment  stopped  presentment  of  check  not  .necessary  to  charge 
drawer.  Usher  v.  A.  I.  Tucker  Co.,  217  Mass.  441,  105  N.  E.  360,  L.  R. 
A.  1916F,  826. 


§  80  PRESENTMENT    FOR    PAYMENT.  575 

*■  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

^/oiama.— Britnell  v.  Smith  (1914),  66  So.  569. 

Illinois. — Sibree  v.  Thomas,  166  111.  App,  422 ;  Simonoff  v.  Granite 
City  Nat.  Bank,  279  111.  246,  116  N.  E.  636. 

/owe.— West  Branch  State  Bk.  v.  Haines  (1907),  135  Iowa  313,  112 
N.  W.  552. 

Massachusetts.— Vsher  v.  A.  I.  Tucker  Co.,  217  Mass.  441,  105  N.  E. 
360,  L.  R.  A.  1916F,  826. 

United  States.— In  re  Swift  (1901),  106  Fed.  65  (Dt.  Mass.). 

§  80.  When  presentment  not  required  to  charge  the 
indorser.  Presentment  for  payment  is  not  required  in  order  to 
charge  an  indorser  where  the  instrument  was  made  or  accepted 
for  his  accommodation,  and  he  has  no  reason  to  expect  that  the 
instrument  will  be  paid  if  presented.*'  ■** 

See  text,  §156. 

Cross   section:     115. 

In  Illinois  everything  is  omitted  after  the  words :  "for  his  accommo- 
dation." 

Corresponding  provisions  of  English  Bills  of  Exchange  Act :  Sec. 
46  (2),  (d). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Who  are  indorsers  entitled  to  notice  of  dishonor.  Fletcher  v.  Stur- 
tevant,  —  Mass.  — ,  126  N.  E.  428. 

Loan  made  partly  for  benefit  of  accommodation  indorser.  Bergen  v. 
Trimble  (Md.),  101  Atl.  137. 

Note  by  president,  directors  and  stockholders  liable  collectively  need 
not  be  presented  to  maker  to  bind  the  others  as  indorsers.  Union  Bank 
of  Brooklyn  v.  Sullivan,  214  N.  Y.  332.  108  N.  E.  558. 

Presentation  not  necessary.  Fosdick  v.  Government  Mineral  Springs 
Hotel  Co.,  —  Wash.  — ,   196  Pac.  652. 

Where  indorsers  indirectly  benefit  by  making  note  they  are  not  ac- 
commodation indorsers  and  presentment  must  be  made.  Murray  v. 
Third  Nat.  Bk.,  234  Fed.  Rep.  481,  148  C.  C.  A.  247. 

**  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Connecticut.— Foster  v.  Balch   (1907),  79  Conn.  449. 

Florida.— Worley  v.  Johnson  (1910),  53  So.  542. 

Marj/and— Bergen  v.  Trimble  (1917),  130  Md.  559,  101  Atl.  137. 


S76  NEGOTIABLE    INSTRUMENTS.  §§  81-82 

Massachusetts. — Fletcher  v.   Sturtevant,   126  N.  E.  428. 

Mmottn.— Overland  Auto  Co.  v.  Winters  (1915),  180  S.  W.  561; 
Beech  v.  Roberts  (1915),  191  Mo.  App.  243,  177  S.  W.  1062. 

New  York.— Van  Vlict  v.  Kanter  (1910),  124  N.  Y.  Supp.  63;  Union 
Bank  V.  Sullivan  (1915),  214  N.  Y.  332,  108  N.  E.  558. 

South  Dakota.—ScTihner  State  Bk.  v.  Ransom  (1915),  151  N.  W. 
1023. 

United  States.— McDonald  v.  Luckenbach  (1909),  170  Fed.  434,  95 
C  C.  A.  604;  Murray  v.  Third  Nat.  Bk.  of  St.  Louis  (1916),  234  Fed. 
481,  148  C.  C.  A.  247. 

Washington. — Fosdick  v.  Government  Mineral  Springs  Hotel  Co.,  196 
Pac.  652. 

§  81.  When  delay  in  making  presentment  is  excused. 
Delay  in  making  presentment  for  payment  is  excused  when  the 
delay  is  caused  by  circumstances  beyond  the  control  of  the  holder 
and  not  imputable  to  his  default,  misconduct  or  negligence. 
When  the  cause  of  delay  ceases  to  operate,  presentment  must  be 
made  with  reasonable  diligence.*' 

See  text,  §  160. 

Cross  section:     186. 

Corresponding  provision  of  English  Bill  of  Exchange  Act:  Sec. 
46  (1). 

**  The  following  is  a  complete  list  of  the  cases  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Florida.— WorUy  v.  Johnson   (1910),  53  So.  542. 

Kentucky.— FrazcT  v.  Phoenix  Nat.  Bk.   (1914),  170  S.  W.  532. 

New  ForJt.— Columbia-Knickerbocker  Tr.  Co.  v.  Miller  (1913),  142 
N.  Y.  Supp.  440. 

Wiscomin.-Aehi  v.  Bk.  of  Evansville  (1905).  124  Wis.  73,  102  N. 
W.  329,  68  L.  R.  A.  (N.  S.)  964,  109  Am.  St.  925. 

§  82.     When  presentment    may    be    dispensed  with.     Pre- 

-sentment  for  payment  is  dispensed  with: 

1.  Where  after  the  exercise  of  reasonable  diligence  present- 
ment as  required  by  this  act  can  not  be  made; 

2.  Where  the  drawee  is  a  fictitious  person; 

3.  By  waiver  of  presentment  express  or  implied.*'  *' 


\ 


§  82  PRESENTMENT   FOR   PAYMENT.  577 

See  text,  §  157. 

Cross  sections:    64-1,  109,  l(i,  89,  96,  114,  109,  111,  70. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
46   (2),   (a),   (b),   (e). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Declarations  of  the  indorser  calculated  to  mislead  the  indorsee  and 
to  induce  him  to  omit  presentment  and  notice  of  dishonor.  Torbert  v. 
Montague,  38  Colo.  325,  87  Pac.  1145. 

Indorser's  statements  as  to  liability  did  not  waive  presentemnt  and 
notice.     Worley  v.  Johnson,  60  Fla.  295,  53  So.  542,  ZZ  L.  R.  A.  641. 

Circumstances  and  acts  vi'hich  show  a  waiver  of  presentment  for  pay- 
ment.    Simonoff  v.  Granite  City  Nat.  Bank,  279  111.  248,  116  N.  E.  636. 

Parol  evidence  to  show  whether  waiver  of  protest  made  on  demand 
note  long  after  its  issue  was  as  to  protest  before  the  waiver  or  to  future 
protests.    Toole  v.  Crafts,  196  Mass.  397,  82  N.  E.  22. 

Indorser's  assurance  before  maturity  that  renewal  note  would  be 
given  is  waiver  of  demand  and  notice.  Sweetser  v.  Jordan,  216  Mass. 
350,  103  N.  E.  905. 

Indorsers  assured  holder  of  note  that  maker  could  not  pay  at  ma- 
turity held  waiver  of  presentment.  Bessenger  v.  Wensel,  161  Mich.  61, 
125  N.  W.  750,  27  L.  R.  A.  (N.  S.)  516. 

Circumstances  which  do  not  excuse  presentment  and  notice  of  dis- 
honor. Congress  Brewing  Co.  v.  Habenicht,  83  App.  Div.  141.  82  N.  Y. 
Supp.  481. 

Waiver  of  notice  of  presentment  is  not  a  waiver  of  presentment. 
Hayward  v.  Empire  State  Sugar  Co.,  105  App.  Div.  21,  93  N.  Y.  Supp. 
449. 

Written  admission  of  defendant  indorser  that  the  maker  company 
was  insolvent  waives  presentment  and  notice  of  dishonor.  J.  W.  O'Ban- 
non  Co.  V.  Curran,  129  App.  Div.  90,  113  N.  Y.  Supp.  359. 

If  maker  of  note  has  no  funds  in  bank  presentment  to  bank  for  pay- 
ment is  unnecessary.     Myers  Co.  v.  Battle,  170  N.  C.  168,  86  S.  E.  1034. 

Consent  by  telephone  to  extension  of  time  for  payment  with  holder 
binds  indorser  and  waives  presentment.  Moll  v.  Roth  Co.,  11  Ore.  593, 
152  Pac.  235. 

Proof  of  facts  excusing  presentment  or  failure  to  give  notice  of  dis- 
honor are  excluded  unless  pleaded  specially.  Galbraith  v.  Shepard,  43 
Wash.  698,  86  Pac.   1113. 

Indorser  having  possession  of  note  from  inception  should  have  pre- 
sented it  for  payment.     Glesson  v.  Eighty,  62  Wash.  656,  114  Pac.  518. 

Indorser  instructed  holder  that  he  would  be  at  the  bank  at  4  o'clock 
to  pay  raises  a  question  for  jury  as  to  Avaiver  of  notice  of  protest.  Sec- 
ond National  Bank  v.  Smith.  118  Wis.  18,  94  N.  W.  664. 

Indorser  informing  holder  that  neither  maker  nor  he  could  pay  at 
maturity  is  a  waiver  of  presentment  as  to  indorser.  In  re  Swift,  106 
Fed.  Rep.  65. 

Payment  on  account  by  indorser  in  error  rebuts  presumption  of  waiv- 
er of  statutory  requirements.  Mactavish's  Judicial  Factor  v.  Michad's 
Trustees   (1912),   Session  Cage?  425   (Scotland). 


578  NEGOTIABLE    INSTRUMENTS.  §  83 

*"The  following  is  a  complete    list    of    the    cases,    arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

/l/a&aMia.— Blomberg  v.  Self   (1919),  80  So.  631. 

Colorado.— Torhet  v.  Montague   (1906),  38  Colo.  325,  87  Pac.  1145. 

F/onda.— Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886;  Worley  v. 
Johnson  (1910),  53  So.  542,  33  L.  R.  A.  641. 

//Know.— Simonoff  v.  Granite  City  Nat.  Bank,  279  III.  248,  116  N.  E. 
636. 

Kansas— Nat.  Bk.  of  Webb  City  v.  Dickinson   (1918),  171  Pac.  636. 

Kenfucky.—OwenshoTO  Sav.  Bk.  &.  Tr.  Co.'s  Receiver  v.  Haynes 
(1911).  136  S.  W.  1004. 

Massachusetts.— Merrht  v.  Jackson  (1902),  181  Mass.  69,  62  N.  E. 
987;  Toole  v.  Crafts  (1906),  193  Mass.  110,  78  N.  E.  775,  118  Am.  St. 
455,  196  Mass.  397,  82  N.  E.  22;  Hall  v.  Crane  (1913),  213  Mass.  325; 
Sweetser  v.  Jordan,  216  Mass.  350,  103  N.  E.  905. 

Michigan.— Bessenger  v.  Wensel  (1910),  161  Mich.  61,  125  S.  W.  750, 
27  L.  R.  A.  (N.  S.)  516. 

New  Jersey.— Jordan  v.  Reed,  77  N.  J.  Law  584,  71  Atl.  280. 

Nezt)  Forjfe.— Congress  Brewing  Co.  v.  Habenicht  (1903),  83  A.  D. 
141  82  N.  Y.  Supp.  481 ;  Hayward  v.  Empire  State  Sugar  Co.,  93  N.  Y. 
Supp.  449,  105  A.  D.  21;  Reed  v.  Spear  (1905),  107  A.  D.  144,  94  N.  Y. 
Supp.  1007;  Gilpin  v.  Savage  (1908),  60  Misc.  605,  112  N  Y.  Supp.  802; 
O'Bannon  J.  W.  Co.  v.  Curran  (1908),  129  A.  D.  90,  113  N.  Y.  Supp. 
359;  Bear  v.  Hoffman,  135  N.  Y.  Supp.  28,  150  A.  D.  475;  McBride  v. 
Illinois  Nat.  Bk.  (1910),  138  A.  D.  339;  First  Nat.  Bk.  of  Binghampton 
V.  Baker  (1914),  148  N.  Y.  Supp.  372,  163  A.  D.  72;  Cohen  v.  Chelsea 
Exchange  Bk.  of  New  York   (1917),  164  N.  Y.  Supp.  75. 

North  Carolina.— Myers  Co.  v.  Battle,  170  N.  Car.  168,  86  S.  E.  1034. 

Or^^o)!.— Robinson  v.  Holmes  (1910),  57  Oreg.  5,  109  Pac.  754; 
Moll  v.  Roth  Co.   (1915),  77  Ore.  593,  152  Pac.  235. 

Washington.— Galhrahh  v.  Shepard  (1906),  43  Wash.  698,  86  Pac. 
1113;  Glesson  v.  Eighty,  62  Wash.  656,  114  Pac.  518. 

Wisconsin.—Second  Nat.  Bank  v.  Smith,  118  Wis.  18,  94  N.  W.  664. 
United  States.— In  re  Swift   (1901),  106  Fed.  65   (Dt.  Mass.). 

§83.     When  instrument  dishonored  by  non-payment.    The 

instrument  is  dishonored  by  non-payment  when: 

1.  It  is  duly  presented  for  payment  and  payment  is  refused 
or  can  not  be  obtained;  or 

2.  Presentment  is  excused  and  the  instrument  is  overdue  and 
unpaid.** 


§  84  PRESENTMENT    FOR    PAYMENT.  579 

See  text,  §  164. 

Cross  sections:    64-1,  109,  75,  76,  89,  96. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:     47  (1). 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Co/orarfo.— Archuleta  v.  Johnston    (1912),  127  Pac.   134. 

F/oWrfa.— Baumeister  v.   Kuntz,  53  Fla.  340,  42  So.  886. 

Massachusetts.— Ltomrd  v.  Draper  (1905),  187  Mass.  536,  73  N.  E. 
644. 

New  Forife.— German- Am.  Bk.  v.  MilHman  (1900),  65  N.  Y.  Supp. 
242,  31  Misc.  87;  Reed  v.  Spear  (1905),  107  A.  D.  144,  94  N.  Y.  Supp. 
1007. 

Tennessee.— Am.  Nat.  Bk.  v.  Nat.  Fertilizer  Co.  (1911),  125  Term. 
328,  143  S.  W.  597. 

Washington.— milman  v.  Stanley  (1909),  56  Wash.  320,  105  Pac.  816. 

§84.  Liability  of  person  secondarily  liable,  when  instru- 
ment dishonored.  Subject  to  the  provisions  of  this  act,  when 
the  instrument  is  dishonored  by  non-payment,  an  immediate 
right  of  recourse  to  all  parties  secondarily  liable  thereon,  ac- 
crues to  the  holder.*'*' 

See  text,  §  176. 

Cross  sections :    64-1,  109,  75. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:    47  (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

After  dishonor  and  notice  to  indorser  he  becomes  liable  and  may  set 
off  same  against  deposit  in  holder  bank  which  has  become  insolvent. 
Carnegie  Trust  Co.  v.  Kistler,  89  Misc.  Rep.  404,  152  N.  Y.  Supp.  240. 

Indorser  liability  and  right  of  set-off  against  holder  after  dishonor 
and  notice  to  indorser.    Curtis  v.  Davison,  215  N.  Y.  395,  109  N.  E.  481, 

After  demand  and  notice  indorsers  become  principal  debtors.  Pitts- 
burgh-Westmoreland Coal  Co.  V.  Kerr,  220  N.  Y.  137,  115  N.  E.  465. 

Payee  may  sue  accommodation  indorser  before  realizing  on  other  se- 
curity of  maker.    Miller  v.  Levitt  (Mass.),  115  N.  E.  431. 

*•  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

F/onJa.— Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886. 

Massachusetis.-Ltonard  v.  Draper  (1905),  187  Mass.  536,  73  N.  E. 
644;  Miller  v.  Levitt,  115  N.  E.  431. 


580  NEGOTIABLE    INSTRUMENTS.  §  85 

New  For^.— German-American  Bank  v.  Milliman,  65  N.  Y.  Supp.  242, 
31  Misc.  Rep.  87;  Gilpin  v.  Savage  (1908),  60  Misc.  605,  112  N.  Y.  Supp. 
802;  Bacigalupo  v.  Parrilli,  112  N.  Y.  Supp.  1040;  Carnegie  Tr.  Co.  v. 
Kistler,  152  N.  Y.  Supp.  240,  89  Misc.  Rep.  404;  Pittsburg,  etc..  Coal  Co. 
V.  Kerr  (1917),  220  N.  Y.  137,  115  N.  E.  465;  Curtis  v.  Davison,  215  N. 
Y.  395,  109  N.  E.  481. 

South  Dakota.—Scnhntr  State  Bk.  v.  Ransom  (1915),  151  N.  W. 
1023. 

Tennessee.— hm.  Nat.  Bk.  v.  Nat.  Fertilizer  Co.  (1911),  125  Tenn. 
328,  143  S.  W.  597. 

Washington.— RiWrmn  v.  Stanley  (1909),  56  Wash.  320,  105  Pac.  816. 

§  85.  Time  of  maturity.  Every  negotiable  instrument  is 
payable  at  the  time  fixed  therein  without  grace.  When  the  day 
of  maturity  falls  upon  Sunday  or  a  holiday,  the  instrument  is 
payable  on  the  next  succeeding  business  day.  Instruments  fall- 
ing due  or  becoming  payable  on  Saturday  are  to  be  presented  for 
payment  on  the  next  succeeding  business  day,  except  that  instru- 
ments payable  on  demand  may,  at  the  option  of  the  holder,  be 
presented  for  payment  before  twelve  o'clock  noon  on  Saturday 
when  that  entire  day  is  not  a  holiday .•^'  ^^ 

See  text,  §§56,  159. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:    14  (1). 

The  Arizona  act  omits  the  sentence  beginning  "Instruments  falling 
due,"  etc. 

The  words  "or  becoming  payable"  have  been  interpolated  after  the 
words  "Instruments  falling  due,"  in  the  third  sentence  in  the  original 
act  or  by  amendment  in  Arkansas,  Indiana,  Kansas,  Minnesota,  Missouri, 
New  Jersey,  New  York  and  Virginia. 

In  the  Colorado  act  (Sec.  85)  this  sentence  is  omitted,  and  the  fol- 
lowing substituted :  "Instruments  falling  due  on  any  day,  in  any  place 
where  any  part  of  such  day  is  a  holiday  are  to  be  presented  for  pay- 
ment on  the  next  succeeding  business  day,  except  that  instruments  pay- 
able on  demand  may,  at  the  option  of  the  holder,  be  presented  for  pay- 
ment during  reasonable  hours  of  the  part  of  such  day  which  is  not  a 
holiday." 

The  Iowa  act  makes  this  additional  provision  following  section  85: 

"Section  198.  Days  of  Grace — demand  made  on.  A  demand  made 
on  any  one  of  the  three  days  following  the  day  of  maturity  of  the  in- 
strument, except  on  Sunday  or  a  holiday,  shall  be  as  effectual  as  though 
made  on  the  day  on  which  demand  may  be  made  under  the  provisions 
of  this  act,  and  the  provisions  of  this  act  as  to  notice  of  non-payment, 
non-acceptance,  and  as  to  protest  shall  be  applicable  with  reference  to 
such  demand  as  though  the  demand  were  made  in  accordance  with  the 
terms  of  this  act ;  but  the  provisions  of  this  section  shall  not  be  con- 
strued as  authorizing  demand  on  any  day  after  the  third  day  from  that 
on  which  the  instrument  falls  due  according  to  its  face." 


§  85  PRESENTMENT    FOR    PAYMENT.  581 

In  Kansas  the  words  "on  becoming  payable"  are  added. 

The  Kentucky  act  omits  the  sentence  beginning  "Instruments  falling 
due,"  etc. 

In  Massachusetts  the  following  amendment  has  been  made :  "When 
the  day  of  maturity  falls  upon  Saturday,  Sunday,  or  a  holiday,  the  m- 
strument  is  payable  on  the  next  succeeding  business  day  which  is  not  a 
Saturday.  Instruments  payable  on  demand  may  at  the  option  of  the 
holder  be  presented  for  payment  before  12  o'clock  noon  on  Saturday, 
when  that  entire  day  is  not  a  holiday,  provided,  however,  that  no  person 
receiving  any  check,  draft,  bill  of  exchange,  or  promissory  note,  payable 
on  demand  shall  be  deemed  guilty  of  any  neglect  or  omission  of  duty 
or  incur  any  liability  for  not  presenting  for  payment  or  acceptance  or 
collection  such  check,  draft,  bill  of  exchange  or  promissory  note  on  a 
Saturday ;  provided,  also,  that  the  same  shal)  be  duly  presented  for  pay- 
ment or  acceptance  or  collection  on  the  next   succeeding  business  day." 

In  the  Massachusetts  act  (by  amendment  in  1902),  the  words  "or 
payable"  were  inserted  after  "falling  due." 

In  Massachusetts  this  section  has  been  modified  (Laws  1899,  c.  130), 
as  follows :  "On  all  drafts  and  bills  of  exchange  made  payable  within 
this  Commonwealth  at  sight,  three  days  of  grace  shall  be  allowed,  unless 
there  is  an  express  stipulation  therefor  to  {he  contrary." 

In  Minnesota,  by  amendment  in  1917,  c.  204,  s.  1,  the  following  clause 
was  added  to  the  section,  "and  if  presented  after  12  o'clock  noon  on  Sat- 
urday, when  that  entire  day  is  not  a  holiday,  may  at  the  option  of  the 
payer  be  then  paid." 

In  New  Hampshire  the  words  "or  payable"  were  inserted  after  "fall- 
ing due." 

In  New  York  the  words  "on  becoming  payable"  were  added  by  amend- 
ment. 

The  North  Carolina  act  (Revisal  of  1908,  sections  2234,  2235)  provides 
that  every  negotiable  instrument  is  payable  at  the  time  fixed  therein 
without  grace  except  that  "all  bills  of  exchange  payable  within  the  state, 
at  sight,  in  which  there  is  an  express  stipulation  to  that  effect,  and  not 
otherwise,  shall  be  entitled  to  days  of  grace  as  the  same  are  allowed 
by  the  customs  of  merchants  in  foreign  bills  of  exchange,  payable  at  the 
expiration  of  a  certain  period  after  date  on  sight;  provided,  that  no 
days  of  grace  shall  be  allowed  on  any  bill  of  exchange,  promissory  note 
or  draft  payable  on  demand." 

In  North  Carolina,  said  third  sentence  was  stricken  out  by  amendment, 
Laws  1909,  ch.  800,  and  it  was  enacted  that  "there  shall  be  no  difference 
between  Saturday  and  any  other  secular  or  business  day,  as  far  as  ne- 
gotiable instruments  are  concerned." 

In  Rhode  Island  the  words  "except  sight  drafts"  have  been  inserted 
after  the  words  "every  negotiable  instrument." 

In  Vermont  all  of  the  third  sentence  before  the  words  "instruments 
payable  on  demand"  is  om.itted. 

In  Washington,  by  amendment  in  1915,  everything  is  omitted  after 
the  second  paragraph,  and  in  an  additional  section   (3584)  it  is  provided 


582  NEGOTIABLE    INSTRUMENTS.  §  86 

that  "Where  the  day  or  the  last  day  of  doing  any  act  herein  required 
or  permitted  to  be  done,  falls  upon  Sunday  or  a  holiday,  the  act  may  be 
done  on  the  next  succeeding  secular  or  business  day." 

The  Wisconsin  act  omits  the  sentence  beginning  "Instruments  falling 
due,"  etc. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Judicial  notice  that  negotiable  instruments  law  is  in  effect  in  another 
state.  Gleason  v.  Thayer,  87  Conn.  248,  87  Atl.  790,  Ann.  Cas.  1915B, 
1069. 

Presumption  as  to  common  law  days  of  grace  in  sister  state.  Demel- 
man  v.  Brazier,  193  Mass.  588,  79  N.  E.  812. 

Notice  may  be  given  on  last  day  of  grace,  but  action  does  not  arise 
until  next  day.    Kennedy  v.  Thomas  (1894),  2  Q.  B.  759. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Connecticut. — Gleason  v.  Thayer,  87  Conn.  248,  87  Atl.  790,  Ann.  Cas. 
1915B,  1069. 

Massachusetts.— Demdman  v.  Brazier  (1907),  193  Mass.  588,  79  N. 
E.  812. 

New  /^rj^y.— Stanford  v.  Stanford  (1917),  101  Atl.  388. 

§  86.  Time ;  how  computed.  Where  the  instrument  is  pay- 
able at  a  fixed  period  after  date,  after  sight,  or  after  the  hap- 
pening of  a  specified  event,  the  time  of  payment  is  determined 
by  excluding  the  day  from  which  the  time  is  to  begin  to  run 
and  by  including  the  date  of  payment.*'  *' 

See  text,  §  159. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
14  (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Note  payable  twelve  months  after  November  8,  1908,  should  be  pre- 
sented on  November  8,  1909,  for  payment.  Lewry  v.  Wilkinson,  135  La. 
105,  64  So.  1003. 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

leOuisiana. — Lewry  v.  Wilkinson,  135  La.  105,  64  So.  1003 


§  87  PRESENTMENT   FOR    PAYMENT.  583 

§  87.  Rule  where  instrument  payable  at  bank.  Where  the 
instrument  is  made  payable  at  a  bank  it  is  equivalent  to  an  order 
to  the  bank  to  pay  the  same  for  the  account  of  the  principal 
debtor  thereon.^-  ^* 

See  text,  §  154. 

Illinois,  Kansas,  Nebraska  and  South  Dakota  omit  this  section. 

In  Minnesota  the  words  "shall  not  be"  arc  used  in  place  of  the 
word  "is." 

In  Missouri  the  following  has  been  added  at  the  end  of  this  section : 
"But  where  the  instrument  is  made  payable  at  a  fixed  or  determined  fu- 
ture time,  the  order  to  the  bank  is  limited  to  the  day  of  maturity  only." 

In  New  Jersey  the  same  has  been  added  at  the  end  of  the  section  as 
set  out  above   in   Missouri. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Maker  may  be  discharged  if  holder  fails  to  present  note  to  bank  at 
maturity  where  the  bank  later  fails.  New  England  Nat.  Bank  v.  Dick, 
84  Kan.  252,  114  Pac.  378. 

Marking  note  paid  and  placing  it  with  maker's  paid  checks  without 
making  entries  on  bank's  books  constituted  payment.  Nineteenth  Ward 
Bank  V.  First  Nat.  Bank,  184  Mass.  49,  67  N.  E.  670. 

Depositor  at  maturity  directed  cashier  to  pay  note  and  cashier  in- 
formed him  his  note  was  paid,  was  payment  at  time.  Belk  v.  Capital 
Fire  Ins.  Co.,  100  Neb.  260,  159  N.  W.  405. 

Orders  on  bank  presented  by  payees  and  stamped  "Paid  Oct.  16, 
1916,"  upon  which  checks  were  drawn  to  payees  were  not  paid  where 
checks  not  cashed  prior  to  notice  of  garnishment.  Hanna  v.  McCrory, 
19  N.  M.  183,  141  Pac.  996. 

Note  payable  at  a  bank  was  sent  there  at  maturity.  Maker  phoned 
bank  to  pay  and  charge  his  account.  This  was  not  done  and  bank 
failed,  but  note  held  paid.  Baldwin's  Bank  v.  Smith,  215  N.  Y.  76,  109 
N.  E.  138,  Ann.  Cas.  1917A,  500. 

Payment  to  holder  after  maturity  is  payment  in  due  course.  Potter 
V.  Sager,  171  N.  Y.  Supp.  438. 

Note  paid  where  maker  directed  bank  to  pay  and  charge  his  accdunt, 
the  maker's  deposit  being  slightly  less  and  the  maker  making  additional 
deposits  the  next  day  which  more  than  covered  the  note  where  bank 
later  failed.     Peaslee-Gaulbert  Co.  v.  Dixon,  172  N.  C.  411,  90  S.  E.  421. 

Effect  of  note  payable  in  bank  as  to  presentment  for  payment.  Nick- 
ell  V.  Bradshaw,  —  Ore.  — ,  183  Pac.  12. 

Holder  does  not  need  to  present  note  to  bank  where  payable  to  hoJd 
the  maker  liable  as  original  party  even  though  bank  fails.  Binghamp^ 
ton  Pharmacy  v.  First  Nat.  Bank,  131  Tenn.  711,   176  S.  W.  1038. 

Requirements  as  to  presentation  for  payment  when  note  not  negotiable. 
Peninsula  Nat.  Bank  v.  Hans  Pederson  Co.,  91  Wash.  621,  158  Pac.  246. 

Effect  of  making  note  pavable  at  "anv  bank  in  Boston."  Carpenter' 
V,  National  Shawmut  Bk.,  187  Fed.  Rep.  1,  109  C.  C.  A.  55. 


584  NEGOTIABLE    INSTRUMENTS.  §  88 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Colorado— Dc  La  Vergne  v.  Globe  Printing  Co.  (1915),  149  Pac.  923. 

Kansas.— The  N.  E.  Nat.  Bk.  of  Kansas  City,  Mo.  v.  Dick  (1911),  84 
Kans.  252,  114  Pac.  378. 

Kentucky.— Price  v.  Gatliff's  Exrs.  (1908),  110  S.  W.  332. 

Massachusetts. — Nineteenth  Ward  Bank  v.  First  Nat.  Bank,  184  Mass. 
49,  67  N.  E.  670;  Elliott  v.  Worcester  Tr.  Co.  (1905),  189  Mass.  542, 
75  N.  E.  944;  Brown  v.  First  Nat.  Bank,  216  Mass.  298,  103  N.  E.  780; 
City  of  Newburyport  v.  First  Nat.  Bank,  216  Mass.  304,  103  N.  E.  782. 

Nebraska.— Belk  v.  Capital  Fire  Ins.  Co.,  100  Neb.  260,  159  N.  W.  405. 

New  Mexico— Hanna.  v.  McCray,  19  N.  M.  183,  141  Pac.  996. 

New  ForA-.— Baldwin's  Bank  v.  Smith,  215  N.  Y.  76,  109  N.  E.  138, 
Ann.  Cas.  1917A,  500;  Glennan  v.  Rochester  Tr.  &  Safe  Dep.  Co.  (1912), 
152  A.  D.  316;  Heinrich  v.  First  Nat.  Bank,  219  N.  Y.  1,  113  N.  E.  531, 
L.  R.  A.  1917A,  655;  Potter  v.  Sager,  171  N.  Y.  Supp.  438. 

North  Carolina. — Peaslee-Gaulbert  Co.  v.  Dixon,  172  N.  C.  411,  90 
S.  E.  421. 

Oregon. — Nickell  v.   Bradshaw,   183   Pac.    12. 

Tennessee.— Pharmacy  v.  First  Nat.  Bk.  (1915),  131  Tenn.  711,  176  S. 
W.  1038. 

Washington. — Peninsula  Nat.  Bank  v.  Hans  Pederson  Co.,  91  Wash. 
621,  158  Pac.  246. 

United  States.— Carpenter  v.  Nat.  Shawmut  Bk.  (1911),  187  Fed. 
Rep.  1,  109  C.  C.  A.  55. 

§  88.  What  constitutes  payment  in  due  course.  Payment 
is  made  in  due  course  when  it  is  made  at  or  after  the  maturity 
of  the  instrument  to  the  holder  thereof  in  good  faith  and  without 
notice  that  his  title  is  defective*'  ** 

See  text,  §  182. 

Cross  sections:     191,  55,  56,  119. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  59  (I), 
last  paragraph. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Effect  of  drawer's  death  where  drawee  pays  without  knowledge  of 
death.  Glennan  v.  Rochester  Trust,  Etc.,  Co.,  209  N.  Y.  12,  102  N  E. 
537,  52  L.  R.  A.  (N.  S.)   302. 

Surety's  placing  amount  of  note  and  costs  on  deposit  in  bank  in  name 
of  trustee  to  be  transferred  for  assignment  of  judgment  when  recovered 


PRESENTMENT    FOR    PAYMENT. 


585 


is  not  pavmeni:  of  note.     Capitol  Nat.  Bk.  v.  Robinson,  41  Wash.  454,  83 
Pac.  1021". 

Sale  of  mortgage  securing  a  demand  note  for  full  value  is  not  pay- 
ment of  note.     Glasscock  v.  Balls,  24  Q.  B.  D.  13. 

**The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Alabama.— OneoutiL  Trust  &  Banking  Co.  v.  Box  (1917),  73  So.  759; 
Wade  V.  Kellen    (1917),  75  So.  970. 

Arkansas.— ]ohnson  v.  Aylor  (1917),  195  S.  W.  4. 

Iowa.— Wendt  v.  Haglestange   (1917),  161  N.  W.  455. 

New  York.— Hoch  v  Bernstein  (1917),  164  N.  Y.  Supp.  113;  Glen- 
nan  V.  Rochester  Tr.  &  Safe  Dep.  Co.  (1912).  152  A.  D.  316.  209  N.  Y. 
12,  102  N.  E.  537.  52  L.  R.  A.  (N.  S.)  302;  Potter  v.  Sager  (1918),  171 
N.  Y.  Supp.  438. 

Washington.— Capitol  Nat.  Bk.  v.  Robinson  (1906),  41  Wash.  454,  83 
Pac.  1021. 


ARTICLE  VII. 


NOTICE  OF  DISHONOR. 


S  89.  To    whom    notice   of    dis- 
honor  must   be   given. 

90.  By  whom  given. 

91.  Notice  given   by   agent. 

92.  Effect   of   notice   given   on 

behalf  of  holder. 

93.  Effect  where  notice  is  giv- 

en     by      party      entitled 
thereto. 

94.  When  agent  may  give  no- 

tice. 

95.  When  notice  sufficient. 

96.  Form  of  notice. 

97.  To    whom    notice   may  be 

given. 

98.  Notice      where     party     is 

dead. 

99.  Notice  to  partners. 

100.  Notice    to    persons    jointly 

liable. 

101.  Notice  to  bankrupt. 

102.  Time   within   which   notice 

must  be  given. 

103.  Where     parties     reside    in 

same  place. 

104.  Where    parties    reside    in 

different  places. 


§  105.  When    sender    deemed    to 
have  given   due  notice. 

106.  Deposit   in  postoffice,   what 

constitutes. 

107.  Notice    to    subsequent    par- 

ties,   time   of. 

108.  Where      notice      must     be 

sent. 

109.  Waiver    of    notice. 

110.  Whom  affected  by  waiver. 

111.  Waiver   of   protest. 

112.  When       notice      dispensed 

with. 

113.  Delay     in     giving     notice; 

how   excused. 

114.  When    notice   need    not   be 

given  to  drawer. 

115.  When   notice   need   not  be 

given  to  indorser. 

116.  Notice      of     non-payment 

where  acceptance  refused. 

117.  Effect  of  omission  to  give 

notice    of   non-acceptance. 

118.  When  protest  need  not  be 

made ;     when     must     be 
made. 


Sections  89  to  118  above  are  the  sections  used  by  the  commissioners. 
See  table  of  corresponding  sections  of  the  law  in  the  various  states 
and  territories  beginning  on  page  360. 

§  89.  To  whom  notice  of  dishonor  must  be  given..  Except 
as  herein  otherwise  provided  when  a  negotiable  instrument  has 
been  dishonored  by  non-acceptance  or  non-payment,  notice  of 
dishonor  must  be  given  to  the  drawer  and  to  each  indorser,  and 
any  drawer  or  indorser  to  whom  such  notice  is  not  given  is 
discharged.*'  *■ 

See  text,  §  168. 

Cross  sections:  97,  108,  70,  66,  1^,  96,  83,  84,  64-1,  109,  120-6,  109, 
116,  149,  151,  70. 


586 


§  89  NOTICE    OF   DISHONOR.  587 

Corresponding  provision  of  English  Bills  of  Exchange  Act :     Sec.  48. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Notice  of  dishonor  to  indorser  must  be  alleged.  Sykes  v.  Kruse,  49 
Colo.  560,   113   Pac.   1013. 

Action  after  legal  notice  of  dishonor  not  barred  because  of  prior 
judgment  in  his  favor  for  failure  to  such  notice.  Peck  v.  Easton, 
74  Conn.  456,  51  Atl.  134. 

Failure  to  give  notice  of  non-payment  of  prior  installments  does  not 
relieve  indorser  as  to  later  ones.  Hopkins  v.  Merrill,  79  Conn.  626,  66 
Atl.  174. 

Allegation  that  note  was  dulv  protested  is  not  sufficient.  Gleason  v. 
Thayer.  87  Conn.  248,  87  Atl.  790',  Ann.  Cas.  1915B,  1069. 

Unreasonable  delay  in  giving  notice  of  dishonor  to  indorser  dis- 
charges him.  Swift  &  Co.  v.  Miller,  62  Ind.  App.  312,  113  N.  E.  447; 
Swift  &  Co.  V.  Miller,  62  Ind.  App.  312,  113  N.  E.  447. 

Demand    and    dishonor    must    be    shown    in     suit    against    indorser. 
Thompson  v.  Divine,  —  Ind.  App.  — ,  126  N.   E.  683. 

Allegation  and  evidence  must  show  demand  and  notice  upon  a  day 
which  will  charge  defendant.  Hoyland  v.  National  Bank  of  Middles- 
borough,  137  Ky.  682,  126  S.  W.  356. 

Notice  of  dishonor  must  be  given  accommodation  indorsers.  Young 
V.  Exchange  Bank  of  Kentucky,  152  Kv.  293,  153  S.  W.  444,  Ann.  Cas. 
1915B,   148. 

Indorser  entitled  to  notice  unless  he  is  officer  of  bank  and  as  such 
required  to  give  the  notice.  First  Nat.  Bank  v.  Bickel,  154  Ky.  11,  156 
5.  W.  856. 

Plaintiff  must  allege  and  prove  the  giving  of  notice  or  that  it  was 
waivetl.     Wisdon  &  Levy  v.  Bille,  120  La.  700,  45  So.  554. 

Although  presentment  is  excused  notice  of  dishonor  must  be  given 
to  bind  indorser.    Reed  v.  Spear,  107  App.  Div.  144,  94  N.  Y.  Supp.  1007. 

Pleading  where  drawer  had  countermanded  payment.  Scanlon  v. 
Wallach,  53  Misc.  Rep.  104,  102  N.  Y.  Supp.  1090. 

When  notice  of  dishonor  of  a  check  must  be  alleged  in  complaint. 
Ewald  V.  Faulhaber  Co.,  105  N.  Y.  Supp.  114. 

Allegation  that  due  notice  of  protest  of  note  was  given  indorser  is 
sufficient.     Sherman  v.  Eckcr,  59  Misc.  Rep.  216,  110  N.  Y.  Supp.  265. 

Drawer  discharged  by  failure  to  give  notice  of  dishonor  for  lack  of 
funds.     Bacigalupo  v.  Parrilli,  112  N.  Y.  Supp.   1040. 

Judgment  for  payee  of  check  not  sustained  where  no  proof  of  notice 
of  dishonor  to  drawer.     Kuflick  v.  Glasser,  114  N.  Y.  Supp.  870. 

Notice  of  dishonor  to  drawer  must  be  alleged.  Studebaker  Sons  Co. 
v.  Fuether,  123  N.  Y.  Supp.  118. 

Plaintiff  must  allege  dishonor  to  hold  indorser.  Kahnweiler  v. 
Salomon,  177  N.  Y.  S.  739. 

Joint  maker,  although  a  surety,  is  not  entitled  to  notice  of  dishonor. 
Rouse  v.  Wooten,  140  N.  C.  557,  53  S.  E.  430,  111  Am.  St.  Rep.  875. 

Accommodation  indorsers  are  entitled  to  notice  of  dishonor.  Perry 
V.  Taylor,  148  N.  C.  362,  62  S.  E.  423. 

Necessity  of  notice  of  dishonor.  Barber  v.  W.  M.  .A,bsher  Co.,  175 
N.  C.  602. 

Indorser  entitled  to  notice  of  non-payment  of  each  installment  of 
note.  Elworthy-Helwick  Co.  v.  Hess,  9  Ohio  App.  200. 


588  NEGOTIABLE    INSTRUMENTS.  §  89 

Presentment  and  notice  of  dishonor  must  be  alleged  to  charge  an 
indorser.     Robinson  v.  Holmes,  57  Ore.  5,  109  Pac.  754. 

In  suit  by  motion  and  notice  the  latter  must  make  allegations  as  to 
notice  of  protest  to  bind  indorser.  Security  Loan  &  Trust  Co.  v.  Fields, 
110  Va.  827,  67  S.  E.  342. 

Failure  to  give  notice  of  dishonor  to  drawer  releases  him  only  when 
it  results  in  his  loss,  Morris-Miller  Co.  v.  Von  Pressentin,  63  Wash.  74, 
114  Pac.  912. 

**The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Alabama.— H.3.\l  v.  First  Nat.  Bank,  196  Ala.  627,  72  So.  171. 

Arkansas.— Bihhs  v.  Hopper   (1913),  160  S.  W.  879. 

California.— Weizd  v.  Cole  (1917),  165  Pac.  692. 

Colorado.—Sykes  v.  Kruse  (1911),  49  Colo.  560,  113  Pac.  1013. 

Connecticut.— Peck  v.  Easton  (1902),  74  Conn.  456,  51  Atl.  134; 
Foster  v.  Balch  (1907),  79  Conn.  449;  Hopkins  v.  Merrill  (1907),  79 
Conn.  626,  66  Atl.  174;  Cent.  Nat.  Bank  v.  Stoddard  (1910),  83  Conn.  330, 
76  Atl.  472 ;  Gleason  v.  Thayer,  87  Conn.  248,  87  Atl.  790,  Ann.  Cas.  1915B, 
1069;  Blue  Ribbon  Garage  v.  Baldwin  (1917),  101  Atl.  83. 

Florida.— WoAey  v.  Johnson  (1910),  53  So.  542;  Baumeister  v. 
Kuntz,  53  Fla.  340,  42  So.  886. 

Illinois.— State  Bank  of  Clinton  v.  Parkhurst  (1910),  155  111.  App. 
101;   Sublette  Ex.  Bank  v.  Fitzgerald   (1912),  168  111.  App.  240. 

Indiana. — Thompson  v.  Divine,  Ind.  App.,  126  N.  E.  683. 

i^a».ya.y.— Guaranty  Inv.   Co.  v.   Gamble    (1918),   171    Pac.   1152. 

Kentucky.— Fritts  v.  Kirchdorfer  (1910),  124  S.  W.  882;  Mechanics 
&  Farmer's  Sav.  Bank  v.  Katterjohn  (1910),  137  Ky.  427,  125  S.  W. 
1071-  Hoyland  v.  Nat.  Bank  of  Middlesborough  (1910),  137  Ky.  682,  126 
S  W.  356;  First  Nat.  Bank  v.  Bickel  (1911),  143  Ky.  754,  137  S.  W. 
790;  Williams  v.  Paintsville  Nat.  Bank  (1911),  143  Ky.  781,  137  S.  W. 
535;  First  Nat.  Bank  v.  Bickel.  154  Ky.  11.  156  S.  W.  856;  Frazee  v. 
Phoenix  Nat.  Bank,  161  Ky.  175,  170  S.  W.  532;  Young  v.  Exchange 
Bank  of  Kentucky,  152  Ky.  293,  153  S.  W.  444,  Ann  Cas.  1915B,  148; 
Sim  v.  Citizens  Bank   (1917),  191  S.  W.  489. 

Louisiana.— Wisdon  &  Levy  v.  Bille  (1908),  120  La.  700,  45  So.  554. 

Maryland.— Lightner  v.  Roach   (1915),  95  Atl.  62,  126  Md.  474. 

Massachusetts.— Commercial  Nat.  Bank  v.  Clarke  (1902),  180  Mass. 
249;  Bennet  v.  Tremont  Securities  Co.   (1915),  108  N.  E.  891. 

Missouri.— Overland  Auto  Co.  v.  Winter  (1915),  180  S.  W.  561; 
Eaves  v.  Keeton  (1917),  193  S.  W.  629;  Peoples  Bank  of  Ava  v.  Baker 
(1917),  193  S.  W.  632. 

New  Hampshire— Traitorx  v.   Garnsey    (1916),  99  Atl.  290. 

New  Jersey.— Eattery  Park  Bank  v.  Ramsey  (1917),  100  Atl.  51; 
Motley  V.  Darling   (1918),  102  Atl.  853. 


§  90  NOTICE   OF   DISHONOR.  589 

New  York. — Ebling  Brewing  Co.  v.  Rheinheimer  (1900),  32  Misc. 
594,  66  N.  Y.  Supp.  458;  University  Press  v.  Williams  (1900),  48  A.  D. 
188;  Mohlman  Co.  v.  McKane  (1901),  60  A.  D.  546;  Kelly  v.  Theiss 
(1901),  65  A.  D.  146;  Fonseca  v.  Hartman  (1903;,  84  N.  Y.  Supp.  131; 
Am.  Ex.  Nat.  Bank  v.  Am.  Hotel  Victoria  Co.  (1905),  103  A.  D.  372, 
92  N.  Y.  Supp.  1006;  Reed  v.  Spear  (1905),  107  A.  D.  144,  94  N.  Y. 
Supp.  1007;  Howard  v.  Bank  of  Metropolis  (1916),  115  A.  D.  326; 
Scanlon  v.  Wallach  (1907),  102  N.  Y.  Supp.  1090,  53  Misc.  104;  Ewald 
V.  Faulhaber  Stable  Co.  (1907),  105  N.  Y.  114;  Sherman  v.  Ecker 
(1908),  59  Misc.  216,  110  N.  Y.  Supp.  265;  Bacigalupo  v.  Parrilli  (1908), 
112  N.  Y.  Supp.  1040;  O'Bannon  J.  W.  Co.  v.  Curran  (1908),  129  A.  D. 
90,  113  N.  Y.  Supp.  359;  Kuflick  v.  Glasser  (1909),  114  N.  Y.  Supp. 
870;  Dupont  de  Nemour  Powder  Co.  v.  Rooney  (1909),  63  Misc.  344, 
117  N.  Y.  Supp.  220;  Studebaker  Sons  Co.  v.  Fuether  (1910),  123  N.  Y'. 
Supp.  118;  Noonan  &  Price  Co.  v.  E.  Kwanok  Realty  Co.  (1910),  123 
N.  Y.  Supp.  915;  Klotz  v.  Silver  (1911),  127  N.  Y.  Supp.  1090;  Mayer 
V.  Boyle  (1912)  132  N.  Y.  Supp.  729;  Smith  v.  Leiman  (1912)  133  N. 
Y.  Supp.  1001;  Pirl  v.  Cary  (1912),  134  N.  Y.  Supp.  1036;  Badt  v. 
Miller  (1912),  135  N.  Y.  Supp.  13,  150  A.  D.  920;  Kahnwciler  v.  Solo- 
mon, 177  N.  Y.  Supp.  739. 

North  Carolina— Rouse  v.  Wooten  (1906),  140  N.  Car.  557,  53  S.  E. 
430,  111  Am.  St.  875;  Perry  Co.  v.  Taylor  (1908),  148  N.  Car,  362,  62 
S.  E.  423;  House  v.  Fayssoux  (1914),  168  N.  C.  1,  83  S.  E.  692,  Ann  Cas. 
1917B,  835;  First  Nat.  Bank  of  Henderson  v.  Johnson  (1915),  86  S.  E. 
360;  Edwartis  v.  Standard  Life  Ins.  Co.  (1917),  92  S.  E.  695;  Newland 
V.  Moore  (1917),  92  S.  E.  367;  Barber  v.  W.  M.  Absher  Co.  (1918\  175 
N.  E.  602;  Horton  v.  Wilson  (1918),  95  S.  E.  904. 

North  Dakota.— Union  State  Bank  v.  Benson   (1917),  165  N.  W.  509. 

0/n"o.— Elwortty-Helwick  Co.  v.  Hess.  9  Ohio  App.  200;  Rockfield  v. 
First  Nat.  Bank  of  Springfield   (1907),  77  Ohio  St.  311,  83  N.  E.  392. 

Or^-^OM.— Robinson  v.  Holmes  (1910),  57  Ore.  5,  109  Pac.  754. 

Pennsylvania. — Link  v.  Bergdoll  (1907),  35  Pa.  Super  Ct.  155;  First 
Nat.  Bank  v.  McBride  (1911),  230  Pa.  261. 

Rhode  Island.— Cook  v.  Am.  Tubing  &  Webbing  Co.  (1906),  28  R.  L 
41,  65  Atl.  641;  Deahey  v.  Choquet  (1907),  28  R.  L  338. 

Tennessee. — Am.  Nat.  Mank  v.  Nat.  Fertilizer  Co.  (1911),  125  Tenn. 
329,  143  S.  W.  597;  Nolan  v.  H.  E.  Wilcox  Motor  Co.  (1917),  195  S. 
W.  581. 

P^tV^rmia.— Security  Loan  &  Trust  Co.  v.  Fields  (1910),  110  Va.  827, 
67  S.  E.  342. 

Washington.— Galhrahh  v.  Shepard  (1906),  43  Wash.  698.  86  Pac. 
1113;  Morris-Miller  Co.  v.  Pressentin,  63  Wash  74,  114  Pac.  912;  Bard- 
shar  V.  Chaffee  (1916),  156  Pac.  388;  Codd  v.  Von  Der  Ake  (1916),  159 
Pac.  686. 

West  Virginia.— Rusvnlssel  v.  White  Oak  Co.   (1917),  92  S.  E.  672. 

§  90.  By  whom  given.  The  notice  may  be  given  by  or  on 
behalf  of  the  holder,  or  by  or  on  behalf  of  any  party  to  the 


590  NEGOTIABLE   INSTRUMENTS.         '  §91 

instrument  who  might  be  compelled  to  pay  it  to  the  holder,  and 
who,  upon  taking  it  up,  would  have  a  right  to  reimbursement 
from  the  party  to  whom  the  notice  is  given.*'  ** 

See  text,  §  167. 

Cross  sections:     68,  109,  119-5,  91. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act :  Section 
49  (1). 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Connecticut.— Blue  Ribbon  Garage  v.  Baldwin   (1917),  101  Atl.  83. 

Illinois. — W.  A.  Fowler  Papker  Co.  v.  Best  Jones  Sales  Book  Co. 
(1913),  183  111.  App.  310. 

Kentucky.— WilVrnms  v.  Paintsville  Nat.  Bank  (1911),  143  Ky.  781, 
137  S.  W.  535. 

Missouri— EavQS  v.  Keeton  (1917),  193  S.  W.  629. 

New  Forib.— University  Press  v.  Willian^s  (1900),  48  A.  D.  188; 
Trader's  Nat.  Bank  v.  Jones  (1905)  ;  104  A.  D.  433,  93  N.  Y.  Supp.  768; 
First  Nat.  Bank  v.  Gridley,  112  A.  D.  398,  98  N.  Y.  Supp.  445. 

Rhode  Island.— Cook  v.  Am.  Tubing  &  Webbing  Co.  (1906),  28  R.  I. 
41,  65  Atl.  641. 

United  States.— Piedmont  &  Caro  Ry.  Co.  v.  Shee  (1915),  223  Fed. 
973  (C.  C.  A.,  4th  Ct.) 

§  91.  Notice  given  by  agent.  Notice  of  dishonor  may  be 
given  by  an  agent  either  in  his  own  name  or  in  the  name  of  any 
party  entitled  to  give  notice,  whether  that  party  be  his  principal 
or  not.*-  ** 

See  text,  §  167. 

Cross  sections:     66,  19,  119-5. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act :  Sec- 
tion 49  (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Possession  of  check  by  bank  cashier  is  evidence  of  his  agency  from  the 
holder  to  protest  it.     Hooper  v.  Herring  (Ala.),  70  So.  308. 

Although  A  could  not  give  notice  of  dishonor  to  B  his  accommodation 
indorser,  he  could  forward  notice  given  by  another  to  B  as  agent 
of  holder.  Traders'  Nat.  Bank  v.  Jones,  104  App.  Div.  433,  93  N.  Y. 
Supp.  768. 


§§  92-93  NOTICE   OF   DISHONOR.  591 

**The  following  is  a  complete  list  of  the  cases,  arranged 
laphabetically  by  states  where  this  section  has  been  construed : 

Alabama. — Hooper  v.  Herring,  70  So.  308. 

Illinois. — W.  A.  Fowler  Paper  Co.  v.  Best-Jones  Sales  Book  Co. 
(1913),  183  111.  App.  310. 

New  York.— Kelly  v.  Theiss  (1902),  77  A.  D.  81;  Traders'  Nat. 
Bank  v.  Jones  (1905),  104  A.  D.  433,  93  N.  Y.  Supp.  768;  First  Nat. 
Bank  of  the  City  of  Brooklyn  v.Gridley  (1906),  98  N.  Y.  Supp.  445,  112 
A.  D.  398. 

§  92,     Effect  of  notice  on  behalf  of  holder.     Where  notice 

is  given  by  or  on  behalf  of  the  holder,  it  cnnres  for  the  benefit 
of  all  subsequent  holders  and  all  prior  parties  who  have  a  right 
of  recourse  against  the  party  to  whom  it  is  given.-^* 

See  text,  §  174. 

Cross   sections :   91. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
49   (3). 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

New  York.— Traders'  Nat.  Bank  v.  Jones,  104  A.  D.  433,  93  N.  Y. 
Supp.  768. 

Pennsylvania. — Nat.  Bank  of  Phoenixville  v.  Bonsor  (1909),  38  Pa. 
Super  Ct.  275. 

United  States. — Piedmont  Carolina  Rv.  Co.  v.  Shaw,  223  Fed.  Rep. 
973,  138  C.  C.  A.  227. 

§  93.  Effect  where  notice  is  given  by  party  entitled  thereto. 
Where  notice  is  given  by  or  on  behalf  of  a  party  entitled  to 
give  notice,  it  enures  for  the  benefit  of  the  holder  and  all  parties 
subsequent  to  the  party  to  whom  notice  is  given.*'  *' 

See  text,  §  174. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act :  Sec. 
49  (4). 

*  Digest  of  some  of  the  decisions  m  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Where  indorsers  of  note  talked  about  the  verbal  notice  of  dishonor 
the  notice  of  one  indorscr  to  another  enured  to  benefit  of  holder.  Pied- 
mont Carolina  Ry.  Co.  v.  Shaw,  223  Fed.  Rep.  973,  138  C.  C.  A.  227. 


592  NEGOTIABLE   INSTRUMENTS.  §  94 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

New  York—\Nths  v.  Rieser  (1909),  62  Misc.  292,  114  N.  Y.  Supp. 
983. 

United  ^/a/*? J.— Piedmont  &  Ca.  Ry.  Co.  v.  Shaw  (1915),  223  Fed. 
973,  138  C.  C.  A.  227  (C  C.  A.,  4th  Ct.). 

§  94.  When  agent  may  give  notice.  Where  the  instrument 
has  been  dishonored  in  the  hands  of  an  agent,  he  may  either 
himself  give  notice  to  the  parties  liable  thereon,  or  he  may  give 
notice  to  his  principal.  If  he  give  notice  to  his  principal,  he 
must  do  so  within  the  same  time  as  if  he  were  the  holder,  and 
the  principal  upon  the  receipt  of  such  notice  has  himself  the 
same  time  for  giving  notice  as  if  the  agent  had  been  an  inde- 
pendent holder.*'  *" 

See  text,  §  167. 

Corresponding  provision  of  English  Bills  of  Exchange  Act :  Sec. 
49  (13). 

In  the  Arkansas  act  in  the  second  sentence  after  the  words  "re- 
ceipt of  said  notice"  are  the  following  words :  "himself  must  do  so  with- 
in the  same  time  for  giving  notice  as  if  the  agent  had  been  an  inde- 
pendent  holder." 

■*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Bank  holding  note  for  collection  may  forward  notice  of  dishonor  to 
bank  from  which  it  received  the  note  for  mailing.  Gleason  v.  Thayer, 
87  Conn.  248,  87  Atl.  790,  Ann  Cas.  1915B,  1069. 

Notice  may  be  given  to  beneficial  owner  through  intervening  holders 
for  collection.  Blue  Ribbon  Garage  v.  Baldwin,  91  Conn.  674,  101  Atl. 
83. 

Agent  mailing  notice  to  principal  with  postage  for  forwarding  to  in- 
dorser,  he  is  not  guilty  of  negligence  in  collecting.  Brill  v.  Jefferson 
Bank,  159  App.  Div.  461,  144  N.  Y.  Supp.  539. 

Notice  sent  through  branches  of  forwarding  bank  were  sufficient  to 
bind  indorsers.     Fielding  v.  Corry  (1898),  I  .  Q.  B.  268. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Colorado.— De  La  Vergne  v.  Globe  Printing  Co.   (1915),  148  Pac.  923. 

Connrr/trMf.— Gleason  v.  Thayer  (1913),  87  Atl.  790,  87  Conn.  248. 
Ann.  Cas.  1915B,  1069;  Blue  Ribbon  Garage  v.  Baldwin,  91  Conn.  674, 
101  Atl.  83. 

Illinois. — W.  A.  Fowler  Paper  Co.  v.  Best- Jones  Sales  Book  Co.  (1913), 
183  111.  App.  310. 


§95  NOTICE   OF   DISHONOR.  593 

Massaclmsetts. — Middleborough  Nat.  Bk.  v.  Cole  (1906),  191  Mass. 
168,  77  N.  E.  781. 

New  York.— BriW  v.  Jefferson  Bank  (1913),  159  A.  D.  461,  144  N.  Y. 
Supp.  539. 

North  Carolina.—Sme  Bk.  of  Chicago  v.  Carr  (1902),  130  N.  Car.  479. 

United  States.— Lyons  v.  Westwater  (1910),  103  C.  C.  A.  663,  181 
Fed.  681   (Pa.). 

§  95.  When  notice  suffiicent,  A  written  notice  need  not 
be  signed  and  an  insufficient  written  notice  may  be  supplemented 
and  validated  by  verbal  communication.  A  misdescription  of 
the  instrument  does  not  vitiate  the  notice  unless  the  party  to 
whom  the  notice  is  given  is  in  fact  misled  thereby.*-  ■*' 

See  text,  §  166. 

Corresponding  provision  of  English  Bills  of  Exchange  Act :  Sec.  49 
(7). 

The  Kentucky  act  omits  the  word  "not"  in  the  first  sentence  and 
substitutes  the  word  "written"  for  the  word  "verbal"  in  the  last  part  of 
the  first  sentence. 

In  the  Kentucky  and  North  Carolina  acts  the  words  "the  notice"  are 
omitted  after  the  word  "vitiate"  in  the  last  sentence  of  the  section. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Notice  and  envelope  addressed  to  another  party  do  not  give  notice  to 
indorser  who  may  receive  it.  Marshall  v.  Sonneman,  216  Pa.  65,  64 
Atl.  874. 

Indorser  released  unless  notice  is  in  writing.  Grayson  Co.  Bank  v. 
Elbert,  143  Ky.  750,  137  S.  W.  782. 

Although  notice  on  its  face  was  to  maker  if  it  was  in  an  envelope 
addressed  to  indorser  and  was  opened  by  him  he  has  sufficient  notice. 
Wilson  v.  Peck,  66  Misc.  Rep.  179,  121  N.  Y.  Supp.  344. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

California. —Smith  v.  Hirst   (1917),  163  Pac.  334. 

Con7:ecticut.— Blue  Ribbon  Garage  v.  Baldwin    (1917),  101  Atl.  83. 

Iowa.— mghy  v.  Bahrenfuss  (1917),  163  N.  W.  247. 

Kentucky.— Grayson  Co.  Bk.  v.  Elbert  (1912),  143  Ky.  750,  137  S.  W. 
782. 

New  York.— Wilson  v.  Peck  (1910).  121  N.  Y.  Supp.  344,  66  Misc. 
179;  Mayer  v.  Boyle  (1912),  132  N.  Y.  Supp   729. 

Pennsylvania.— Marshall  v.  Sonneman  (1906),  216  Pa.  65,  64  Atl.  874. 


594  NEGOTIABLE    INSTRUMENTS.  §  96 

Wiscojnin.— Second  Nat.  Bk.  of  Richmond  v.  Smith  (1903),  118  Wis. 
18,  94  N.  W.  664;  First  Nat.  Bk.  v.  McBride  (1911),  230  Pa.  261. 

§  96.  Form  of  notice.  The  notice  may  be  in  writing-  or 
merely  oral,  and  may  be  given  in  any  terms  which  sufficiently 
identify  the  instrument,  and  indicate  that  it  has  been  dishonored 
by  non-acceptance  or  non-payment.  It  may  in  all  cases  be  given 
by  delivering  it  personally  or  through  the  mails.*-  *^ 

See  text,  §  165. 

Cross  sections :     106,  108,  76,  89,  97. 

In  the  Kentucky  act  the  words  "or  merely  oral"  are  omitted. 

Corresponding  provision  of  English  iJills  of  Exchange  Act:  Sees. 
49  (5),  49  (15). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Upon  receipt  of  notice  of  dishonor  by  owner  he  telephoned  one  in- 
dorser  and  saw  a  second  personally  next  day.  Notice  sufficient.  Blue 
Ribbon  Garage  v.  Baldwin,  91  Conn.  674,  101  Atl.  83. 

Oral  notice  insufficient  where  act  omits  words  "or  merely  oral."  Gray- 
son Co.  Bank  v.  Elbert,  143  Ky.  750,  137  S.  W.  782. 

Informal  letter  as  sufficient  notice.  Doherty  v.  First  Nat.  Bank,  170 
Ky.  810,  186  S.  W.  937. 

Oral  notice  given  personally  or  by  agent  charges  indorser.  Kelly  v. 
Theiss,  77  App.  Div.  81,  78  N.  Y.  Supp.  1050. 

Personal  notice  left  with  person  in  charge  where  indorser  absent.  Amer- 
ican Exchange  Nat.  Bank  v.  American  Hotel  Victoria  Co.,  103  App.  Div. 
372.  92  N.  Y.  Supp.  1006. 

Omissions  that  do  not  invalidate  notice.  Herrmann  Lumber  Co.  v. 
Bjurstrom,  74  Misc.  Rep.  93,  131  N.  Y.  Supp.  689. 

Telephone  notice  not  sufficient.     Mayer  v.  Boyle,  132  N.  Y.  Supp.  729. 

Where  assistant  treasurer  indorsed  corporation  note  and  he  knew  from 
circumstances  that  corporation  had  not  paid,  formal  notice  unnecessary. 
William  S.  Merrell  Chemical  Co.  v.  Root,  152  N.  Y.  Supp.  368. 

Notice  must  be  given  by  mail  or  personally.  Price  v.  Warner,  60  Ore. 
7,  118  Pac.  173. 

Declaration  of  demand  and  dishonor  accompanied  by  copy  of  note  suf- 
ficient.    Marshall  v.  Sonneman,  216  Pa.  65,  64  Atl.  874. 

Notice  by  telephone  sufficient  if  indorser  properly  identified.  American 
Nat.  Bank  v.  Nat.  Fertilizer  Co.,  125  Tenn.  328,  143  S.  W.  597. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

/i/flfeawa.— Scarborough  v.  City  Nat.  Bk.  (1908),  157  Ala.  577,  48  So.  62. 

Ca/i/omzo.— Smith  v.  Hirst  (1917).  163  Pac.  334,  32  Cal.  App.  507. 

Colorado.— De  La  Vigne  v.  Globe  Printing  Co.  (1915),  148  Pac.  923. 


§  97  NOTICE   OF   DISHONOR.  595 

Connecticut.— Blue  Ribbon  Garage  v.  Baldwin,  91  Conn.  674,  101  Atl.  83. 

Florida.— Ryan  v.  State  (1910),  60  Fla.  25,  53  S.  E.  448;  Jones  v.  Mani- 
towoc Shipbuilding  &  Dry  Dock  Co.  (1913),  62  So.  590. 

/M<ftc«a.— Swift  &  Co.  V.  Miller,  62  Ind.  App.  312,  113  N.  E.  447. 

Knifncky.— Grayson  Co.  Bk.  v.  Elbert  (1912),  143  Ky.  750,  137  S.  W. 
782;  Doherty  v.  First  Nat.  Bk.  (1916),  170  Ky.  810,  186  S.  W.  937. 

New  Jersey.— Battery  Park  Bk.  v.  Ramsay  (1917),  100  Atl.  51. 

Neif  For^.— University  Press  v.  Williams  (1900),  48  A.  D.  188;  Kelly 
V.  Theiss  (1902),  77  A.  D.  81.  78  N.  Y.  Supp.  1050;  Am.  Ex.  Nat.  Bk.  v. 
Am.  Hotel  Victoria  Co.  (1905),  103  A.  D.  373,  92  N.  Y.  Supp.  1006;  Reed 
V.  Soear  (1905).  107  A.  D.  144,  94  N.  Y.  Supp.  1007;  Klotz  v.  Silver 
(19li),  127  N.  Y.  Supp.  1090;  Herrmann  Lumber  Co.  v.  Bjurstrom,  131 
N.  Y.  Supp.  689,  74  Misc.  Rep.  93;  Mayer  v.  Boyle  (1912),  132  N.  Y. 
Supp.  729;  Merrell  Chem.  Co.  v.  Root  (1915),  152  N.  Y.  Supp.  368. 

Oregon.— Frice  v.  Warner  (1911),  60  Oreg.  7,  118  Pac.  173. 

Pennsyhania.-Mar'^haW  v.  Sonneman  (1906),  216  Pa.  65,  64  Atl.  874; 
Zollner  v.  I^Ioffitt  (1909),  222  Pa.  644,  72  Atl.  285;  First  Nat.  Bk.  v.  Mc- 
Bride   (1911),  230  Pa.  261. 

Tennessee.— American  Nat.  Bank  v.  Nat.  Fertilizer  Co  ,  125  Tenn.  328, 
143  S.  W.  597. 

WasJiington.—Gleeson  v.  Lichty  (1911),  62  Wash.  656,  114  Pac.  518; 
Schultz  v.  Crewdson   (1917),  163  Pac.  734. 

Wisconsin.-Sccond  Nat.  Bk.  of  Richmond  v.  Smith  (1903),  118  Wis. 
18,  94  N.  W.  664. 

United  States.— Denhan\  v.  Donahue,  155  Fed.  Rep.  3S5,  83  C.  C.  A. 
657. 

§  97.  To  whom  notice  may  be  given.  Notice  of  dishonor 
may  be  given  either  to  the  party  himself  or  to  his  agent  in  that 
behalf  .*•  1^ 

See  text,  §  168. 

Cross  sections :     76,  89,  96,  108. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec. 
49   (80). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Leaving  notice  at  window  of  cashier  of  hotel  corporation  insufficient 
where  no  one  shown  to  be  present.  Am..  Exch.  Nat.  Bank  v.  Am.  Hotel 
Victoria  Co.,  103  App.  Div.  372,  92  N.  Y.  Supp.  1006 

Notice  to  one  indorser  delivered  to  another  is  notice  to  neither.  V/il- 
son  v.  Peck,  66  Misc   Rep.  179.  121  N.  Y.  Supp.  344. 

Accom.modation  indorsement  charges  one  as  indgr^er  not  ag  jo-'-it  maker 
Macauley  v.  Fund,  179  N.  Y.  Supp.  469. 


596  NEGOTIABLE    INSTRUMENTS.  §  98 

Notice  addressed  to  second  indorser  delivered  to  first  indorser  is  not 
notice  to  him.     Marshall  v.  Sonneman,  216  Pa.  65,  64  Atl.  874. 

Telephone  notice  to  clerk  of  corporation  does  not  bind  corporation 
unless  clerk  communicated  notice  to  some  officer.  American  Nat.  Bank 
V.  Nat.  Fertilizer  Co.,  125  Tenn.  328,  143  S.  W.  597. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Florida.— Jonts  v.  Manitowoc  Shipbuilding  &  Dry  Dock  Co.  (1913), 
62  So.  590. 

Illinois. — W.  A.  Fowler  Paper  Co.  v.  Best-Jones  Sales  Book  Co. 
(1913),  183  111.  App.  310. 

Indiana.— Swih  &  Co.  v.  Miller  (1917),  113  N.  E.  447. 

New  For/5;.— Mohlman  Co.  v.  McKane  (1901),  69  N.  Y.  Supp.  1046, 
60  A.  D.  546;  Am.  Ex.  Nat.  Bk.  v.  Am.  Hotel  Victoria  Co.  (1905),  103 
A.  D.  372,  92  N.  Y.  Supp.  1006;  Reed  v.  Spear  (1905),  107  A.  D.  114, 
94  N.  Y.  Supp.  1007;  Wilson  v.  Peck,  121  N.  Y.  Supp.  344,  66  Misc.  Rep. 
179;  Macauley  v.  Fund,  179  N.  Y.  Supp.  469. 

Pennsylvania. — Marshall  v.   Sonneman,  216  Pa.  65,  64  Atl.  874. 

Tennessee.— Am.  Nat.  Bk.  v.  Nat.  Fertilizer  Co.  (1911),  125  Tenn.  329, 
143  S.  W.  597. 

§  98.  Notice  where  party  is  dead.  When  any  party  is 
dead,  and  his  death  is  known  to  the  party  giving  notice,  the 
notice  must  be  given  to  a  personal  representative,  if  there  be 
one,  and  if  with  reasonable  diligence,  he  can  be  found.  If  there 
be  no  personal  representative,  notice  may  be  sent  to  the  last 
residence  or  last  place  of  business  of  the  deceased.**  ** 

See  text,  §168. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  49  (9). 

In  the  Arkansas  act  the  words  "must  be  sent  by  mail"  are  substituted 
for  the  wortis  "may  be  sent"  in  the  last  sentence. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Reasonable  diligence  shown  by  notice  to  deceased  indorser  by  name 
in  case  of  executor  in  the  latter's  name  and  at  his  address.  Second  Na- 
tional Bank  v.  Smith  (N.  J.).  105  Atl.  862. 

Notice  to  deceased  indorser's  representative  on  note  payable  in  Can- 
ada must  be  in  compliance  with  Canadian  act.  Merchants'  Bank  v. 
Brown,  86  App.  Div.  599,  83  N.  Y.  Supp.  1037. 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 


§§99-100  NOTICE   OF   DISHONOR.  597 

New  Jersey. — Second  Nat.  Bank  v.  Smith,  103  Atl.  862. 

New  For*.— Merchants  Bank  v.  Brown  (1903),  86  A.  D.  599,  83  N. 
Y.  Supp.  1037. 

§  99.  Notice  to  partners.  Where  the  parties  to  be  notified 
are  partners,  notice  to  any  one  partner  is  notice  to  the  firm,  even 
though  there  has  been  a  dissolution.-^'  ** 

See  text,  §  168. 

Cross   sections:     91. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  49   (1). 

•''  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Notice  to  one  partner  is  notice  to  all.  Kensington  Nat.  Bk.  v.  Ware, 
32  Pa.  Super.  Ct.  247. 

*■  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Kentucky.— Aud  v.  McElvoy   (1917),   197  S.  W.  824. 

Massachusetts.— Feigenspan  v.  McDonnell  (1909),  201  Mass.  341,  87 
N.  E.  624. 

New  Forife.— Trader's  Nat.  Bk.  v.  Jones  (1905),  104  A.  D.  433,  93 
N.  Y.  Supp.  768. 

Pennsylvania.— Kensington  Nat.  Bk.  v.  Ware  (1906),  32  Pa.  Super. 
Ct.  247. 

§  100.  Notice  to  persons  jointly  liable.  Notice  to  joint 
parties  who  are  not  partners  must  be  given  to  each  of  them,  un- 
less one  of  them  has  authority  to  receive  such  notice  for  the 
others.*'  ** 

See  text,  §  168. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  49  (11). 

*  Digfest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued  arranged  alphabetically  by  states : 

Joint  indorsers  not  discharged  by  failure  to  give  notice  to  all  joint 
indorsers.     Doherty  v.  First  Nat.  Bank,  170  Ky.  810,  186  S.   W.  937. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Kentucky.— Doherty  v.  First  Nat.  Bk.  (1916),  186  S.  W.  937. 


59S  NEGOTIABLE   INSTRUMENTS.  §§  101-103 

§  101.  Notice  to  bankrupt.  Where  a  party  has  been  ad- 
judged a  bankrupt  or  an  insolvent,  or  has  made  an  assignment 
for  the  benefit  of  creditors,  notice  may  be  given  either  to  the 
party  himself  or  to  his  trustee  or  assignee.*'  ** 

See  text,  §  168. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  49    (10). 

§  102.  Time  within  which  notice  must  be  given.  Notice 
may  be  given  as  soon  as  the  instrument  is  dishonored  and  unless 
delay  is  excused  as  hereinafter  provided,  must  be  given  within 
the  times  fixed  by  this  act.*'  ** 

See  text,   §  169. 

Cross  sections :  75. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  49  (12). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Finding  of  jury  that  .proper  notice  was  given  as  curing  defective 
pleading.     Doherty  v.  First  Nat.  Bank,  170  Ky.  810,  186  S.  W.  937. 

Notice  may  be  given  on  last  day  of  grace  but  he  cannot  begin  an  ac- 
tion until  the  next  day.     Kennedy  v.  Thomas   (1894),  2  Q.  B.  759. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

California.—Smlth  v.  Hirst   (1917),  163  Pac.  334,  32  Cal.  App.  507. 

Kentucky.— Ehey  v.  Peoples  Bk.  ot  Bardwell  (1916),  182  S.  W.  873; 
Doherty  v.  First  Nat.  Bank,   170  Ky.  810,  186  S.  W.  937. 

Maine.— Kerr  v.  Dyer  (1917),  102  Atl.  178. 

New  York.— German-Am.  Bk.  v.  Milliman  (1900),  65  N.  Y.  Supp. 
242.  31  Misc.  87. 

Tennessee.— Am.  Nat.  Bk.  v.  Nat.  Fertilizer  Co.  (1911),  125  Tenn. 
329,  143  S.  W.  597. 

§  103.  Where  parties  reside  in  same  place.  Where  the 
person  giving  and  the  person  to  receive  notice  reside  in  the  same 
place,  notice  kiust  be  given  within  the  following  times : 

1.  If  given  at  the  place  of  business  of  the  person  to  receive 
notice,  it  must  be  given  before  the  close  of  business  hours  on  the 
day  following; 


§  104  NOTICE    OF   DISHONOR.  599 

2.  If  given  at  his  residence,  it  must  be  given  before  the  usual 
hours  of  rest  on  the  day  following ; 

3.  If  sent  by  mail,  it  must  be  deposited  in  the  post-office  in 
time  to  reach  him  in  usual  course  on  the  day  following.*-  *' 

See  text,  §  169. 

Corresponding  provision  of  English  Bills  of  Exchange  Act :  49 
(12)    (a). 

In  the  Rhode  Island  act  subsection  2  above  is  changed  to  read  as  fol- 
lows :  "If  given  at  his  residence  it  must  be  given  before  ten  o'clock  in 
the  evening  of  the  day  following." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Notice  two  or  three  days  after  note  due  not  sufficient.  Solomon  v. 
Cohen,  94  N.  Y.   Supp.  502. 

Notice  two  days  after  due  is  too  late.  Siegel  v.  Dubinskv,  56  Misc. 
Rep.  681.  107  N.  Y.   Supp.  678. 

Sufficiency  of  evidence  where  notice  placed  in  mail  chute  on  day  of 
protest  but  postmarked  next  day.  Wilson  v.  Peck,  66  Misc.  Rep.  179, 
121   N.  Y.  Supp.  344. 

Written  notice  must  be  given  when  oral  cannot  on  account  of  ab- 
sence.    Price  v.  Warner,  60  Ore.  7,  118  Pac.  173. 

*■  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Colorado. — Emerson  &  Buckingham  Bk.  &  Trust  Co.  v.  German-Amer- 
ican Trust  Co.  (1919),  176  Pac.  472. 

Indiana.— Swih  &  Co.  v.  Miller  (1917),  113  N.  E.  447. 

New  York.— Czssel  v.  Regierer  (1908).  114  N.  Y.  Supp.  601;  Kelly 
v.  Theiss  (1901),  65  A.  D.  146;  Jurgens  v.  Wichman  (1908),  124  A.  D. 
531,  108  N.  Y.  Supp.  881;  In  re  Mandelbaum  (1913),  141  N.  Y.  Supp.  319; 
Klotz  V.  Silver  (1911),  127  N.  Y.  Supp.  1090;  Siegel  v.  Dubnisky  (1907), 
56  Misc.  68.  107  N.  Y.  Supp.  678;  Smith  Co.  v.  America-Europe  Co. 
(1911).  128  N.  Y.  Supp.  81 ;  Solomon  v.  Cohen  (1905).  94  N.  Y.  Supp.  502; 
Wilson  V.  Peck  (1910),  121  N.  Y.  Supp.  344,  66  Misc.  179. 

Oregon.— Frkt  v..  Warner  (1911),  60  Oreg.  7,  118  Pac    173. 
Rhode  Island— Deahey  v.  Choquet  (1907),  28  R.  I.  338. 

South  Carolina.— 'Norwood  Nat.  Bk.  v.  Piedmont  Pub.  Co  (1917),  91 
S.  E.  866. 

§  104.  Where  parties  reside  in  different  places.  Where 
the  person  giving  and  the  person  to  receive  notice  reside  in  dif- 
ferent places,  the  notice  must  be  given  within  the  following 
times : 


600  NEGOTIABLE    INSTRUMENTS.  §  104 

1.  If  sent  by  mail,  it  must  be  deposited  in  the  post-office  in 
time  to  go  by  mail  the  day  following  the  day  of  dishonor,  or  if 
there  be  no  mail  at  a  convenient  hour  on  that  day,  by  the  next 
mail  thereafter. 

2.  If  given  otherwise  than  through  the  post-office,  then 
within  the  time  that  notice  would  have  been  received  in  due 
course  of  mail,  if  it  has  been  deposited  in  the  post-office  within 
the  time  specified  in  the  last  subdivision.*'  ** 

See  text,  §  169. 

Cross  section :     108. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  49 
(12)    (1). 

In  the  Kansas,  Nebraska  and  Ohio  acts  the  words  "next  preceding 
paragraph  of  this  section"  are  substituted  for  the  words  "last  subdi- 
vision." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Oral  notice  on  the  day  following  receipt  of  notice  from  agent  1»  suffi- 
cient where  agent's  notice  properly  given.  De  La  Vergne  v.  Globe  Print- 
ing Co.  (Col.  App.),  148  Pac.  923. 

Evidence  of  giving  notice  of  dishonor.    Hudson  v.  Carlson,  —  Ida. 

—  170  Pac.  100. 

When  there  were  twelve  daily  trains  between  the  two  towns  notice 
on  the  second  day  after  dishonor  not  sufficient.  Harris  v.  Baker,  226 
Mass.  113,  115  N.  E.  292. 

Notice  of  dishonor  by  mail.     Second  Nat.  Bank  of  Hoboken  v.  Smith, 

—  N.  J.  — ,  103  Atl.  862. 

Notice  of  dishonor  by  mail — burden   of  oroof.     Nickel!  v.  Bradshaw, 

—  Oreg.  — ,  183  Pac.  12. 

Proof  of  notice  properly  addressed,  stamped  and  mailed,  not  rendered 
insufficient  because  to  person  as  treasurer  when  he  indorsed  individually. 
Farmer's  Nat.  Bk.  v.  Howard,  71  W.  Va.  57,  16  S.  E.  122. 

Failure  to  mail  before  departure  of  mail  and  to  prepay  postage  for 
five  days  releases  indorser.  First  National  Bank  of  Shawano  v.  Miller, 
139  Wis.  126,  120  N.  W.  820. 

**The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Colorado.— De  La  Vergne  v.  Globe  Printing  Co.  (1915),  148  Pac.  923. 

Idaho.— Hudson  v.  Carlson   (1918),  170  Pac.  100. 

Indiana.— SwUt  &  Co.  v.  Miller   (1916),  113  N.  E.  447. 

Iowa. — Citizens  Bk.  of  Pleasantville  v.  First  Nat.  Bk.  of  Pleasantville 
(1907),  135  Iowa  605,  13  L.  R.  A.  (N.  S.)  303,  113  N.  W.  481. 


§  105  NOTICE    OF   DISHONOR.  601 

Massachusei is— Harris  v.  Baker  (1917),  226  Mass.  113,  115  N.  E.  292. 

New  Jersey.— Second  Nat.  Bk.  of  Hoboken  v.  Smith  (1918),  103  Atl 
862. 

New  York.— Jurgens  v.  Wichman  (1908),  124  A.  D.  531,  108  N.  Y. 
Supp.  881;  Kelly  v.  Theiss  (1901),  65  A.  D.  146;  Metropolitan  Bk.  v. 
Engel  (1901),  66  A.  D.  273;  Mohlman  Co.  v.  McKane  (1901),  60  A.  D. 
546,  69  N.  Y.  Supp.  1046;  Smith  Co.  v.  Ameirca-Europe  Co.  (1911),  128 
N.  Y.  Supp.  81;  University  Press  Co.  v.  Williams   (1900),  48  A.  D.  188. 

Oregon. — Nickell  v.  Bradshaw,  183  Pac.  12. 

West  Virginia.— Fartryers  Nat.  Bk.  v.  Howard  (1912),  71  W.  Va.  57, 
76  S.  E.  122. 

Wiseonsin.— First  Nat.  Bk.  of  Shawano  v.  Miller  (1909),  139  Wis. 
126,  120  N.  W.  820. 

Ca/i/oniia.— Seeley  v.  Stoltz.  Inc.  (1917),  163  Pac.  681,  32  Cal.  App. 
458. 

§  105.     When  sender  deemed    to    have    given    due    notice. 

Where  notice  of  dishonor  is  duly  addressed  and  deposited  in  the 
post-office,  the  sender  is  deemed  to  have  given  due  notice,  not- 
withstanding any  miscarriage  in  the  mails.*'  ** 

See  text,  §  171. 

Corresponding  provision  of  English  Bills  Act:    49  (15). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Proof  of  execution,  stamping  and  placing  with  other  mail  matter  to 
be  taken  to  postoffice  sufficient  without  clerk  who  carried  it.  Central 
Nat.  Bank  v.  Stoddard,  83  Conn.  332,  76  Atl.  472. 

Proof  of  mailing  notice  of  dishonor.  Hudson  v.  Carlson,  —  Ida.  — , 
170  Pac.  100. 

Plaintiff  suing  on  dishonored  instrument  has  burden  of  proving  no- 
tice of  dishonor.  First  Nat.  Bank  v.  Star  Watch  Case  Co.,  187  Mich. 
224,  153  N.  W.  722. 

Notice  presumed  even  if  miscarriage  in  mail.  Second  Nat.  Bank  of 
Hoboken  v.  Smith,  —  N.  J.  — ,  103  Atl.  862. 

Evidence  of  non-receipt  is  competent  on  question  of  whether  notice 
was  mailed.  Union  Bank  of  Brooklyn  v.  Deshel,  139  App.  Div.  217.  123 
N.  Y.  Supp.  585. 

Where  notice  of  dishonor  is  addressed  to  indorser  at  incorrect  ad- 
dress indorser  is  not  charged  unless  he  receives  it.  Century  Bank  v. 
Breitbard,  89  Misc.  Rep.  308,  151  N.  Y.  Supp.  588. 

Addressing  notice  to  indorser  at  No.  24.  instead  of  "No.  22  and  23 
E.  Market  Street,  Wilkesbarre,  Pa.,"  is  not  sufficient  where  defendant 
showed  non-receipt  and  another  by  same  name  in  city.  Siegel  v.  Hirsch, 
26  Pa.   Super.  Ct.  398. 

After  proof  by  notary  of  mailing  notice  of  dishonor  not  erroneous  to 
exclude  defendant's  testimony  of  non-receipt.  First  Nat.  Bank  v.  De- 
lone.  254  Pa.  409,  98  Atl.  1042. 


602  NEGOTIABLE    INSTRUMENTS.  §  106 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Connecticut.— Central  Nat.  Bank  v.  Stoddard,  83  Conn.  332,  76  Atl. 
472. 

Idaho. — Hudson  v.  Carlson,  170  ir'ac    100, 

Illinois.— Kewanee  Nat.  Bk.  v.  Ladd   (1912),  175  111.  App.  151. 

Massachusetts.— Feigenspan  v.  McDonnell  (1909),  201  Mass.  341,  87 
N.  E.  624;  Harris  v.  Baker    (1917),  115  N.  E.  292. 

Michigan. — First  Nat.  Bk.  of  Manistee  v.  Star  Watch  Case  Co.  (1915), 
187  Mich.  224.  153  N.  W.  722. 

Missouri.— Eaves  v.  Keeton  (1917),  153  S.  W.  629;  First  Nat.  Bk, 
of  Grant  City  v.  Korn  (1915),  179  S.  W.  721. 

Neii'  Jersey.— Battery  Park  Bk.  v.  Ramsay  (1917),  100  Atl.  51;  Sec- 
ond Nat.  Bank  of  Hoboken  v.  Smith,  103  Atl.  862. 

New  York.— Century  Bk.  of  City  of  N.  Y.  v.  Breitbard  (1915),  151 
N.  Y.  Supp.  588,  89  Misc.  Rep.  308;  McGrath  v.  Francoline  (1915),  158 
N.  Y.  Supp.  981;  State  Bank  v.  Solomon  (1903),  84  N.  Y.  Supp.  976; 
Union  Bk.  of  Brooklyn  v.  Deshel  (1910),  123  N.  Y.  Supp.  585,  139  A. 
D.  217. 

Pennsylvania. — First  Nat.  Bk.  of  Hanover  v.  Delone  (1916),  254  Pa. 
409,  98  Atl.  1042;  Siegel  v.  Hirsch  (1904),  26  Pa.  Super.  Ct.  398;  Zollner 
V.  Moffatt  (1909),  222  Pa.  644,  72  Atl.  285. 

West  Virginia.— Board  of  Education  v.  Angel  (1915),  84  S.  E.  747; 
Farmer's  Nat.  Bk.  v.  Howard  (1912),  71  W.  Va.  57. 

Wisconsin. — First  Nat.  Bank  of  Shawano  v.  Miller,  139  Wis.  126,  120 
N.  W.  820. 

§  106.  Deposit  in  post-office ;  what  constitutes.  Notice  is 
deemed  to  have  been  deposited  in  the  post-office  when  deposited 
in  any  branch  post-office  or  in  any  letter  box  under  the  control 
of  the  post-office  department.*-  ** 

See  text,  §  171. 

In  Arkansas  the  words  "when  deposited"  are  omitted.  This  is  prob- 
ably a  clerical  error. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Deposit  of  notice  in  mail  chute  of  government  is  sufficient.  Wilson 
V.   Peck,  66  Misc.  Rep.   179,  121   N.  Y.  Supp.  344. 

Leaving  at  usual  place  in  ofifice  where  postman  collected  mail  not 
sufficient  proof.     Friedman  v.   Maltinsky  (Pa.),  103  Atl.  731. 


§  107  NOTICE   OF   DISHONOR.  603 

*"  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

California.— Sce\y  v.  Stoltz,  Inc.  (1917),  163  Pac.  681,  32  Cal.  App. 
458. 

Connecticut.— Cent.  Nat.  B!'.  v.  Stoddard  (1910),  83  Conn.  330,  76 
Atl.  472. 

Massachusetts. — Feigenspan  v.  McDonnell,  201  Mass.  341,  87  N.  E.  624. 

New  York.— Wilson  v.  Peck  (1910),  121  N.  Y.  Supp.  344,  66  Misc.  179. 

New  Jersey.— Battery  Park  Bk.  v.  Ramsay   (1917),  100  Atl.  51. 

Pennsylvania.— Fhoen'ix  Brewing  Co.  v.  Weiss  (1903),  23  Pa.  Super. 
Ct.  519;  Friedman  v.  Maltinsky,  103  Atl.  731. 

§  107.  Notice  to  subsequent  party ;  time  of.  Where  a 
party  receives  notice  of  dishonor,  he  has,  after  the  receipt  of 
such  notice,  the  same  time  for  giving  notice  to  antecedent  parties 
that  the  holder  has  after  the  dishonor.^-  ** 

See  text,  §  169. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  49  (14). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Holder  of  note  for  collection  may  give  notice  to  his  principal  or  to 
all  parties  liable.  Gleason  v.  Thayer,  87  Conn.  248,  87  Atl.  790,  Ann.  Cas. 
1915B,  1069. 

Joint  indorser  as  antecedent  party.  Williams  v.  Paintsville  Nat. 
Bank.  143  Ky.  781,  137  S.  W.  535,  Ann.  Cas.  1912D,  350. 

Inclosing  notice  of  dishonor  to  subsequent  indorser  with  postage  for 
forwarding  is  not  sufficient.  Fuller  Buggy  Co.  v.  Waldron,  112  App. 
Div.  814,  99  N.  Y.  Supp.  920. 

Indorser  of  check  notified  on  29th  of  dishonor  gave  telegraphic  no- 
tice to  defendant  on  30th,  which  was  in  time.  Jurgens  v.  Wichman,  124 
App.  Div.  531,  108  N.  Y.  Supp.  881. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Connecticut.— G\eason  v.  Thayer  (1913),  87  Conn.  248,  87  Atl.  790, 
Ann.  Cas.  1915B,  1069. 

Kentucky.— WWWams  v.  Paintsville  Nat.  Bk.  (1911),  143  Ky.  781,  137 
S.  W.  535,  Ann.  Cas.  1912D,  350. 

New  York.— BnW  v.  Jefferson  Bk.  (1913).  159  A.  D.  461.  144  N.  Y. 
Supp.  539;  Fuller  Buggv  Co.  v.  Waldron  (1907),  99  N.  Y.  Supp.  920,  112 
A.  D.  ai4;  Jurgens  v.  Wichman  (1908),  124  A.  D.  531,  108  N.  Y.  Supp. 
881. 


604  NEGOTIABLE    INSTRUMENTS,  §  108 

§  108.  Where  notice  must  be  sent.  Where  a  party  has 
added  an  address  to  his  signature,  notice  of  dishonor  must  be 
sent  to  that  address ;  but  if  he  has  not  given  such  address,  then 
the  notice  must  be  sent  as  follows: 

1.  Either  to  the  post-office  nearest  to  his  place  of  residence 
or  to  the  post-office  where  he  is  accustomed  to  receive  his  letters ; 
or 

2.  If  he  live  in  one  place,  and  has  his  place  of  business  in 
another,  notice  may  be  sent  to  either  place ;  or 

3.  If  he  is  sojourning  in  another  place,  notice  may  be  sent 
to  the  place  where  he  is  so  sojourning. 

But  where  the  notice  is  actually  received  by  the  party  within 
the  time  specified  in  this  act,  it  will  be  sufficient  though  not  sent 
in  accordance  with  the  requirements  of  this  section.*'  *' 

See  text,  §  170. 

Cross  section :     104. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Notice  is  properly  addressed  to  place  where  indorser  stated  his  resi- 
dence to  be  at  time  of  execution.  Archuleta  v.  Johnston,  53  Colo.  393, 
127  Pac.   134. 

Circumstances  which  ratify  address  placed  on  note  by  subsequent  in- 
dorser.   Lankonfsky  v.  Raymond,  217  Mass.  98.  104  N.  E.  489. 

Where  removal  shown,  but  no  date  stated,  it  is  presumed  to  be  after 
notice  given  to  place  of  residence  at  time  of  dating  note.  Mohlman  v. 
McKane,  60  App.  Div.   546,  69  N.  Y.   Supp.   1046. 

Addressing  notice  to  indorser  at  New  York  City,  New  York,  must  be 
supported  by  evidence  that  indorser  lived  there  at  same  time  or  was  so- 
journing there.     Fonseca  v.  Hartman,  84  N.  Y.  Supp.  131. 

Sufficient  diligence  on  part  of  notary  shown  where  notice  sent  to 
last  city  directory  address  where  other  address  not  obtainable.  Mc- 
Grath  v.  Fancolini.  92  Misc.  Rep.  359,  156  N.  Y.  Supp.  981. 

Notary's  certificate  of  notice  of  protest  is  presumed  to  be  the  right 
place  in  absence  of  facts  to  contrary.  Scott  v.  Brown,  240  Pa.  328,  87 
Atl.  431. 

Proof  of  mailing  notice  to  business  address  of  director  of  company 
without  proof  of  his  receiving  his  mail  there  is  insufficient.  Knight  v. 
Infantry  Hall  Auditorium  Co.,  35  R.  I.  383,  87  Atl.  165,  195. 

**  The  follovv'ing  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Colorado.— Torhtt  v.  Montague  (1912),  127  Pac.  134;  Archuleta  v. 
Johnston,  53  Colo.  393.  127  Pac.  134. 


§  109  NOTICE   OF  DISHONOR.  605 

Massachusetts.— Lankonisky  v.  Raymond  (1914),  217  Mass.  98,  104  N. 
E.  489. 

Missouri— First  Nat.  Bank  of  Grant  City  v.  Korn  (1915),  179  S.  V/. 
721;  Vogel  v.  Starr  (1908),  132  Mo.  App.  430,  112  S.  W.  27. 

New  York.— First  Nat.  Bank  v.  Gridley,  112  A.  D.  398,  98  N.  Y. 
Supp.  445;  Albany  Trust  Co.  v.  Frothingham  (1906),  50  Misc.  598,  99 
N.  Y.  Supp.  343;  Century  Bk.  of  City  of  N.  Y.  v.  Breithart  (1915),  151 
N.  Y.  Supp.  588;  Dupont  de  Nemour  Powder  Co.  v.  Rooney  (1909),  63 
Misc.  344,  117  N.  Y.  Supp.  220;  Ebling  Brewing  Co.  v.  Rheinheimer 
(1900),  32  Misc.  594,  66  N.  Y.  Supp.  458;  Fonseca  v.  Hartman  (1903), 
84  N.  Y.  Supp.  131;  In  re  Mandelbaum  (1913),  141  N.  Y.  Supp.  319.  80 
Misc.  Rep.  475;  McGrath  v.  Francolini  (1915).  92  Misc.  Rep.  359,  156  N. 
Y.  Supp.  981;  Mohlman  Co.  v.  McKane  (1901).  69  N.  Y.  Supp.  1046.  60 
A.  D.  546;  Smith  Co.  v.  America-Europe  Co.  (1911),  128  N.  Y.  Supp. 
81 ;  Hussey  v.  Sutton,  96  Misc.  Rep.  552,  160  N.  Y.  Supp.  934. 

Pennsyhania.—Scott  v.  Brown  (1913).  240  Pa.  328.  87  Atl.  431; 
Siegel  V.  Hirsch  (1904),  26  Pa.  Super.  Ct.  398. 

Rhode  Island. — Knight  v.  Infantry  Hall  Auditorium  Co.  (1913).  35 
R.  I.  383,  87  Atl.  165,  195. 

§  109.  Waiver  of  notice.  Notice  of  dishonor  may  be 
waived  either  before  the  time  of  giving  notice  has  arrived,  or 
after  the  omission  to  give  due  notice,  and  the  waiver  may  be 
express  or  implied.*'  ■^* 

See  text,   §  172. 

Cross  sections:    82-3,  64-1,  66,  119-5,  70. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act :  50 
(2)   (b). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

A  new  promise  to  pay  after  no  notice  of  dishonor  is  binding.  Hurl- 
burt  V.  Bradley,  —  Conn.  — ,  109  Atl.  171. 

Waiver  of  presentment  for  payment  dispenses  with  notice  of  dishonor. 
Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886. 

Notice  before  maturity  with  indorser's  instructions  to  make  collection 
is  not  a  waiver  of  proper  notice.  Porter  v.  Moles,  151  Iowa  279.  131  N. 
W.  23. 

Indorser's  promise  on  day  of  maturity  of  note  to  look  after  it  waived 
notice  of  dishonor.    Dillon  v.  Brion.  96  Kan.  189,  150  Pac.  553. 

Oral  promise  to  renew  note  made  after  maturity  by  accommodation 
indorser  is  not  a  waiver.  Mechanics'  and  Farmers'  Sav.  Bank  v.  Katter- 
john,  137  Ky.  427,  125  S.  W.  1071,  Ann.  Cas.  1912A.  439. 

Indorser  is  unconditionally  bound  where  note  contains  waiver  clause. 
Atkins  v.  Dixie  Fair  Co.,  135  La.  622,  65  So.  762. 

Notice  of  dishonor  waived.  Frank-Taylor-Kendrich  Co.  v.  Voisse- 
ment,  142  La.  973. 


606  NEGOTIABLE    INSTRUMENTS.  §  109 

A  waiver  of  notice  of  dishonor  may  be  implied  from  indorser's  words 
and  conduct.    Linthicum  v.  Bagby,  131  Md.  644,  102  Atl.  997. 

Indorser's  ignorance  of  fact  that  he  signed  waiver  is  insufficient  if 
indorsee  did  not  know  of  indorser's  ignorance.  First  Nat.  Bank  v.  Soltz 
(Mo.  App.),  183  S.  W.  675. 

Indorser  may  waive  his  discharge  for  failure  of  notice  by  promise  to 
pay.    Richardson  v.  Kulp,  81  N.  J.  L.  123,  78  Atl.  1062. 

Indorsement  of  renewal  note  not  a  waiver  of  notice  of  dishonor  of 
original  note.  First  Nat.  Bank  v.  Gridley,  112  App.  Div.  398,  98  N.  Y. 
Supp.  445. 

Indorser  paying  note  on  theory  note  was  due  on  June  3d  when  it  was 
due  on  May  3d  could  recover  money  paid  for  failure  of  notice.  Isaacs 
V.  Kobre,   145  N.  Y.  Supp.  919. 

Waiver  of  notice  of  extension  waives  notice  of  dishonor.  First  Nat. 
Bank  v.  Johnston,  169  N.  C.  526,  86  S.  E.  360,  L.  R.  A.  1916B,  941. 

Indorser's  promise  to  pay  after  discharge  is  a  waiver  thereof  whether 
with  or  without  knowledge  of  discharge.  Burgettstown  Nat.  Bank  v. 
Hill,  213  Pa.  456,  63  Atl.  186,  3  L.  R.  A.  (N.  S.)  1079n. 

Facts  constituting  waiver  must  be  alleged  and  proved.  Galbraith  v. 
Shepard,  43  Wash.  698,  86  Pac.  1113. 

Waiver  of  notice  of  presentment  is  not  waiver  of  presentment.  Thomp- 
son V.  Curry,  79  W.  Va.  771,  91  S.  E.  801. 

All  signing  under  printed  waiver  are  bound  thereby.  Central  Nat. 
Bank  v.  Sciotoville  Co.   (W.  Va.),  91  S.  E.  808. 

Indorser's  promise  to  pay  after  discharge  without  knowledge  of  dis- 
charge not  a  waiver.  Aebi  v.  Bank  of  Evansville,  124  Wis.  11,  102  N.  W. 
329,  68  L.  R.  A.  964,  109  A.  S.  R.  925. 

Knowledge  of  secretary  of  drawer  company  is  not  notice  to  company 
where  it  was  not  his  duty  to  notify  the  company.  In  re  Fenwick  (1902), 
1  Ch.  507. 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Co/orarfo.— Archuleta  v.  Johnston  (1906),  38  Colo.  325,  87  Pac.  1145; 
Torbert  v.  Montague,  38  Colo.  325,  87  Pac.  1145. 

Conn^cHcMf.— Hurlburt  v.  Bradley,  109  Atl.  171. 

F/onda.— Worley  v.  Johnson  (1910),  53  So.  542,  60  Fla.  294,  33  L. 
R.  A.  641 ;  Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886. 

/mnow.— Steward  v.  Soenksen  (1912),  173  111.  App.  1;  SimonoflF  v. 
Granite  City  Nat.  Bank,  279  111.  248.  116  N.  E.  636. 

/ndtatio.— Linthicum  v.   Bagby,  131   Ind.  644. 

/owfl.— Porter  v.  Moles  (1911),  151  Iowa  279,  131  N.  W.  23;  Quinn  v. 
Bane  (1917),  164  N.  W.  788. 

Kansas.— VixWon  v.  Brion,  96  Kan.  189,  ISO  Pac.  553. 

if^n/Mcifey.— Doherty  v.  First  Nat.  Bk.  (1916),  170  Ky.  810,  186  S.  W. 
937;  Mechanics  &  Farmer's  Sav.  Bk.  v.  Katterjohn  (1910),  137  Ky.  427, 
125  S  W  1071,  Ann.  Cas.  1912A,  439;  Owensboro  Sav.  Bk.  &  Tr.  Co.'s 
Receiver  v.  Haynes   (1911),  136  S.  W.  1004. 


§  110  NOTICE   OF  DISHONOR.  607 

Louisiana. — Frank  Taylor  Kendrick  Co.  v.  Voissement  (1918),  142 
La.  973,  77  So.  895 ;  Atkins  v.  Dixie  Fair  Co.,  135  La.  622,  65  So.  762. 

Maryland.— Linthicum  v.   Bagby    (1917),  131   Md.  644,  102  Atl.  997, 

Massachusetts.— Lankoisky  v.  Raymond  (1914),  217  Mass.  98,  104  N. 
E.  489;  Toole  v.  Crafts  (1907),  196  Mass.  397,  82  N.  E.  22;  Hall  v.  Crane, 
213  Mass.  326,  100  N.  E.  336;  Sweetser  v.  Jordan,  216  Mass.  350,  103  N. 
E.  905. 

Missouri.— First  Nat.  Bank  v.  Soltz  (Mo.  App.),  183  S.  "W.  675; 
Belch  V.  Roberts  (1915),  177  S.  W.  1062. 

New  Jersey.— ]ordan  v.  Reed,  77  N.  J.  L.  584,  71  .  .280;  Richard- 
son V.  Kulp,  81  N.  J.  L.  123,  78  Atl.  1062. 

New  York. — Congress  Brewing  Co.  v.  Habenicht,  82  N.  Y.  Supp.  481, 
83  A.  D.  141;  Hayward  v.  Empire  St.  Sugar  Co.  (1905),  93  N.  Y.  Supp. 
449,  105  A.  D.  21;  First  Nat.  Bank  v.  Gridley,  98  N.  Y.  Supp.  445,  112  A. 
D.  398;  O'Bannon  J.  W.  Co.  v.  Curran  (1908),  129  A.  D.  90,  113  N.  Y. 
Supp.  359;  Well  v.  Corn  Ex.  Bk.  (1909),  116  N.  Y.  Supp.  665,  63  Misc. 
300,  116  N.  Y.  Supp.  665;  Isaacs  v.  Kobre,  145  N.  Y.  Supp.  919;  First 
Nat.  Bank  v.  Baker,  148  N.  Y.  Supp.  372.  163  A.  D.  72. 

North  Carolina.— First  Nat.  Bk.  of  Henderson  v.  Johnson  (1915),  86 
S.  E.  360,  169  N.  C.  526,  L.  R.  A.  1916B,  941. 

Oregon.— UoW  v.  Roth  Co.  (1915),  77  Ore.  593,  152  Pac.  235;  Robin- 
son V.  Holmes  (1910),  57  Oreg.  5,  109  Pac.  754;  Clark  v.  Sallaska  (1918). 
174  Pac.  505. 

Pennsylvania.— In  re  Aldred's  Estate  (1911),  229  Pa.  627;  Burgetts- 
town  Nat.  Bk.  v.  Nil!  (1906),  213  Pa.  456,  63  Atl.  186.  3  L.  R.  A.  (N.  S.) 
1079n,  110  Am.  St.  Rep.  554. 

FtV^imo.— Security  Loan  &  Trust  Co.  v.  Fields  (1910),  110  Va.  827, 
67  S.  E.  342. 

Washin^on.—GsLlhraith.  v.  Shepard  (1906),  43  Wash.  698,  86  Pac. 
1113;  Gleeson  v.  Lichty,  62  Wash.  656,  114  Pac.  518. 

West  Virginia.— Central  Nat.  Bank  v.  Sciotoville  Co.  (W.  Va.),  91 
S.  E.  808;  Thompson  v.  Curry  (1917),  79  W.  Va.  771,  91  S.  E.  801.* 

Wisco7tsin.—Aehi  v.  Bank  of  Evansville,  124  Wis.  73,  102  N.  W. 
329,  68  L.  R.  A.  964,  109  Am.  St.  Rep.  925. 

§110.     Whom  affected  by  waiver.     Where  the  waiver  is 

embodied  in  the  instrument  itself,  it  is  binding  upon  all  parties ; 
but  where  it  is  written  above  the  signature  of  an  indorser,  it 
binds  him  only.*'  ** 

See  text,  §  179. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Indorsers  and  accommodation  indorsers  are  bound  by  clause  for 
waiver  in  note  as  well  as  maker.  Owensboro  Savings  Bank  v.  Haynes, 
143  Ky.  534,  136  S.  W.  1004. 


608  NEGOTIABLE    INSTRUMENTS.  §111 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Kentucky.— OwenshoTO  Sav.  Bk.  &  Tr.  Co.'s  Receiver  v.  Haynes 
(1911),  143  Ky.  534,  136  S.  W.  1004;  Atkinson  v.  Skidmore  (1913),  153 
S.  W.  456. 

Oregon.— Oark  v.  Sallaska  (1918),  174  Pac.  505. 
Pennsylvania.— Burgettstov/n  Nat.  Bk.  v.  Nill   (1906),  213  Pa.  456. 
West   Virginia.— Cenirdil   Nat.   Bk.   v.   Sciotoville   Milling  Co.    (1917), 
91  S.  E.  808. 

§  111.  Waiver  of  protest.  A  waiver  of  protest,  whether 
in  the  case  of  a  foreign  bill  of  exchange  or  other  negotiable  in- 
strument, is  deemed  to  be  a  waiver  not  only  of  a  formal  protest, 
but  also  of  presentment  and  notice  of  dishonor.*-  *■ 

See  text,  §  179. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

It  is  not  a  conclusion  of  law  to  allege  that  defendant  "waived  demand, 
protest  and  notice  of  demand,  nonpayment  and  protest."  Williams  v. 
Peninsular  Grocery  Co.   (Fla.),  75  So.  517. 

Waiver  of  protest  written  on  face  of  note  before  indorsed  binds  in- 
dorser.  Frank-Taylor-Kendrick  Co.  v.  Voissement,  142  La.  973,  77  So. 
895. 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Florida. — Williams  v.  Peninsular  Grocery  Co.,  75  So.  517. 

Idaho.— Bk.  of  Montpelier  v.  Montpelier  Lumber  Co.  (1909),  16  Idaho 
730,  102  Pac.  685. 

lUinois.—Simonofi  v.  Granite  City  Nat.  Bank,  279  111.  248,  116  N.  E. 
636. 

Kentucky. — Owensboro  Sav.  Bk.  &  Tr.  Co.'s  Receiver  v.  Haynes 
(1911),  136  S.  W.  1004;  Atkinson  v.  Skidmore  (1913),  152  Ky.  413,  153 
S.  W.  456. 

Louisiana.— Wisdom  &  Levy  v.  Bille  (1908),  120  La.  699,  45  So.  554; 
Frank  Taylor  Kendrick  Co.  v.  Voissement  (1918),  142  La.  973,  77  So.  895. 

North  Carolina. — First  Nat.  Bk.  of  Henderson  v.  Johnson  (1915),  86 
S.  E.  360. 

Tennessee.— VJaterhouse  v.  Sterchi  Bros.   (1918),  201   S.  W.  150. 

T^^raj.— Barger  v.  Brubaker   (1916),   187  S.  W.   1025. 


§§  112-113  NOTICE   OF   DISHONOR.  609 

§  112.  When  notice  is  dispensed  with.  Notice  of  dis- 
honor is  dispensed  with  when,  after  the  exercise  of  reasonable 
diligence,  it  can  not  be  given  to  or  does  not  reach  the  parties 
sought  to  be  charged.*'  ** 

See  text,  §  172. 

Cross  sections  :     108,  25. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  50 
(2)    (a). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Reasonable  diligence  is  question  for  jury.  Brewster  v.  Schrader,  26 
Misc.  Rep.  480,  57  N.  Y.  Supp.  606. 

Undisputed  facts  present  question  of  law  as  to  reasonable  diligence. 
Press  V.  Williams,  48  App.  Div.  188,  62  N.  Y.  Supp.  986. 

Inquiry  only  at  place  where  indorser  formerly  worked  not  sufficient. 
Silver  v.  Loucheim,  84  Misc.  Rep.  234,  147  N.  Y.  Supp.  29. 

Facts  which  do  not  show  reasonable  diligence  of  notary.  Mechanic 
V.  Elgin  Iron  Works,  98  Misc.  Rep.  620,  163  N.  Y.  Supp.  97. 

**The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Nczi)  York.—RttA  v.  Speer.  94  N.  Y.  Supp.  1007,  107  App.  Div.  144; 
Howard  v.  Van  Gieson  (1900),  56  A.  D.  217;  University  Press  v.  Wil- 
liams, 62  N.  Y.  Supp.  986,  48  A.  D.  188;  Mohlman  v.  McKane,  60  A.  D. 
546,  69  N.  Y.  Supp.  1046;  Brewster  v.  Shrader,  57  N.  Y.  Supp.  606,  26 
Misc.  Rep.  480;  Fonseca  v.  Hartman  (1903),  84  N.  Y.  Supp.  131;  Siegel 
V,  Dubinsky,  107  N.  Y.  Supp.  678,  56  Misc.  Rep.  681 :  Silver  v.  Locheim 
(1914),  147  N.  Y.  Supp.  29,  84  Misc.  Rep.  234;  Mechanic  v.  Elgin  Iron 
Works  (1917),  163  N.  Y.  Supp.  97,  98  Misc.  Rep.  620;  McGrath  v.  Fran- 
colini.  156  N.  Y.  Supp.  981,  92  Misc.  Rep.  359. 

§  113.  Delay  in  giving  notice  of  dishonor;  how  excused. 
Delay  in  giving  notice  is  excused  when  the  delay  is  caused 
by  circumstances  beyond  the  control  of  the  holder  and  not 
imputable  to  his  default,  misconduct  or  negligence.  When 
the  cause  of  delay  ceases  to  operate,  notice  must  be  given 
with  reasonable  diligence.*'  *" 

See  text,   §  173. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  50   (1). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Failure  to  give  notice  where  knowledge  of  address  where  indorssr 
may  be  found  is  obtained  before  suit,  Studdy  v.  Beesty.  60  L.  T.  Rep. 
647. 


610  NEGOTIABLE    INSTRUMENTS.  §  114 

**The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

New  For^.— University  Press  v.  Williams  (1900),  48  A.  D.  188;  How- 
ard V.  Van  Gieson  (1900),  56  A.  D.  217. 

Oregon.— Yrxat  v.  Warner   (1911),  60  Oreg.  7,  118  Pac.  173. 
England.— Si\.\d<^y  v.  Beetsy,  60  L.  T.  Rep.  647. 

§  114.  When  notice  need  not  be  given  to  drawer.  Notice 
of  dishonor  is  not  required  to  be  given  to  the  drawer  in  either 
of  the  following  cases : 

1.  Where  the  drawer  and  drawee  are  the  same  person; 

2.  Where  the  drawee  is  a  fictitious  person  or  a  person  not 
having  capacity  to  contract ; 

3.  Where  the  drawer  is  the  person  to  whom  the  instrument  is 
presented  for  payment : 

4.  Where  the  drawer  has  no  right  to  expect  or  require  that 
the  drawee  or  acceptor  will  honor  the  instrument ; 

5.  Where  the  drawer  has   countermanded  payment.*'  •*' 
See  text,   §  172. 

Cross   section :     89. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  50  (2) 
(c);  50  (2)    (c)    (4). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Plaintiff  not  entitled  to  notice  of  dishonor  when  he  made  check  pay- 
able at  bank  in  which  he  had  no  funds.  Demateis  v.  Vezee,  —  Cal.  App. 
—    193  Pac.  793. 

Failure  to  give  notice  of  dishonor  Torgerson  v.  Ohnstad,  —  Minn. 
— .   182   N.  W.  724. 

Co-maker  of  note  not  entitled  to  notice  of  dishonor.  Boand  v.  Stew- 
art (Mo.  App.),  18S  S.  W.  317. 

Where  payee  took  judgment  against  maker  on  note  and  later  trans- 
ferred the  note  indorsee  can  sue  payee  as  indcr:;er  without  demand  on 
maker.     Plawkins  v.  Wiest,  167  IMo.  App.  439,  151  S.  W.  789. 

Burden  is  on  holder  or  one  claiming  under  him  to  excuse  failure  to 
give  notice.     Cassel  v.  Regierer,  114  N.  Y.  Supp.  601. 

Pleading  failing  to  allege  notice  of  dishonor.  Adler  v.  Levinson,  65 
Misc.  Rep.  514,  120  N,  Y,  Supp.  67. 


§115  NOTICE   OF   DISHONOR.  611 

Allegations  as  to  countermanded  payment  is  sufficiently  alleged  by 
setting  forth  check  with  words  "Pyt.  Stopped"  indorsed  on  face.  Na- 
tional Copper  Bank  v.  Davis  Co.  Bank,  47  Utah,  236,  152  Pac.  1180. 

^^  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Arkansas.— Gihhs  v.   Hopper   (1913),  160  S.  W.  879. 

California. — Demateis  v.  Vezee,   193  Pac.  793. 

Florida.— Worley  v.  Johnson  (1910),  53  So.  542. 

Massachusetts.— Leonard  v.  Draper  (1905),  187  Mass.  536,  73  N.  E. 
644. 

Minnesota. — Forgerson  v.  Ohnstad,  182  N.  W.  724. 

Missouri.— First  Nat.  Bank  of  Grant  City  v.  Korn  (1915),  179  S.  W. 
721;  Boand  v.  Stewart  (1916),  188  S.  W.  317;  Hawkins  v.  Weist,  167  Mo. 
App.  439,  151  S.  W.  789. 

Neiv  Jersey.— ]  or  don  v.  Reed   (1908),  77  N.  J.  L.  584,  71  Atl.  280. 

New  For/fe.— Trader's  Nat.  Bk.  v.  Jones  (1905),  104  A.  D.  435.  93  N. 
Y.  Supp.  768;  Scanlon  v.  Wallach  (1907),  102  N.  Y.  Supp.  1090,  53  Misc. 
104;  Cassel  v.  Regierer  (1908),  114  N.  Y.  Supp.  601;  Adler  v.  Levinson 
(1909),  120  N.  Y.  Supp.  67,  65  Misc.  Rep.  514. 

Rhode  Island.— Knight  v.  Infantry  Hall  Auditorium  Co.  (1913),  87 
Atl.  195. 

[/fa/?.— National  Copper  Bank  v.  Davis  Co.  Bank,  47  Utah  236,  152 
Pac.  1180. 

§  115.  When  notice  need  not  be  given  to  indorser.  Notice 
of  dishonor  is  not  required  to  be  given  to  an  indorser  in  either 
of  the  following  cases : 

1.  Where  the  drawee  is  a  fictitious  person  or  a  person  not 
having  capacity  to  contract,  and  the  indorser  was  aware  of  the 
fact  at  the  time  he  indorsed  the  instrument ; 

2.  Where  the  indorser  is  the  person  to  whom  the  instrument 
is  presented  for  payment ; 

3.  Where  the  i"r»strument  was  made  or  accepted  for  his  ac- 
commodation.** ** 

See  text,  §  172. 

Cross   sections :     64-1,   82-3. 

Corresponding  provisions  of  English  Bills  of  Exchange  Act*  50 
(2)    (d). 


612  NEGOTIABLE    INSTRUMENTS.  §  115 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Defect  in  complaint  as  to  allegations  of  waiver  or  presentment  and 
notice  cured  by  answer  and  reply  after  demurrer.  De  La  Vergne  v. 
Globe  Printing  Co.,  27  Colo.  App.  308,  148  Pac.  923. 

When  neither  receipt  of  property  nor  admission  that  indorser  was 
responsible  for  the  note  waives  presentment  and  notice.  Jordan  v.  Reed, 
n  N.  J.  L.  584,  n  Atl.  280. 

Maker's  bankruptcy  does  not  make  notice  to  indorser  unnecessary. 
In  re  Mandelbaum,  80  Misc.  Rep.  475,  141  N.  Y.  Supp.  319. 

Where  anomalous  indorser  is  secured  by  deed  of  trust  of  maker's 
property  he  can  be  charged  without  prior  demand  on  the  maker.  In  re 
Aldrcd's  Estate,  229  Pa.  627,  79  Atl.  141. 

Indorsement  before  delivery  by  one  stockholder  of  the  note  of  an- 
other stockholder  for  company  funds  is  for  benefit  of  indorser  and 
needs  no  notice  of  dishonor.  Mercantile  Bank  v.  Busby,  120  Tenn.  652, 
113  S.  W.  390. 

Notice  of  dishonor  must  be  given  to  stockholder  who  indorses  note 
of  another  stockholder  before  delivery  even  if  funds  are  for  company 
use.    Nolan  v.  Wilcox  Co.,  137  Tenn.  667,  195  S.  W.  581. 

Who  entitled  to  notice  of  dishonor.  Fosdick  v.  Government  Mineral 
Springs  Hotel  Co.,  —  Wash.  — ,  196  Pac.  652. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Colorado. — De  La  Vergne  v.  Globe  Printing  Co.,  27  Colo.  App.  308, 
148  Pac.  923. 

Connecticut— FositT  v.  Balch   (1907),  79  Conn.  449. 

Illinois. — First  Nat.  Bk.  of  Lincoln  v.  Sandmeyer  (1911),  164  111.  App. 
98. 

Maryland.— Btrgtn  v.  Trimble,  101   Atl.  137. 

Massachusetts. — Lankofsky  v.  Raymond  (1914),  104  N.  E.  489;  Sweet- 
ser  V.  Jordan  (1914),  216  Mass.  350. 

Missouri. — Hawkins  v.  Wiest  (1912),  167  Mo.  App.  439;  Overland 
Auto  Co.  v.  Winters  (1915),  180  S.  W.  561;  Westinghouse  Electric,  Etc., 
Co.  v.  Hodge,  181  Mo.  App.  232,  167  S.  W.  1186. 

New  Jersey.— Jordan  v.  Reed  (1908),  77  N.  J.  L.  584,  71  Atl.  280. 

New  York.— WiWiams  v.  Brown  (1900),  53  A.  D.  486;  Trader's  Nat. 
Bk.  v.  Jones  (1905),  104  A.  D.  433,  93  N.  Y.  Supp.  768;  In  re  Mandel- 
baum, 80  Misc.  Rep.  475,  141  N.  Y.  Supp.  319. 

Pennsylvania.— AUred's  Estate  (1911),  229  Pa.  627,  79  Atl.  141. 

Tennessee. — Mercantile  Bank  of  Memphis  v.  Busby  (1908),  120  Tenn. 
652,  113  S.  W.  390;  Nolan  v.  H.  E.  Wilcox  Motor  Co.  (1917),  137  Tenn. 
667,  195  S.  W.  581. 

United  States.— In  re  Swift  (1901),  106  Fed.  65;  McDonald  v.  Luck- 
cnback  (1909),  170  Fed.  434,  95  C.  C.  A.  604. 


§§  116-118  NOTICE    OF   DISHONOR.  613 

Washington. — Fosdick  v.  Government  Mineral  Springs  Hotel  Co.,  196 
Pac.  652. 

§  116.  Notice  of  non-pa)mient  where  acceptance  refused. 
Where  due  notice  of  dishonor  by  non-acceptance  has  been  given, 
notice  of  a  subsequent  dishonor  by  non-payment  is  not  necessary, 
unless  in  the  meantime  the  instrument  has  been  accepted.*"  *' 

See  text,  §  174. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  Sec. 
48  (2). 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

il/ar:v/a«(f.— Schefifenacker  v.  Hoopes   (1910),  113  Md.  111. 

New  York— Mt.  Morris  Bk.  v.  Twenty-Third  Ward  Bk.  (1902),  172 
N.  E.  244. 

Pennsylvania. — Colonial  Tr.  Co.  v.  Nat.  Bk.  of  Western  Pa.  (1912), 
50  Pa.  Super.  510. 

§  117.     Effect  of  omission  to  give  notice  of  non-acceptance. 

An  omission  to  give  notice  of  dishonor  by  non-acceptance  does 
not  prejudice  the  rights  of  a  holder  in  due  course  subsequent  to 
the  omission.-*" 

See  text,  §  174. 

The  Wisconsin  act  (sec.  1678-47)  adds:  "But  this  shall  not  be  con- 
strued to  revive  any  liability  discharged  by  such  omission." 

Corresponding  provisions  of  English  Bills  of  Exchange  Act :  Sec. 
48   (1). 

*"  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Maryland. — Scheflfenacker  v.  Hoopes   (1910),   113   Md.  111. 

Missouri.— Wmg  v.  Union  Cent.  Life  Ins.  Co.   (1914),  168  S.  W.  917. 

New  York.— Mt  Morris  Bk.  v.  Twenty-Third  Ward  Bk.  (1902),  172 
N.  Y.  244. 

§  118.  When  protest  need  not  be  made;  when  must  be 
made.  Where  any  negotiable  instrument  has  been  dishonored 
it  may  be  protested  for  non-acceptance  or  non-payment,  as  the 
case  may  be ;  but  protest  is  not  required,  except  in  the  case  of 
foreign  bills  of  exchange.'-  ** 

See  text,  §  178. 

Cross  sections:     152,  160,  132,  137,  129. 


614  NEGOTIABLE    INSTRUMENTS.  §  118 

Corresponding  provisions  of  English  Bills  of  Exchange  Act:  Sec 
51  (1)   (2);  89  (4). 

In  the  Vermont  act  the  following  words  are  added  to  the  last  of  this 
section:  "But  the  provisions  of  this  section  shall  not  be  held  to  dispense 
with  demand  and  notice  of  dishonor  as  provided  by  sections  71  and  90." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

The  fact  of  protest  is  not  conclusive  upon  the  dishonor  and  due  no- 
tice to  indorser  as  other  evidence  is  competent  and  presents  a  jury  ques- 
tion.   Demelman  v.  Brazier,  198  Mass.  458,  84  N.  E.  856. 

Where  state  statutes  make  certificate  of  notary  prima  facie  evidence 
protest  is  often  made  for  its  convenience  in  proving  facts.  Eaves  v. 
Keeton   (Mo.  App.),  193  S.  W.  629. 

Instruments  protested  for  convenience  of  proof  in  those  states  where 
certificate  of  protest  is  prima  facie  evidence  of  facts.  Scott  v.  Brown, 
240  Pa.  328,  87  Atl.  431. 

Protest  not  needed.  Fosdick  v.  Government  Mineral  Springs  Hotel 
Co.,  —  Wash.  — ,   196  Pac.   652. 

**The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

///jMow.— Sublette  Ex.  Bk.  v.  Fitzgerald  (1912),  168  111.  App.  240. 

Maryland.—Scheficnacker  v.  Hoopes   (1910),  113  Md.  111. 

Massachusetts. — Commercial  Nat.  Bk.  v.  Clarke  (1902),  180  Mass. 
249;  Demelman  v.  Brazier  (1907),  193  Mass.  588,  79  N.  E.  812;  Demel- 
man V.  Brazier  (1908),  198  Mass.  458,  84  N.  E.  856. 

Missouri.— Eaves  v.  Keeton   (Alo.  App.),  193  S.  W.  629. 

New  For^.— Sherman  v.  Eckey,  110  N.  Y.  Supp.  256,  56  Misc.  Rep. 
216;  Mt.  Morris  Bk.  v.  Twenty-Third  Ward  Bk.  (1902),  172  N. 
Y.  244;  Congress  Brewmg  Co.  v.  Habenicht  (1903),  83  A.  D.  141, 
82  N.  Y.  Supp.  481;  Howard  v  Bk.  of  the  Metropolis  (1906),  115  A.  D. 
326;  McBride  v.  Illinois  Nat.  Bk.  (1910),  138  A.  D.  339;  Nooman  & 
Price  Co.  V.  E.  Kwanok  Realty  Co.  (1910),  123  N.  Y.  Supp.  915;  Gens 
v.  Hamilton  (1910),  123  N.  Y.  Misc.  981;  Badt  v.  Miller  (1912),  135  N. 
Y.  Supp.  13,  150  A.  D.  920;  Amsinck  v.  Rogers,  189  N.  Y.  252,  82  N.  E. 
134,  12  L.  R.  A.  (N.  S.)  875,  121  Am.  St.  Rep.  858. 

Or^firon.— Robinson  v.  Holmes   (1910),  57  Oreg.  5,  109  Pac.  754. 

Pennsylvania.—Scott.  v.  Brown,  240  Pa.  328,  87  Atl.  431 ;  Wisner  v. 
First  Nat.  Bk.  of  GalHtzin  (1906),  220  Pa.  21,  68  Atl.  955,  17  L.  R.  A. 
(N.  S.)  1266;  Whitman  v.  First  Nat.  Bk.  of  Canton  (1907),  35  Pa.  Su- 
per. Ct.  125;   Friedman  v.   Maltingsky    (1918),   103  Atl.   731. 

Rhode  Island.— Kn\ght  v.  Infantry  Hall  Auditorium  Co.  (1913)  87 
Atl.  195. 

Tennessee.— Am.  Nat.  Bk.  v  Nat.  Fertilizer  Co.  (1911),  125  Tenn 
328,  143  S.  W.  597. 

Washington. — Fosdick  v.  Government  Mineral  Springs  Hotel  Co., 
196  Pac  652, 


ARTICLE  VIII. 
DISCHARGE  OF  NEGOTIABLE  INSTRUMENTS. 


§  119.  Instrument;       how        dis- 
charged. 

120.  When      persons     secondar- 

ily   liable    on,    discharged. 

121.  Right    of    party    who    dis- 

charges   instrument. 

122.  Renunciation    by   holder. 


§  123.  Cancellation;     unintention- 
effect  of. 

124.  Alteration    of    instrument; 

effect  of. 

125.  What   constitutes    a   mate- 

rial alteration. 


Sections  119  to  125  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  law  in   the  various  states 

and  territories,  beginning  on  page  360. 

§119.     Instrument;  how  discharged.    A  negotiable  instru- 
ment is  discharged : 

1.  By  payment  in  due  course  by  or  on  behalf  of  the  principal 
debtor ; 

2.  By  payment  in  due  course  by  the  party  accommodated, 
where  the  instrument  is  made  or  accepted  for  accommodation ; 

3.  By  the  intentional  cancellation  thereof  by  the  holder ; 

4.  By  any  other  act  which  will  discharge  a  simple  contract 
for  the  payment  of  money ; 

5.  When  the  principal  debtor  becomes  the  holder  of  the  in- 
strument at  or  after  maturity  in  his  own  right.*'  ** 

See  text,  §§  181,  182,  184,  189. 

Cross  sections :     88,  29,  123,  50,  123.  121,  120-6,  66,  109. 

The  Illinois  act  omits  subdivision  four. 

Corresponding  provision   of    English    Bills   of  Exchange   Act:      Sees. 
59  (1),  59  (3),  63  (1),  (2).  61. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

615 


616  NEGOTIABLE    INSTRUMENTS.  §  119 

Maker  paying  note  with  check  of  his  wife  and  having  note  transferred 
to  her  held  a  discharge  as  to  co-makers.  Hagin  v.  Shoaf,  9  Ala.  App. 
300,  63  So.  764. 

Plaintiff  knowing  the  payee  to  be  the  principal  debtor  failed  to  apply 
his  deposit  which  was  sufficient  to  pay  the  notes  and  thereby  released  the 
accommodation  maker.  Tatum  v.  Commercial  Bank  &  Trust  Co.,  193 
Ala.   120,  69  So.  508. 

Note  transferred  to  maker  as  collateral  of  another  debt  is  not  dis- 
charged.    Owings  Lumber  Co.  v.  Marlowe   (Ala.),  76  So.  926. 

M.  made  a  note  which  was  sent  to  A  bank  for  collection  and  drew  a 
draft  on  plaintiff  and  placed  it  in  A  bank  for  collection  and  application 
on  note.  It  was  not  so  applied.  Upon  discovery  of  fraud  plaintiff  en- 
titled to  moneys  misapplied.  Oklahoma  State  Bank  v.  Bank  of  Central 
Arkansas  (Ark.),  179  S.  W.  509. 

When  co-maker  is  not  discharged  as  surety.  Fox  v.  Terre  Haute 
Nat.  Bank,  —  Ind.  App.  — ,  129  N.  E.  33. 

Maker  who  has  agent  purchase  note  from  holder  for  the  maker  who 
reimburses  agent  is  owner  in  own  right  regardless  of  holder's  belief  as 
to  agent's  purchase.  Sigler  v.  Sigler,  98  Kan.  524,  128  Pac.  864,  L.  R.  A. 
1917A,  725. 

Maker  acquiring  note  as  agent  of  another  does  not  affect  a  discharge. 
People's  State  Bank  v.  Dryden,  91  Kan.  216,  137  Pac.  928. 

Note  and  mortgage  assigned  to  one  of  joint  makers  and  by  him  as- 
signed without  recourse  and  the  assignee  assuming  and  agreeing  to  pay 
the  note  as  between  the  makers  thereof,  relieved  the  makers  of  personal 
liability  to  subsequent  holder.  Security  State  Bank  v.  Clarke,  99  Kan. 
18,  160  Pac.  1149. 

Article  2203  of  civil  code  as  a  discharge  of  note  reading  "I  promise 
to  pay  for  machinery  sold  to  both"  releasing  makers  liable  in  solido  by 
written  release  to  one  by  holder.  J.  I.  Case  Threshing  Machine  Co.  v. 
Budger.  133  La.  754,  63  So.  319. 

Notes  of  town  issued  by  treasurer  to  cover  default  were  taken  up 
by  giving  renewal  notes  of  town  issued  without  authority  held  not  a 
discharge  of  original  notes.  Bass  v.  Wellesley,  192  Mass.  526,  78  N.  E. 
543. 

Defendant  drew  check  which  was  indorsed  and  presented  through 
clearing  house  to  drawee  bank  after  defendant  stopped  payment,  but 
teller  paid  it  by  mistake.  Defendant  withdrew  his  funds  from  bank. 
Held  that  the  teller  to  whom  check  assigned  could  recover  from  defend- 
ant.   Usher  v.  Tuckef  Co.,  217  Mass.  441,  105  N.  E.  360. 

Plea  that  one  maker  was  known  to  payee  to  be  a  surety  and  that  an 
extension  of  time  discharged  him  is  bad.  Vanderford  v.  Farmers'  Bank, 
105  Md.  164.  66  Atl.  47,  10  L.  R.  A.  (N.  S.)  129. 

Renunciation  must  be  in  writing  unless  instrument  delivered  to  party 
primarily  liable  thereon.  Whitcomb  v.  National  Exchange  Bank,  123  Md 
612.  91  Atl.  689. 

Parol  evidence  admissible  to  show  plaintiflf  the  accommodated  party 
in  his  suit  against  accommodation  maker.  Lambertson  v.  Love,  165  Mich 
460.  130  N.  W.  1126. 

Holder's  intentional  distruction  of  note  held  a  discharge.  Montgom- 
ery V.  Schwald.  177  Mo.  App.  75,  166  S.  W.  831. 

Where  relation  of  suretyship  was  created  by  independent  agreements 
the  makers  were  discharged  by  the  surety's  extension  of  time.  Citizens* 
Bank  of  Senatti  v.  Douglas,  178  Mo.  App.  664,  161  S.  W.  601. 


§  119  DISCHARGE    OF    INSTRUMENTS.  617 

Accommodating  indorser  not  discharged  by  a  binding  agreement  of 
extension  of  time  to  the  maker  without  the  consent  of  the  indorser. 
Night  &  Day  Bank  v.  Rosenbaum,  191  Mo.  App.  559,  177  S.  W.  693. 

Defendant  surety  maker  assured  by  holder  that  he  had  funds  of 
maker  sufficient  to  cover  indebtedness  was  discharged  by  holder  ex- 
tending time  of  payment.  Bank  of  Neelyville  v.  Lee,  193  Mo.  App.  537, 
182  S.  W.   1016. 

Payment  of  note  by  maker  to  original   payee   without  knowledge   of 
transfer  after  maturity.     Steele  v.  Bradley  (Mo.  App.),  186  S.  W.  1171. 
When  accommodation  maker  not  released  as  surety.     Merchants  Natl. 
Bank  of  Billings  v.  Smith,  —  Mont.  — ,  196  Pac.  523. 

Whether  party  primarily  liable,  if  known  to  the  holder  to  be  a  surety 
onlv  may  be  discharged  by  extension  of  time.  National  Citizens  Bank 
V.  Toplitz,  178  N.  Y.  464. 

Where  drawee  bank  returned  check  to  clearing  house  because  drawer 
had  failed,  and  a  refund  made  by  collecting  bank  to  clearing  house  the 
check  was  not  paid  so  as  to  discharge  indorser.  Columbia-Knickerbocker 
Co.  V.  Miller,  215  N.  Y.  191,  109  N.  E.  179. 

Maker  fraudulently  used  plaintiff's  money  to  pay  the  payee  of  note, 
but  as  between  plaintiff  and  the  maker  and  indorsers  the  plaintiff  was 
entitled  to  be  subrogated  to  holder's  rights.  Pittsburg-Westmoreland 
Coal  Co.  V.  Kerr,  220  N.  Y.  137,  114  N.  E.  465. 

Mortgage  given  and  accepted  as  collateral  or  payment  to  indorsee  by 
payee  is  not  a  discharge  of  note.  Twelfth  Ward  Bank  v.  Brooks,  63 
App.  Div.  220,  71  N.  Y.  Supp.  388. 

Demand  note  discharged  by  surrender  of  holder  upon  maker's  part 
payment  and  promise  of  balance  later.  Schwartzman  v.  Post,  84  N.  Y. 
Supp.  922,  94  App.  Div.  474,  87  N.  Y.  Supp.  872. 

Indorser  discharged  by  surrender  of  note  to  maker  in  exchange  for 
renewal  note,  even  though  renewal  note  altered  by  maker.  First  Nat. 
Bank  v.  Gridley,  112  N.  Y.  App.  Div.  398.  98  N.  Y.  Supp.  445. 

Error  to  direct  verdict  where  evidence  as  to  purpose  for  which  mort- 
gage grven  is  in  dispute.  Royal  Bank  v.  Goldschmidt,  51  Misc.  Rep. 
622,  101  N.  Y.  Supp.  101. 

Receipt  from  an  insolvent  corporation  of  a  preferential  payment  of 
an  indorsed  note,  contrary  to  the  statute,  is  no  payment  and  does  not 
release  indorser.  Perry  v.  Van  Norden  Trust  Co.,  118  App.  Div.  228, 
103  N.  Y.  Supp.  543. 

Defendant  requested  the  plaintiff,  a  second  indorser,  to  take  up  note. 
Plaintiff  paid  the  holder,  but  defendant  got  possession  of  note,  but  it 
was  not  discharged  as  against  plaintiff.  Korkemas  v.  Macksoud,  131 
App.  Div.  728,  116  N.  Y.  Supp.  85. 

Bookkeeper's  failure  to  apply  a  check  to  payment  of  note,  but  applied 
it  to  open  account  did  not  affect  the  defense  of  payment.  Rosenberg  v. 
Segall.  159  N.  Y.   Supp.  152. 

Bank's  accepting  check  of  deposit  in  payment  of  another's  note  and 
stamping  both  paid,  charging  depositor's  account  and  giving  him  the 
note,  is  payment.  Broad  &  Market  Nat.  Bank  v.  N.  Y.  &  E.  Realty 
Co.,  102  Misc.  Rep.  82,  168  N.  Y.  Supp.  149. 

Were  notes  torn  with  intent  to  cancel  is  a  jury  question.  Greene  v. 
Poz,  182  N.  Y.  Supp.  900. 

Defendant  has  burden  of  proving  payment.  Guano  Co.  v.  Marks,  135 
N.  C.  59.  47  S.  E.  127. 

Burden  of  proof  as  to  payment  is  on  defendant.  Swan  v.  Carawan, 
168  N.  C.  472,  84  S.  E.  699. 


618  NEGOTIABLE   INSTRUMENTS.  §  119 

An  assignment  of  note  to  a  third  person  by  one  of  surety  makers  it 
evidence  of  intent  not  to  discliarge  the  note  but  to  keep  it  alive.  Pen- 
dergraft  v.  Phillips    (OklaJ,  156  Pac.  1189. 

Other  statutes  as  enlarging  grounds  of  discharge  of  surety.  Na- 
tional Bank  of  Poteau  v.  Lowrey   (Okla.),  157  Pac.  103. 

Maker  not  discharged  by  holder's  acceptance  of  new  note  which 
proves  invalid.     Wade  v.  Hall  (Okla.),  166  Pac.  720. 

Accommodation  makers  not  discharged.  Oklahoma  State  Bank  of 
Sayer  v.  Seaton,  —  Okla.  — ,  170  Pac.  477. 

Accommodation  maker  who  wrote  "surety"  after  his  name  is  not 
discharged  by  an  extension  of  time  to  his  co-makers  without  his  con- 
sent. Cellers  v.  Meachem,  49  Ore.  186,  89  Pac.  426,  10  L.  R.  A.  (N.  S.) 
133,  13  Ann.  Cas.  997. 

Accommodation  indorser's  discharge.  Farmers  State  Bank  of  North 
Powder  v,  Forsstrom,  —  Ore.  — ,  173  Pac.  935. 

Effect  of  payment  without  agreement  of  correction  and  refunding  on 
a  suit  for  reimbursement  by  plaintiff  bank  who  received  payment.  Mo- 
nongahela  Nat.  Bank  v.  First  Nat.  Bank,  226  Pa.  270,  75  Atl.  359. 

Plaintiff  bank  received  payment  of  check  from  drawee  bank  under  an 
agreement  of  correction  at  any  time  during  day,  defendant  could  not 
plead  discharge  by  payment  where  plaintiff  sued  for  reimbursement. 
Seaboard  Nat.  Bank  v.  Central  Trust  &  Savings  Bank,  253  Pa.  412,  98 
Atl.  607. 

Stay  of  judgment  as  discharge  of  surety  on  note.  Graham  v.  Shep- 
hard,  136  Tenn.  418,  189  S.  W.  867. 

Plaintiff  and  defendant  joint  and  several  makers  of  note  for  defend- 
ant's accommodation.  Plaintiff  paid  note  at  maturity  and  wa  sentitled 
to  recover  from  defendant.     Pease  v.  Syler,  78  Wash.  24,  138  Pac.  310. 

Debtors  become  owners  of  note  before  maturity  note  is  not  discharged. 
State  Finance  Co.  v.  Moore,  —  Wash.  — ,  174  Pac.  22. 

Payment  to  prior  holder  as  a  discharge  of  note  against  holder  in  due 
course  before  maturitv.  Manchester  v.  Parsons,  75  W.  Va.  793,  84  S. 
W.  885. 

Payment  of  accommodation  note,  after  negotiation,  at  maturity  by 
accommodated  party  discharges  the  note.  Comstock  v.  Buckley,  141  Wis. 
228,  124  N.  W.  414. 

Note  not  paid  by  sale  of  mortgage  to  one  party  and  indorsement  of 
note  to  another.     Glasscock  v.  Balls,  24  Q.  B.  D.  13. 

Maker  gave  note  to  payee  who  indorsed  it  against  his  agreement  and 
paid  the  payee  who  obtained  note  from  indorsee  by  fraud  and  gave  it  to 
maker,  held  not  discharged.     Nash  v.  De  Freville  (1900),  2  Q.  B.  72. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Alabama.— Uag'm  v.  Shoaf  (1913),  63  So.  764,  9  Ala.  App.  300;  Mont- 
gomery Bk.  &  Tr.  Co.  V.  Jackson  (1915),  67  So.  235;  Sherrill  v.  Merch. 
&  Mech.  Tr.  &  Sav.  Bk.  (1916),  70  So.  723;  Tatum  v.  Commercial  Bank 
&  Trust  Co.,  193  Ala.  120,  69  So.  508;  Owings  Lumber  Co.  v.  Marlowe 
(Ala.),  76  So.  926. 

Arisona.—Cov/an  v.  Ramsay  (1914),  15  Ariz.  533,  140  Pac.  501;  Big 
Eye  Min.  &  Mill  Co.  v.  Livingston  (1918),  171  Pac.  989. 

Arkansas. — Alammoth  Vein  Coal  Co.  v.  Bishop  (1914),  168  S.  W. 
1086;  Oklahoma  State  Bank  v.  Central  Arkansas  (Ark.),  179  S.  W.  509; 


§  119  DISCHARGE    OF    INSTRUMENTS.  619 

Calhoun  v.  Sharkey  (1915),  180  S.  W.  216;  Tancred  v.  First  Nat.  Bk. 
(1916),  187  S.  W.  160;  Hamilton  Nat.  Bk.  v.  Emigh  (1917),  192  S.  W. 
913;  Manly  Carriage  Co.  v.  Fowler  &  Hill  (1917),  194  S.  W.  708;  Peo- 
ples Sav.  Bk.  V.  Manes  (1919),  206  S.  W.  315. 

California. — Levey  v.  Henderson  (1917),  169  Pac.  673;  Hall  v.  Thrus- 
ton  (1918).  171  Pac.  285. 

Florida.— Feacock  v.  Home  Life  Ins.  Co.   (1917),  75  So.  799. 

Idaho.— Fidelity  State  Bk.  v.  M^iller  (1917),  162  Pac.  244;  Federal 
State  Bk.  v.  Miller   (1917),  162  Pac.  244. 

Indiana.— Kdley  v.  York  (1915),  109  N.  E.  772;  Fox  v.  Terre  Haute 
Nat.  Bank,  129  N.  E.  33. 

/owa.— Fullerton  Lumber  Co.  v.  Snouffer  (1908),  139  Iowa  176,  117 
N.  W.  50;  Park  v.  Best  (1916),  157  N.  W.  233;  McCullough  v.  Rey- 
nolds (1917),  165  N.  W.  333. 

Kansas.— The  N.  E.  Nat.  Bk.  of  Kansas  City,  Mo.  v.  Dick  (1911),  84 
Kans.  252,  114  Pac.  378;  First  Nat.  Bank  v.  Livemore,  90  Kan.  395,  133 
Pac.  734,  74  L.  R.  A.  (N.  S.)  274;  Peoples  State  Bank  v.  Dryden,  91 
Kan.  216,  137  Pac.  928;  Citizens  Bank  v.  Bowden,  98  Kan.  140,  157  Pac. 
429;  Security  State  Bank  v.  Clarke,  99  Kan.  18,  160  Pac.  1149;  Niotaze 
State  Bk.  v.  Cooper  (1917),  162  Pac.  1169;  Sigler  v.  Sigler  (1916),  158 
Pac.  864,  98  Kan.  524,  L.  R.  A.  1917A,  725. 

Kentucky.— Frhts  v.  Kirchdorfer  (1910),  136  Ky.  643,  124  S.  W.  882; 
First  State  Bk.  of  Nortonville  v.  Williams  (1915),  164  Kv.  143,  175  S. 
W.  10;  Smith  v.  Smith  (1915),  178  S.  W.  1058;  Bk.  of  Wi'llard  v.  Pa.  & 
Ky.  Fire  Brick  Co.  (1917),  194  S.  W.  110;  Elsey  v.  People's  Bank,  168 
Ky.  701,  182  S.  W.  873. 

Louisiana. — ^J.  I.  Case  Threshing  Machine  Co.  v.  Bridger  (1913),  133 
La.  754,  63  So.  319;. 

Maryland.— Vanderiord  v.  Farmers  Bank,  105  Md.  164,  66  Atl.  47,  10 
L.  R.  A.  (N.  S.)  129;  Whitcomb  v.  National  Exchange  Bank,  123  Md. 
612,  91  Atl.  689;  Jameson  v.  Citizens'  Nat.  Bk.,  130  Md.  75,  99  Atl.  994. 

Massachusetts.— Bass  v.  Wellesley,  192  Mass.  526,  78  N.  E.  543;  Aus- 
tin V.  Papanti  (1908),  197  Mass.  584;  Illustrated  Card  &  Novelty  Co.  v. 
Dolan  (1911),  208  Mass.  53;  Usher  v.  Tucker  Co.,  217  Mass.  441,  105 
N.  E.  360;  Union  Tr.  Co.  v.  McGinty  (1912),  212  Mass.  205,  98  N.  E. 
679.  Ann.  Cas.  1913C,  525;  Arlington  Nat.  Bk.  v.  Bennett  (1913),  214 
Mass.  352,  101  N.  E.  982;  Baldwin  v.  Porter  (1914),  217  Mass.  15; 
Clark  V.  Young  (1918),  120  N.  E.  397. 

Michigan.— Lamhertson  v.  Lane,   165  Mich.  460,  130   N.  W.  1126. 

Mississippi.—Sivley  v.  Williamson  (1916),  72  So.  1008;  Davidson  v. 
Plant  (1917),  74  So.  328,  115  Miss.  482;  Bass  v.  Borries  (1918),  77  So. 
189. 

Missouri.— Lane  v.  Hyder  (1912),  163  Mo.  App.  688,  147  S.  W.  514; 
Citizen's  Bk.  of  Senatti  v.  Douglass  (1913),  178  Mo.  664,  161  S.  W.  601; 
Montgomery  v.  Schuald,  177  Mo.  App.  75,  166  S.  W.  831;  Meredith  v. 
Pemberton  (1913),  170  Mo.  App.  100,  156  S.  W.  704;  Night  &  Day  Bank 


620  NEGOTIABLE    INSTRUMENTS.  §  119 

V.  Rosenbaum,  191  Mo.  App.  559,  177  S.  W.  693;  Shark  v.  Sherf  (1919), 
207  S.  W.  863;  Steele  v.  Bradley  (Mo.  Ayp.),  186  S.  W.  1171;  Bank  of 
Neelyville  v.  Lee,  193  Mo.  App.  537,  182  S.  W.  1016;  Merchants  Nat.  Bk. 
of  Billings  v.  Smith,  196  Pac.  523. 

Nebraska. — Aurora  State  Bank  v.  Hayes-Eames  Elevator  Co.,  88  Neb. 
187,  129  N.  W.  279;  Fanners  &  Mech.  Bk.  of  Ulysses  v.  Tate  (1914), 
147  N.  W.  213;  Gillard  v.  Honeywell  (1919),  170  N.  W.  357;  Belk  v. 
Capital  Fin.  Ins.  Co.  (1919),  169  N.  W.  262. 

Neiv  Foryfe.— Twelfth  Ward  Bank  v.  Brooks,  71  N.  Y.  Supp.  388,  6Z 
A.  D.  220;  National  Citizens'  Bank  v.  Toplitz,  81  N.  Y.  Supp.  422,  af- 
firmed 178  N.  Y.  464  (p.  313),  81  A.  D.  593;  Perry  v.  Van  Norden 
Trust  Co.,  103  N.  Y.  Supp.  543,  118  A.  D.  228;  Schwartzman  v.  Post 
(1903),  84  N.  Y.  Supp.  922,  94  A.  D.  474,  87  N.  Y.  Supp.  872;  First  Nat. 
Bk.  of  the  City  of  Brooklyn  v.  Gridlev  (1906),  112  A.  D.  398,  98  N.  Y. 
Supp.  445;  Pavenstedt  v.  N.  Y.  Life  Ins.  Co.  (1906),  113  A.  D.  866,  99  N. 
Y.  Supp.  614;  The  Royal  Bk.  of  N.  Y.  v.  Goldschmidt  (1906),  51  Misc. 
622,  101  N.  Y.  Supp.  101;  Perry  v.  Van  Norden  Tr.  Co.  (1907),  10  N. 
Y.  Supp.  543;  Korkemas  v.  Macksoud  (1939),  131  A.  D.  728,  116  N. 
Y.  Supp.  85;  Bainbridge  v.  Hoes  (1914),  149  N.  Y.  Supp.  20,  163  A.  D. 
870;  Hoch.  v.  Bernstein  (1917),  164  N.  Y.  Supp.  113;  Pittsburg  v.  Kerr 
(1917),  115  N.  E.  465,  220  N.  Y.  137;  Broad  &  Market  Nat.  Bk.  v.  East- 
ern Realty  Co.  (1918),  168  N.  Y.  Supp.  149,  102  Misc.  Rep.  82;  Elis- 
berg  V.  Simpson  (1919),  173  N.  Y.  Supp.  128;  Greene  v.  Poz,  182  N.  Y. 
Supp.  900;  Wright  v.  Gausevoort  Bank,  103  N.  Y.  Supp.  548,  52  Misc. 
Rep.  214;  Columbia-Knickerbocker  Co.  v.  Miller,  215  N.  Y.  191,  109  N. 
E.  179;  Pittsburg- Westmoreland  Coal  Co.  v.  Kerr,  220  N.  Y.  137,  114 
N.  E.  465;  Rosenberg  v.  Segall,  159  N.  Y.  Supp.  152. 

North  Carolina.— Am.  Nat.  Bk.  of  Richmond  v.  Hill  (1915),  85  S.  E. 
209;  Guano  Co.  v.  Marks,  135  N.  Car.  59,  47  S.  E.  127;  First  Nat.  Bk. 
of  Lumberton  v.  Lennon  (1915),  86  S.  E.  715;  First  Nat.  Bk.  v.  Hall 
(1917),  93  S.  E.  981;  Swan  v.  Carawan,  168  N.  Car.  472,  84  S.  E.  699. 

Ohio.— Richer  As  v.  Market  Ex.  Bk.  (1910),  81  Ohio  St.  348,  55  Ohio 
Law  Bull,  20,  90  N.  E.  1000,  26  L.  R.  A.  (N.  S.)  99;  First  Nat.  Bk.  of 
Wellston  V.  Patton  Co.   (1910),  32  Ohio  Cir.  627. 

O/t/a/zowa.— National  Bank  of  Poteau  v.  Lowrey  (Okla.),  157  Pac. 
103;  Ardmore  State  Bk.  v.  Lee  (1916),  159  Pac.  903;  Cleveland  Nat.  Bk. 
V.  Bickel  (Okla.),  159  Pac.  302;  Ricks  v.  Johnson  (1917),  162  Pac.  476; 
Wade  v.  Hall  (1917),  166  Pac.  720;  Pendergraft  v.  Phillips  (Okla.), 
156  Pac.  1189;  Oklahoma  State  Bank  of  Sayre  v.  Seaton,  170  Pac.  477. 

Or^^on.— Cellers  v.  Meachem  (1907),  49  Oreg.  186,  89  Pac.  426,  10 
L.  R.  A.  (N.  S.)  133;  Lumbermen's  Nat.  Bk.  of  Portland  v.  Campbell 
(1912),  61  Orcg.  123,  121  Pac.  427;  Murphy  v.  Panter  (1912),  62  Oreg. 
522,  125  Pac.  292;  Hunter  v.  Harris,  63  Oreg.  505,  127  Pac.  786;  Farm- 
ers' State  Bank  of  North  Powder  v.  Forstrom,  173  Pac.  935. 

P^nnjy/z'a«m.— Monongahela  Nat.  Bank  v.  First  Nat.  Bank,  226  Pac. 
270,  75  Atl.  359;  Brown  v.  Marmaduke  (1915),  93  Atl.  1025;  Seaboard 
Nat.  Bank  v.  Central  Trust  &  Savings  Bank,  253  Pa.  412,  98  Atl.  607. 

South  Dakota.— Astoria.  State  Bk.  v.  Markwood  (1916),  156  N.  W. 
583. 


§  120  DISCHARGE    OF   INSTRUMENTS.  621 

Tennessee.— Graham  v.   Shephard,  136  Tenn.  418,   189  S.  W.  867. 

r^jrcj.— Jackson  v.  Home  Nat.   Bk.    (1916),   185  S.   W.  893. 

C/fa/t.— Wostenholme  v.  Smith  (1908),  34  Utah  300,  97  Pac.  329;  In- 
terstate Trust  Co.  V.  Headlund  (1918),  171  Pac.  SIS. 

Washington.— Capitol  Nat.  Bk.  v.  Robinson  (1906),  41  Wash.  454, 
83  Pac.  1021;  Bradley  Engineering  Co.  v.  Heyburn,  56  Wash.  628,  106 
Pac.  170;  Pease  v.  Syler  (1914),  78  Wash.  24,  138  Pac.  310;  .State 
Finance  Co.  v.  Moore  (1918),  174  Pac.  22;  Kclley  v.  Bansman  (1917), 
168  Pac.   181. 

West  Virginia.— Manchester  v.  Parsons  (1915),  75  W.  Va.  793,  84 
S.   E.  885. 

Wisconsin. — Citizens  Nat.  Bk.  of  Green  Bay  v.  Harter  (1908),  134 
Wis.  408;  Marling  v.  Jones  (1909),  138  Wis.  82,  119  N.  W.  931;  Corn- 
stock  V.  Buckley  (1910),  141  Wis.  228,  124  N.  W.  414. 

§  120.     When   person  secondarily    liable    on,    discharged. 

A  person  secondarily  liable  on  the  instrument  is  discharged: 

1.  By  an  act  which  discharges  the  instrument; 

2.  By  the  intentional  cancellation  of  his  signature  by  the 
holder ; 

3.  By  the  discharge  of  a  prior  party ; 

4.  By  a  valid  tender  of  payment  made  by  a  prior  party; 

5.  By  a  release  of  the  principal  debtor,  unless  the  holder's 
right  of  recourse  against  the  party  secondarily  liable  is  ex- 
pressly reserved.-*'  ■** 

6.  By  any  agreement  binding  upon  the  holder  to  extend  the 
time  of  payment  or  to  postpone  the  holder's  right  to  enforce  the 
instrument,  unless  the  right  of  recourse  against  such  party  is  ex- 
pressly reserved.*'  ** 

See  text,   §  192. 

Cross  sections:     48,  119,  64-1. 

In  Illinois  subsection  3  is  omitted;  to  subsection  5  (Illinois  sub- 
section 4)  the  words  "or  unless  the  principal  debtor  be  an  accommoda- 
tion party;"  and  in  line  one  of  subsection  6  (Illinois  subsection  5)  the 
word  "an"  is  substituted  for  the  word  "any ;"  and  the  words  "in  favor  of 
the  principal  tlebtor"  are  interpolated  after  the  word  "agreement"  in  the 
first  sentence  of  said   subsection,   the   words   "prior   or   subsequent"   ar§ 


622  NEGOTIABLE    INSTRUMENTS,  §    120 

interpolated  after  "assent"  and  at  the  end  of  the  subsection  the  follow- 
ing words  are  added :  "or  unless  the  principal  debtor  be  an  accommodat- 
ing party." 

The  Maryland  and  New  York  acts  omit  the  words  "unless  made  with 
the  assent  of  the  party  secondarily  liable,  or"  in  subsection  6. 

The  Missouri  act  adds :  "Except  when  such  discharge  is  had  in  bank- 
ruptcy proceedings,"  after  subdivision   3. 

The  Wisconsin  act  (Sees.  1679-1)  adds  a  subdivision  after  the  words, 
"by  a  prior  party,"  which  is  as  follows :  "  By  giving  up  or  applying  to 
other  purposes  collateral  security  applicable  to  the  debt,  or,  there  be- 
ing in  the  holder's  hands  or  within  his  control  the  means  of  complete 
or  partial  satisfaction,  the  same  are  applied  to  other  purposes." 

The  Wisconsin  act  substitutes  for  subdivision  6  the  following:  "By 
an  agreement  binding  upon  the  holder  to  extend  the  time  of  payment, 
or  to  postpone  the  holder's  right  to  enforce  the  instrument  unless  made 
with  the  assent,  prior  or  subsequent,  of  the  party  secondarily  liable, 
unless  the  right  of  recourse  against  such  party  is  expressly  reserved, 
or  unless  he  is  fully  indemnified." 

Corresponding  provision  in  English  Bills  of  Exchange  Act:  In- 
tentional cancellation  by  holder,  not  in  B.  E.  A.,  Sec.  63  (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Plea  must  show  binding  agreement  for  extension  of  time  upon  con- 
sideration to  excuse  indorser.  Williams  v.  Peninsular  Grocery  Co.  (Fla.), 
75  So.  517. 

Guarantor  of  payment  becomes  primarily  liable  after  default  and 
is  not  released  as  a  party  secondarily  liable.  Frost  v.  Harbert,  20  Idaho, 
336,  118  Pac.  1095,  38  L.  R.  A.  (N.  S.)  875. 

When  co-maker  not  secondarily  liable.  Fox  v.  Terre  Haute  Nat. 
Bank,  —  Ind.  App.  — ,  129  N.  E.  33. 

Renewal  of  note  works  extension  of  time  where  sureties  consented 
to  extension  of  time  without  notice.  Aldrich  v.  Rowell  (Iowa),  166  N. 
W.  88. 

A  payee  who  wrote  his  name  on  back  of  note  under  guaranty  of 
payment  clause  becomes  secondarily  liable  and  is  discharged  by  exten- 
sion of  time.  Farmers'  &  Drovers'  Bank  v.  Bashor,  98  Kan.  729,  160 
Pac.  208. 

Surety  maker  for  co-maker  not  a  party  secondarily  liable.  Niotaze 
State  Bank  v.  Cooper,  99  Kan.  731,  162  Pac.  1169. 

Joint  makers  not  sureties  from  provisions  of  note.  Nat.  Bank  of 
Webb  City,  Mo.  v.  Dickinson,   102  Kan.  564. 

Holders  impairment  of  mortgage  security  releases  indorsers.  In- 
terstate Trust  &  Banking  Co.  v.  Young,  135  La.  465,  65  So.  611. 

Extension  of  time  on  principal  note  does  not  affect  indorsers  on 
notes  held  as  collateral.  Commercial  Nat.  Bank  v.  Sanders,  139  La. 
622,  71  So.  891. 

An  offer  to  prove  change  in  marginal  memoranda  on  note  on  bank 
book  by  cashier  without  showing  his  authority  to  so  do  from  the  bank 


§  120  DISCHARGE    OF   INSTRUMENTS.  623 

is  inadmissible.  Vanderford  v.  Farmers'  Bank,  105  Md.  164,  66  Atl. 
47,  10  L.  R.  A.  (N.  S.)  129. 

Holder's  right  against  anomalous  indorser  not  affected  by  taking 
security  from  payee  indorser  after  dishonor.  Commercial  Nat.  Bank  v 
Clarke,  180  Mass.  249,  62  N.  E.  370. 

Holder's  agreement  to  proceed  against  second  indorser  only  does  not 
discharge  first  indorser.  Bank  of  America  v.  Wilson,  186  Mass.  214, 
71  N.  E.  312. 

Oral  evidence  admissible  to  show  secondarily  liable  party  requested 
holder  to  release  principal.  Arlington  Nat.  Bank  v.  Bennett,  214  Mass. 
352.  101   N.  E.  982. 

Payment  for  and  receipt  of  note  by  a  stranger  is  presumed  a  pur- 
chase thereof.     Cantrell  v.  Davidson,  180  Mo.  App.  410^  168  S.  W.  271. 

Stranger  who  pays  and  receives  note  is  presumed  to  purchase  it. 
Wing  V.  Union  Central  Life  Ins.  Co.,  181  Mo.  App.  381,  168  S.  W.  917. 

Part  payment  received  as  full  settlement  by  holder  is  discharge  of 
indorsers.  Phenix  Nat.  Bank  v.  Hanlon,  183  Mo.  App.  243,  166  S.  W. 
830. 

Extension  without  indorser's  consent  releases  indorser  although  new 
notes  given  and  old  note  retained  as  collateral.  Nat.  Park  Bank  v. 
Koehler,  204  N.  Y.  174,  97  N.  E.  468. 

Surety  on  appeal  bond  not  subrogated  to  the  right  of  the  judgment 
creditor  as  against  a  subsequent  indorser.  State  Bank  v.  Kahn,  49 
Misc.  Rep.  500,  98  N.  Y.  Supp.  858. 

Intentional  cancellation  of  party's  signature  by  holder  releases  with- 
out consideration.  McCormick  v.  Shea,  50  Misc.  Rep.  592,  99  N.  Y. 
Supp.  467. 

No  right  of  recourse  having  been  preserved  an  extension  of  time 
without  indorser's  assent  discharges  him.  Greenberg  v.  Ginsberg  143 
N.  Y.  Supp.  1017.  82  Misc.  Rep.  415. 

Renewal  of  principal  note  without  consent  of  indorser  of  blank  note 
signed  by  maker  releases  indorser.  Union  Trust  Co.  v.  McCrum,  145 
App.  Div.  409,   129  N.  Y.  Supp.  1078. 

Composition  in  bankruptcy  does  not  release  or  discharge  indorsers. 
Silverman  v.  Rubenstein,  162  N.  Y.  Supp.  733. 

Holder's  agreement  with  third  party  does  not  release  indorsers  of 
note  not  being  with  debtor.  Brosemer  v.  Brosemer,  99  Misc.  Rep.  101, 
162  N.  Y.  Supp.  1067. 

Accommodation  indorsers  are  released  by  payee  giving  up  collateral 
security  of  greater  value  to  the  maker.  Brown  Carriage  Co.  v.  Dowd, 
155  N.  C.  307,  71  S.  E.  721. 

Plaintiff's  promise  to  take  up  and  carry  note  did  not  release  surety 
under  statutes  as  revised.  Robertson-Ruffin  Co.  v.  Spain  (N  C)  91 
S.  E.  361. 

Negotiable  quality  of  note  not  destroyed  by  provisions  waiving  pre- 
sentment and  notice  of  protest  and  consent  that  time  be  extended.  First 
Nat.  Bank  of  Pomeroy  v.  Buttery,  17  N.  D.  326,  116  N.  W.  341,  16  L.  R. 
A.  (N.  S.)  878. 

A  guarantor  of  payment  is  secondarily  liable  and  released  by  ex- 
tension of  time  without  consent.  Northern  State  Bank  v.  Bellamy, 
19  N.  D.  509,  125  N.  W.  888. 

This  section  applies  only  to  acts  of  creditors  and  not  discharges  by 
operation  of  law.    Everding  v.  Toft,  82  Ore.  1,  160  Pac.  1160. 

Note  may  be  taken  as  collateral  for  old  note  without  discharge  of 
indorser.     Second  Nat.  Bank  v.  Graham,  246  Pa.  256:  92  Atl.  198. 


624  NEGOTIABLE    INSTRUMENTS.  §  120 

Phraseology  of  reservation  of  the  right  of  recourse  should  be  rea- 
sonably construed.  First  Nat.  Bank  v.  Delone,  254  Pa.  409,  98  Atl. 
1042. 

Agreement  not  to  press  suit  while  certain  payments  are  being  made 
discharges  non-assenting  indorsers.  Deahy  v.  Choquet,  28  R.  I.  338, 
67  Atl.  421,  14  L.  R.  A.   (N.  S.)  847. 

Sureties  not  discharged  where  note  contains  clause  for  extension  of 
time  and  a  new  note  is  given  for  a  larger  amount  and  the  old  note  held 
as  collateral.  Dies  v.  Wilson  Co.  Bank,  129  Tenn.  89,  165  S.  W.  248,  Ann. 
Cas.  1915A,  1090. 

Holder's  acceptance  of  money  required  as  discount  on  renewal  notes 
on  condition  that  maker  have  surety  sign  renewal  notes  is  not  a  dis- 
charge. Hamilton  Nat.  Bank  v.  Breeden,  130  Tenn.  465,  171  S.  W. 
86,  L.  R.  A.  (N.  S.)  1915C,  831. 

Without  contradicting  evidence  payment  and  acceptance  of  interest 
in  advance  is  evidence  of  intention  to  extend  time.  Cape  Charles  Bank 
V.  Farmers'  Mut.  Exchange,  120  Va.  771,  92  S.  E.  918. 

Release  of  joint  maker  with  reservation  of  rights  as  to  other  parties 
does  not  work  discharge.     Davis  v.  Gutheil,  87  Wash.  596,  152  Pac.  14. 

Surety  not  discharged  by  release  of  a  less  amount  of  collateral 
security  by  holder.  State  Bank  of  La  Crosse  v.  Michel,  152  Wis.  88, 
139  N.  W.  748. 

New  consideration  necessary  for  waiver  of  discharge  after  knowledge 
thereof  by  accommodation  indorsers.  German  National  Bank  v.  Bar- 
ber, 159  Wis.  109,  149  N.  W.  IQ. 

When  giving  of  note  in  payment  of  old  note  extinguishes  the  debt. 
In  re  Wegman  Piano  Co.,  221  Fed.  Rep.  128. 

Sureties  are  released  where  renewal  notes  taken  before  maturity 
without  their  consent.  Edwards  v.  Goode,  228  Fed.  Rep.  664,  143 
C.  C.  A.  186. 

Agreement  to  wait  for  part  if  part-payment  of  note  is  made  is  with- 
out consideration  and  does  not  relieve  accommodation  indorser.  Nalit- 
zky  v.  Williams,  237  Fed.  Rep.  802,  151  C.  C.  A.  44. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Arizona. — Cowan  v.  Ramsey  (1914),  140  Pac.  501. 

District  of  Columbia. — Walker  v.  Wash.  Title  Ins  Co.,  19  App.  Cas. 
(D.  C.)  575. 

Florida— Clark  v.  Union  Grocery  Co.  (1915).  68  So.  766;  Williams 
v.  Penn  (1917),  75  So.  517;  William  v.  Peninsula  Grocery  Co.  (1917), 
75  So.  517. 

Idaho.— Frost  v.  Harbert  (1911),  20  Idaho  336,  118  Pac.  1095,  38 
L.  R.  A.   (N.  S.)   875. 

Indiana.— Fox  v.  Terre  Haute  Nat.  Bank,  129  N.  E.  33. 

Iowa. — Goodman  Mfg.  Co.  v.  Mammoth  Vein  Coal  Co.  (1918),  168 
N.  W.  912;  Aldrich  v.  Powell   (Iowa),  166  N.  W.  88. 

i^owjaj.— Peoples  State  Bank  of  Wellsville  v.  Dryden  (1914),  137 
Pac.  928;  Farmers  &  Drovers  Bank  v.  Bashor  (1916),  98  Kan.  729,  160 


§  120  DISCHARGE    OF    INSTRUMENTS.  625 

Pac.  208;    Security    State  Bank   v.   Clark    (1916),    160   Pac.    1149;    Ger- 

Am.   St.   Bank  v.  Watson  (1917),   163   Pac.  637;    Niotaze   State   Bank  v. 

Cooper,  99  Kan.   731,   162  Pac.   1169;   Nat.   Bank  of  Webb   City,   Mo.  v. 
Dickinson,  102  Kan.  564. 

Kentucky.— First  State  Bk.  of  Nortonville  v.  Williams  (1915),  175 
S.  W.  10;  Mut.  Ben.  Life  Ins.  Co.,  v.  First  Nat.  Bk.  (1914),  169  S.  W. 
1028. 

Louisiana. — Interstate  Trust  &  Banking  Co.  v.  Young,  135  La.  465, 
65  So.  611;  J.  I.  Case  Threshing  Machine  Co.  v.  Bridger  (1913),  133 
La.  754,  63  So.  319;  Lewy  v.  Wilkinson  (1914),  64  So.  1003;  Commer- 
cial Nat.  Bk.  V.  Sanders  (1916),  139  La.  622,  71  So.  891. 

Maryland. — Vanderford  v.  Farmers  &  Mechanics  Nat.  Bk.  of  West- 
minster (1907),  105  Md.  164,  66  Atl.  47,  10  L.  R.  A.  (N.  S.)   129. 

Massachusetts. — Bank  of  America  v.  Wilson,  186  Mass.  214,  71  N.  E. 
312;  Commercial  Nat.  Bank  v.  Clarke,  180  Mass.  249,  62  N.  E.  370; 
Union  Tr.  Co.  v.  McGinty  (1912),  212  Mass.  205,  98  N.  E.  679;  Arling- 
ton Nat.  Bank  v.  Bennett  (1913),  214  Mass.  352,  101  N.  E.  982;  Paul 
Revere  Trust  Co.  v.  Castle  (1918),  120  N.  E.  352. 

Michigan.— Butterheld  v.  Reynolds   (1917),  163  N.  W.  86. 

Missouri. — Miners  &  Merchants  Bank  v.  Rogers  (1907),  123  Mo.  App. 
569,  100  S.  W.  534;  Lane  v.  Hyder  (1912),  163  Mo.  App.  688,  147  S. 
W.  514;  Citizen's  Bank  of  Senath  v.  Douglass  (1913),  161  S.  W.  601; 
Cantrell  v.  Davidson,  180  Mo.  App.  410,  168  S.  W.  271 ;  Wing  v.  Union 
Central  Life  Ins.  Co.,  181  Mo.  App.  381.  168  S.  W.  917;  Phoenix  Nat. 
Bank  V.  Hanlon,  183  Mo.  App.  243,  166  S.  W.  830;  Night  &  Day  Bank 
V.  Rosenbaum  (1915),  177  S.  W.  693;  Bank  of  Chillicothe  v.  Gundy 
(1916),  189  S.  W.  412. 

New  Jersey.— Frkle  v.  Rudiger   (1918),  104  Atl.  142. 

New  Mexico. — First  Nat.  Bank  of  Albuquerque  v.  Stover  (1916),  155 
Pac.  905. 

New  York.— State  Bank  v.  Kahn  (1906),  49  Misc.  500,  98  N.  Y. 
Supp.  858;  McCormick  v.  Shea  (1906),  99  N.  Y.  Supp.  467,  50  Misc.  592; 
Ziegfried  v.  Stein  (1909),  117  N.  Y.  Supp.  900;  Nat.  Park  Bank  v.  Koeh- 
ler  (1909),  137  A.  D.  785.  121  N.  Y.  Supp.  640;  Bloom  v.  Polacsek 
(1910).  121  N.  Y.  Supp.  951;  Zimmerman  v.  Kastner  (1910),  123  N.  Y. 
Supp.  952;  Union  Tr.  Co.  of  New  Jersey  v.  McCrum  (1911),  129  N. 
Y.  Supp.  1078,  145  A.  D.  409;  Greenberg  v.  Ginsberg  (1913),  143  N.  Y. 
Supp.  1017,  82  Misc.  415;  Orth  v.  Anderson  (1914),  146  N.  Y.  Supp. 
689;  Union  Bk  v.  Sullivan  (1915),  108  N.  E.  558,  214  N.  Y.  332;  Brose- 
mer  v.  Brosemer  (1917),  162  N.  Y.  Supp.  1067,  99  Misc  Rep.  101; 
Silverman  v.  Rubenstein  (1917),  162  N.  Y.  Supp.  733;  Nat.  Park  Bank 
V.  Koehler,  204  N.  Y.  174,  97  N.  E.  468. 

North  Carolina. — Brown  Carriage  Co.  v.  Dowd,  155  N.  C.  307,  71 
S.  E.  721;  First. Nat.  Bank  of  Henderson  v.  Johnson  (1915),  88  S.  E. 
360;  Robertson-Ruffin  Co.  v.  Spain   (N.  C.)   91   S.  E.  361. 

North  Dakota.— First  Nat.  Bank  of  Pomeroy  v.  Buttery  (1908),  17 
N.  D.  326,  116  N.  W.  341.  16  L.  R.  A.  (N.  S.)  878;  Northern  State  Bk. 
V.  Bellany  (1910),  19  N.  D.  509,  125  N.  W.  888. 


526  NEGOTIABLE  INSTRUMENTS.  §  121 

Oklahoma. — Bank  of  Commerce  v.  Jackson   (1918),  170  Pac.  474. 

Oregon.— Cdlers  v.  Meachem  (1907),  49  Ore.  186,  10  L.  R.  A. 
(N.  S.)  133;  Murphy  v.  Panter  (1912),  62  Ore.  522,  125  Pac.  292; 
Peterson  v.  Thompson  (1915),  151  Pac.  721  (1916);  Everding  v.  Toft 
(1916),  82  Ore.  1,  160  Pac.  1160. 

Pennsylvania.— First  Nat.  Bank  of  York  v.  Diehl  (1907),  218  Pa.  588, 
67  Atl.  897;  In  re  Moritz's  Estate  (1913),  86  Atl.  875;  Second  Nat. 
Bank  of  Mechanicsburg  v.  Graham  (1914),  246  Pa.  256,  92  Atl.  198; 
First  Nat.  Bank  of  Hanover  v.  Delone  (1916),  254  Pa.  409,  98  Atl.  1042. 

Rhode  Island.— Dealey  v.  Choquet  (1907),  28  R.  I.  338,  67  Atl.  421, 
14  L.  R.  A.  (N.  S.)  847. 

South  Carolina.— Bank  of  Inman  v.  Elliott   (1915),  84  S.  E.  996. 

South  Dakota.— Runely  v.  Anderson  (1915),  150  N.  W.  939;  Wilcox 
V.  McCain  Land  &  Live  Stock  Co.  (1916),  159  N.  W.  49;  Ei«t  Nat. 
Bank  V.  Brule  Nat.  Bank  (1917),  161  N.  W.  616. 

Tennessee.— Dies  v.  Wilson  Co.  Bank  (1914),  129  Tenn.  89**165  S. 
W.  248,  Ann.  Cas.  1915 A,  1090;  Hamilton  Nat.  Bank  v.  Breeden  (1914), 
130  Tenn.  465,  L.  R.  A.  (N.  S.)  1915C,  831,  171  S.  W.  86;  Graham  v. 
Shepard  (1916),  189  S.  W.  867;  Meredith  v.  Dibrell,  127  Tenn.  387,  155 
S.  W.  163,  46  L.  R.  A.  (N.  S.)  92,  Ann  Cas.  1914B,  1079. 

Texas.— Wills  v.  Tyler  (1916),  186  S.  W.  862. 

t/fa/j.— Wostenholme  v.  Smith   (1908),  34  Utah  300,  97  Pac.  329. 

Virginia. — Cape  Charles  Bank  v.  Farmers  Mutual  Exchange  (1917), 
120  Va.  771,  92  S.  E.  918. 

Washington.— Davis  v.  Byrne  (1915),  152  Pac.  14;  Davis  v.  Gut- 
heil   (1915),  152  Pac.  14,  87  Wash.  596. 

Wisconsin.-^Citizens  Nat.  Bank  of  Green  Bay  v.  Harter  (1908),  134 
Wis.  408;  State  Bank  of  La  Crosse  v.  Michel  (1913),  152  Wis.  88,  139 
N.  W.  748;  Ger.  Nat.  Bank  v.  Barber  (1914),  159  Wis.  109;  149  N. 
W.  767. 

United  States.— In  re  Wegman  Piano  Co.,  221  Fed.  Rep.  128;  Ed- 
wards v.  Goode.  228  Fed.  Rep.  664,  143  C.  C.  A.  186;  Nalitzky  v.  Wil- 
liams (1917),  237  Fed.  802,  151  C.  C.  A.  44. 

§  121.  Right  of  party  who  discharges  instrument.  Where 
the  instrument  is  paid  by  a  party  secondarily  hable  thereon,*-  *" 
it  is  not  discharged ;  but  the  party  so  paying  it  is  remitted  to 
his  former  rights  as  regards  all  prior  parties,  and  he  may  strike 
out  his  own  and  all  subsequent  indorsements,  and  again  negotiate 
the  instrument,  except : 

1.  Where  it  is  payable  to  the  order  of  a  third  person,  and  has 
been  paid  by  the  drawer;  and, 


§  121  DISCHARGE    OF   INSTRUMENTS.  627 

2.  Where  it  was  made  or  accepted  for  accommodation,  and 
has  been  paid  by  the  party  accommodated.^ 

See  text,  §  182. 

Cross  section:  119,  68. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  Sees 
59  (2)    ("a)    (b),  59  (3). 

In  Arkansas  the  last  word  is  "accommodater"  instead  of  "accommo- 
dated."    This  is  likely  a  clerical  error. 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

One  of  several  accommodation  payees  after  maturity  took  up  note 
from  indorsee  and  discharged  all  others  except  maker.  Miller  v.  Del 
Rio  Mining  Co.,  25  Idaho  83,  136  Pac.  448. 

Indorser  for  payee's  accommodation  who  pays  note  to  holder  and 
takes  note  can  recover  from  maker.     Graves  v.  Neeves,  183  111.  App.  235. 

Maker  entitled  to  pay  and  be  discharged  by  payment  to  payee  named 
in  note.     Gorin  v.  Wiley,  215  111.  App.  541. 

Anomalous  and  accommodation  indorsers  left  to  rights  under  com- 
mon law.     Lill  v.  Gleason,  92  Kan.  754,  142  Pac.  287. 

Anomalous  indorser  has  no  former  rights  on  instrument  and  pay- 
ment extinguishes  note.    Quinby  v.  Varnum,  190  Mass.  211,  76  N.  E.  671. 

Charging  back  of  amount  by  company  to  account  of  plaintiff's  hus- 
band was  not  a  payment  of  the  note  which  discharged  defendant  maker. 
Bovarnick  v.  Davis,  —  Mass.  — ,  126  N.  E.  380. 

Possession  by  last  of  accommodation  indorsers  presumed  conclusive 
of  payment  by  him.  entitling  him  to  recovery  against  prior  indorsers. 
Hill  v.  Buchanan,  71  N.  J.  Law  301,  60  Atl.  952. 

Payment  by  subsequent  indorser  no  defense  unless  prior  indorser  can 
show  the  payment  for  himself.  Twelfth  Ward  Bank  v.  Brooks,  63  App. 
Div.  220,  71  N.  Y.  Supp.  388. 

Payee  obtaining  check  by  fraud  later  paying  indorsee  who  is  holder  in 
due  course  discharges  the  check  as  to  all  parties.  Josephsohn  v.  Gens, 
85  Misc.  Rep.  372,  142  N.  Y.  Supp.  451. 

Holder  may  recover  from  maker  although  pa3mient  had  from  a 
guarantor  but  it  is  for  the  latter.  Assets  Realization  Co.  v.  Mercantile 
Nat.  Bank,  167  App.  Div.  757,  153  N.  Y.  Supp.  156. 

Right  of  holder  as  to  defenses  existing  between  the  drawer  and 
acceptor.     Sobel  v.   Engels,   188  N.   Y.  S.  436. 

Possession  by  payee  prima  facie  evidence  of  ownership  although 
note  bears  his  uncancelled  indorsement.  Waldock  v.  Winkler  (Okla.), 
152  Pac.  99. 

Plaintiff  third  party  who  placed  a  guaranty  upon  note,  paid  it  with- 
out an  assignment  has  no  former  rights  and  recovers  as  reimburse- 
ment. Noble  v.  Beeman-Spaulding  Co.,  65  Ore.  93,  131  Pac.  1006,  46  L. 
R.  A.  (N.  S.)  162. 

Accommodation  maker  treated  as  party  secondarily  liable  in  suit 
against  co-maker.     Pease  v.  Syler,  78  Wash.  24,  138  Pac.  310. 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 


628  NEGOTIABLE    INSTRUMENTS.  §  122 

Idaho— WiWer  v.  Del  Rio  Mining  Co.,  25  Idaho  83,  136  Pac.  448. 

Indiana.— Farker  v.  First  Nat.  Bank  of  Fort  Wayne  (1915),  109  N. 
E.  75. 

Illinois. — Graves  v.  Neeves,  183  111.  App.  235;  Gordin  v.  Wiley,  215 
111.  App.  541. 

Kansas.— Lin   v.    Gleason    (1914),   92   Kans.   754,    142   Pac.   287. 

Massachusetts.— Quimby  v.  Varnum  (1906),  190  Mass.  211,  76  N.  E. 
671;  Berenson  v.  Conant,  214  Mass.  127,  101  N.  E.  60;;  Bovarnick  v. 
Davis,  126  N.  E.  380. 

Missouri.— CantreW  v.  Davidson  (1914),  168  S.  W.  271;  Carter  v. 
Butler,  126  Mo.  306,  174  S.  W.  399,  Ann.  Cas.  1917 A,  483. 

New  Jersey.— mn  v.  Buchanan,  71  N.  J.  Law  301,  60  Atl.  952; 
Pohlemus  v.  Prudential  Realty  Co.   (1907),  74  N.  J.  L.  570,  67  Atl.  303. 

New  For^.— Twelfth  Ward  Bank  v.  Brooks,  71  N.  Y.  Supp.  388,  63 
A.  D.  220;  The  Royal  Bank  of  New  York  v.  Goldschmidt  (1906),  51 
Misc.  622,  101  N.  Y.  Supp.  101;  Josephsohn  v.  Gens  (1914),  142  N.  Y. 
Supp.  451,  85  Misc.  Rep.  372;  Assets  Realization  Co.  v.  Mercantile  Nat. 
Bank  (1915),  153  N.  Y.  Supp.  156,  167  A.  D.  757;  Sobel  v.  Engels,  188 
N.  Y.  S.  436. 

Oklahoma.— VJaldock  v.   Winkler    (Okla.),   152   Pac.  99. 

Oregon. — Noble  v.  Breeman-Spaulding- Woodward  Co.  (1913),  65 
Ore.  93,  131  Pac.  1006,  46  L.  R.  A.   (N.  S.)   162. 

Washington.— Pease  v.  Syler   (1914),  78  Wash.  24,  138  Pac.  310. 

§  122.  Renunciation  by  holder.  The  holder  may  expressly 
renounce  his  rights  against  any  party  to  the  instrument,  before, 
at  or  after  its  maturity.  An  absolute  and  unconditional  renun- 
ciation of  his  rights  against  the  principal  debtor  made  at  or  after 
the  maturity  of  the  instrument,  discharges  the  instrument.  But 
a  renunciation  does  not  affect  the  rights  of  a  holder  in  due  course 
without  notice.  A  renunciation  must  be  in  writing,  unless  the 
instrument  is  delivered  up  to  the  person  primarily  liable 
thereon.*'  ** 

See  text,  §   191. 

Cross  section :  120. 

Corresponding  provision  of  English  Bill  of  Exchange  Act:  Sec. 
62    (1),   (2); 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Indorsement  and  delivery  constituting  present  gift  of  principal  with 
reservation  of  interest  during  life.  Pyle  v.  East,  173  lov/a  165,  155 
l^.  W.  283. 


§  123  DISCHARGE  OF  INSTRUMENTS.  629 

Application  of  term  "renunciation."  Whitcomb  v.  National  Exchanee 
Bank,  123  Md.  612,  91  Atl.  689. 

Refusal  of  co-maker's  tender  is  not  a  renunciation  of  holder's  rights 
against  him  for  balance  after  principal  maker's  bankruptcy  estate  set- 
tled.   Jamesson  v.  Citizens'  Nat.  Bank,  130  Md.  75,  99  Atl.  994. 

Holders'  covenant  not  to  sue  maker  and  reserving  rights  as  to  in- 
dorsers  does  not  discharge  indorsers  although  members  of  firm  maker. 
Faneuil  Hall  Nat.  Bank  v.  Meloon,  183  Mass.  66,  66  N.  E.  410  97  Am 
St.  Rep.  416. 

Renunciation  of  debt  by  holder.     Dickinson  v.  Vail,  199  Mo.  App.  458. 
Writing    addressed   to    executors    expressing    wish    that    note    be    can- 
celled in  case  of  his   death,  found  after  death,  is  not  a  valid  renuncia- 
tion.   Leask  v.  Dew,  102  App.  Div.  529,  92  N.  Y.  Supp.  891. 

Release  of  surety  by  immediate  part  payment  agreement  is  good  if  in 
writing.     Baldwin  v.  Daly,  41  Wash.  416,  83  Pac.  724. 

Renunciation  in  favor  of  surety  upon  part  payment  agreement  must 
be  in  writing.     Pitt  v.  Little,  58  Wash.  355,  108  Pac.  941. 

Plaintiff  can  waive  provision  for  renunciation  being  in  writing  and 
may  claim  novation.    Gimmet  v.  Greene,  87  Wash.  40,  151  Pac.  99. 

Release  of  one  joint  maker  with  reservation  of  rights  as  to  others 
is  not  an  absolute  and  unconditional  renunciation  but  only  as  to  one 
released.    Davis  v.  Gutheil,  87  Wash.  596,  152  Pac.  14. 

Oral  evidence  of  holder's  promise  to  return  to  maker  note  made  with- 
out consideration,  and  so  known  to  holder,  is  competent.  Hornburg 
V.  Larson,  93  Wash.  74,  160  Pac.  11. 

Memorandum  written  by  nurse  at  dictation  of  holder,  prior  to  death 
not  a  renunciation  but  expression  of  desire  or  wish  to  renounce.  In 

re  George,  44  Ch.  D.  627. 

Maker's  devisee  not  within  the  term  maker  as  party  to  whom   renun- 
ciation can  be  made.    Edwards  v,  Walters  (1896),  2  Ch.  157. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

/o«;o.— Pyle  v.  East,  173  Iowa  165,  155  N.  W.  283. 

Louisiana. — J.  I.  Case  Threshing  Machine  Co.  v.  Bridger  (1913),  133 
La.  754,  63  So.  319. 

Massachusetts.— Fanenil  Hall  Nat.  Bank  v.  Meloon  (1903),  183  Mass. 
66,  66  N.  E.  410;  97  Am.  St.  Rep.  416. 

Maryland.— Whitcomb  v.  Nat.  Exch.  Bank  (1914),  91  Atl.  689,  123 
Md.  612;  Jamesson  v.  Citizens'  Nat.  Bank,  130  Md.  75,  99  Atl.  994. 

Missouri.— Dickinson  v.  Vail  (1918),  199  Mo.  App.  458,  203  S.  W.  635. 

New  York.— Leask  v.  Dew  (1905),  102  A.  D.  529,  92  N.  Y.  Supp. 
891;  Broad  &  Market  Nat.  Bank  v.  N.  Y.  &  E.  Realty  Co.,  168  N.  \. 
Supp.  149,  102  Misc.  Rep.  82. 

0^/oftoma.— Campbell  v.  Newton  &  Driskoll   (1915),  152  Pac.  841. 

Oregon.— Cellars  v.  Meachem  (1907),  49  Ore.  186,  10  L.  R.  A.  (N. 
S.)  133. 


630  NEGOTIABLE    INSTRUMENTS.  §  123 

Washington.— Baldwin  v.  Daly  (1906),  41  Wash.  416,  83  Pac.  724; 
Pitt  V.  Little  (1910),  58  Wash.  355,  108  Pac.  941;  Gimmet  v.  Greene 
(1915),  151  Pac.  99,  87  Wash.  40;  Davis  v.  Gutheil,  87  Wash.  596,  152 
Pac.  14;  Hornburg  v.  Larson,  93  Wash.  74,   160  Pac.  11. 

§  123.     Cancellation;   unintentional;   burden  of   proof.      A 

cancellation  made  unintentionally,  or  under  a  mistake,  or  without 
the  authority  of  the  holder,  is  inoperative ;  but  where  an  instru- 
ment or  any  signature  thereon  appears  to  have  been  cancelled  the 
burden  of  proof  lies  on  the  party  who  alleges  that  the  cancella- 
tion was  made  unintentionally,  or  under  a  mistake  or  without 
authority.*'  ** 

See  text,  §   184. 

Cross  sections:     120-2,  66,  109,  119-5,  1-4. 

The  Illinois  Act  changes  this  some. 

Corresponding  provision  of  English  Bill  of  Exchange  Act :  Sec. 
63   (3). 

'*-  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Burden  is  on  plaintiff  to  overcome  apparent  cancellation.  Morris  v. 
Reyman,  55  Ind.  App.  112,  103  N.  E.  423. 

Plaintiff  has  burden  of  overcoming  the  presumption  arising  from 
apparent  cancellation  of  notes.  In  re  Philpott's  Estate  (Iowa),  164 
N.  W.  167. 

Erasure  of  their  names  by  part  of  the  indorsers  without  the  knowl- 
edge of  others  was  inoperative  and  did  not  affect  the  indorsement  of  those 
who  did  not  take  part  in  the  erasure.  Union  Bank  of  Brooklyn  v.  Sulli- 
van, 214  N.  Y.  332,  108  N.  E.  558. 

Constitutionality  of  section.  Gilley  v.  Harrell,  118  Tenn.  115,  101 
S.  W.  424. 

Where  date  and  signature  destroyed  by  burning,  it  is  presumed  to  be 
intentional  for  cancellation.  Jones*  Adm'rs.  v.  Coleman  (Va.),  92  S.  E. 
910. 

Cancellation  inoperative  where  agent  accepted  less  than  amount  due 
and  principal  returned  the  monev  and  received  back  the  note.  Dominion 
Bank  v.  Anderson,  15  Sess.  Cas."  (1888)  408. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Illinois.— Fry  v.  Jenkins   (1912),  173  111.  App.  486. 

Indiana. — Morris  v.  Reyman,  55  Ind.  App.  112,  103  N.  E.  423. 

Iowa.— In  re   Philpott's   Estate    (Iowa),   164  N.   W.   167. 

Kansas.— Uolyfidd  v.  Harrington    (1911),  84  Kans.  760,  115  Pac.  546. 

New  York. — First  Nat.  Bank  of  the  City  of  Brooklyn  v.  Gridley 
(1906),  112  A.  D.  398,  98  N.  Y.  Supp.  445;  McCormick  v.  Shea  (1906), 


§  124  DISCHARGE    OF    INSTlRUMENTS.  631 

99  N.  Y.   Supp.  467,  SO  Misc.   592;   Union   Bank  v.   Sullivan    (1915),  214 
N.  Y.  222,  108  N.  E.  558. 

Tennessee.— GiWty  v.  Harrell   (1906),   118  Tenn.   115,   101   S.  W.  424. 

Virginia. — Jones  Admrs.  v.  Coleman    (1917),  92   S.   E.   AQ. 

§124.  Alteration  of  instrument;  effect  of.  Where  a  ne- 
gotiable instrument  is  materially  altered  without  the  assent  of  all 
parties  liable  thereon,  it  is  avoided,  except  as  against  a  party  who 
has  himself  made,  authorized  or  assented  to  the  alteration  and 
subsequent  indorsers.  But  when  an  instrument  has  been  mate- 
rially altered  and  is  in  the  hands  of  a  holder  in  due  course,  not 
a  party  to  the  alteration,  he  may  enforce  payment  thereof  accord- 
ing to  its  original  tenor.^-  ^* 

See  text,  §§  144,  188. 

Cross  sections:     66,   109,  119-5,  29,   125,  64-1,  25,   52,  9-5,  16,  56,  191. 

The  first  part  of  the  first  sentence  in  Illinois  reads  as  follows :  "Where 
a  negotiable  instrument  is  fraudulently  or  materially  altered  by  the 
holder  without  the  assent  etc." 

In  the  South  Dakota  act  the  words:  "by  the  holder"  are  added  after 
the  word  "altered"  in  the  first  sentence. 

The  Wisconsin  Act  (Sec.  1679-5)  inserts  after  "assented"  "orally  or 
in  writing." 

Corresponding  provision  of  the  English  bills  of  exchange  act: 
Sec.  64  (1) ; 

■•■  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Holder  in  due  course  may  recover  according  to  original  tenor  of 
altered  instrument.     Green  v.  Harsh,  —  Ala.  — ,  86  So.  392. 

Burden  of  proof  as  to  alteration  depends  upon  its  being  apparent. 
Arnold  v.  Wood,  127  Ark.  234,  191  S.  W.  960. 

Circumstances  admissible  to  show  alteration  of  note.  Hamilton  Nat. 
Bank  v.  Emigh   (Ark.),  192  S.  W.  913. 

Giving  up  of  forged  note  no  consideration  for  note  altered  after 
payment.     Fairfield  Co.  Nat.  Bank  v.  Hammer,  89  Conn.  592,  95  Atl.  31. 

Indorsement  of  payment  on  back  of  note  not  alteration.  Bland  v. 
Fidelity  Trust  Co.,  71  'pla.  499,  71  So.  630. 

Jury  must  consider  evidence  other  than  note  itself  in  determining 
when  alteration  made.     Peterson  v.  Emery,  154  111.  App.  294. 

Change  of  date  by  a  stranger  without  holder's  knowledge  does  not 
prevent  recovery.    Fry  v.  Jenkins,  173  111.  App.  486. 

A  change  of  time  of  payment  upon  face  of  note  is  alteration,  but  all 
parties  agreeing  they  are  bound  by  it.  Holyfield  v.  Harrington,  84  Kan. 
760,  115  Pac.  546,  39  L.  R.  A.  (N.  S.)  131. 

Effect  of  innocent  alteration.  Edington  v.  McLeod,  87  Kan.  426,  124 
Pac.  163,  41  L.  R.  A.  (N.  S.)  230. 

Insertion  of  interest  clause  by  co-maker  is  a  material  alteration. 
White  V.  Shephard,  140  Ky.  349,  131   S.  W.  17. 

Where  note  attached  to  contract  providing  for  detachment  by  payee 
is  detached.  Robertson  v.  Commercial  Security  Co.,  152  Ky.  336,  153 
S.  W.  450. 


^^^2  NEGOTIABLE    INSTRUMENTS.  §  124 

Purchasers  knowledge  that  note  was  detached  from  contract  pro- 
viding for  detachment  does  not  affect  validity.  Pratt  v.  Rounds  160 
Ky.  358,   169  S.  W.  848. 

Holder  must  explain  apparent  or  proven  alteration.  Harrison  v. 
Pearcy,  174  Ky.  485,   192  S.  W.  513. 

Alteration  by  stranger  as  avoiding  a  negotiable  instrument.  Jeffrey 
v.  Rosen  f eld,  179  Mass.  506,  61  N.  E.   49. 

Maker  stole  note  indorsed  by  payee,  altered  it  and  negotiated  it  to 
holder  in  due  course.  Massachusetts  Nat.  Bank  v.  Snow,  187  Mass. 
159,  72  N.  E.  959. 

Recovery  upon  original  tenor  by  holder  in  due  course  where  altera- 
tion appears.     Thorpe  v.  White,  188  Mass.  2,2,2,,  74  N.  E.  592. 

No  exception  lies  to  court's  exercise  of  its  discretion  in  admitting 
note  without  explanation  of  apparent  alterations.  Wood  v.  Shelley,  196 
Mass.  114,  81  N.  E.  872. 

Fraudulent  alteration  extinguishes  obligation  and  invalidates  note. 
Sherman  v.  Connecticut  Mut.  Life  Ins.  Co.,  222  Mass.  159,  110  N  E. 
159. 

Alteration  by  change  of  payee's  name  prevents  recovery.  Andrews 
v.  Sibley,  220  Mass.  10,  107  N.  E.  395. 

Where  note  blank  as  to  payee  was  fraudulently  altered  by  intended 
payee  and  negotiated,  recovery  can  not  be  had.  Tower  v.  Stanley,  220 
Mass.  429,  107  N.  E.  1010. 

Court  declined  to  decide  holder's  rights  where  maker  willing  to  pay 
as  per  original  tenor  of  note.  Munroe  v.  Stanley,  220  Mass.  438,  107 
N.  E.  1012. 

Payee's  erasure  of  his  name  and  increasing  amount  renders  note  not 
enforceable.  Stone  v.  Sargent,  220  Mass.  445,  107  N.  E.  1014. 

Alteration  in  date  presumed  to  be  made  before  delivery,  nothing  sus- 
picious appearing.     Ensign  v.  Fogg,  177  Mich.  317,  143  N.  W.  82. 

Accommodation  maker  hable  only  for  original  tenor  where  note 
altered  by  accommodated  maker.  Public  Bank  v.  Knox-Burchard  Co. 
(Minn.),  160  N.  W.  667. 

Erasure  of  conjunctive  "and"  and  insertion  of  "or"  between  per- 
sons required  to  indorse  before  payment  is  material  alteration.  Trustees 
of  German,  etc..  Congregation  v.  Merchants'  Nat.  Bank  (Minn.),  165  N. 
W.  491. 

Fraudulent  alteration  prevents  recovery.  Bank  of  Flat  River  v. 
Walton,  187  Mo.  App.  621,  173  S.  W.  56. 

Depositor  Responsible  for  signing  blank  checks  which  may  be  stolen 
and  completed.  S.  S.  Allen  Grocery  Co.  v.  Bank  of  Buchanan  Co.,  192 
Mo.  App.  476,  182  S.  W.  111. 

Detachment  of  agreement  glued  to  accepted  bill  as  alteration.  Bothell 
v.  Schweitzer,  84  Neb.  271,  120  N.  W.  1129,  22  L.  R.  A.  (N.  S.)  263. 

Burden  of  proving  alteration  is  upon  defendant.  Teske  v.  Baum- 
gart.  99  Neb.  479,  156  N.  W.  1044. 

Check  with  printed  words  "Not  good  for  more  than  $15,"  called  for 
$37.98,  is  good  for  the  amount  authorized.  Marshall  &  Co.  v.  Kirsch- 
braun  &  Louis.  100  Neb.  876. 

Interliniation  of  waiver  of  service  of  protest  is  alteration.  Stan- 
ford V.   Stanford   (N.  J.),  101  Atl.  388. 

Accommodation  indorser  liable  only  in  amount  stated  prior  to  mak- 
er's alteration.  Packard  v.  Windholz,  88  App.  Div.  365,  84  N.  Y.  Supp. 
666;  affirmed  180  N.  Y.  549. 


§  124  DISCHARGE    OF    INSTRUMENTS.  633 

Accommodation  indorser  not  liable  where  maker  alters  note  by  in- 
creasing the  amount  by  filling  blank  spaces.  National  Exchange  Bank  v. 
Lester,  194  N.  Y.  461,  87  N.  E.  79. 

Drawer's  loss  caused  by  payees  false  representation  rather  than  by 
change  of  date  on  check  alleged  to  be  lost.  Moskowitz  v.  Deutsch,  46 
Misc.  Rep.  603,  92  N.  Y.  Supp.  721. 

Alteration  in  New  York  is  governed  by  laws  of  New  York.  Colonial 
Nat.  Bank  v.  Duerr,   108  App.  Div.  215,  95  N.  Y.  Supp.  810. 

When  mere  inspection  shows  alteration  one  is  not  purchaser  in  due 
course.     Elias  v.  Whitney,  50  Misc.  Rep.  326,  98  N.  Y.  Supp.  667. 

Question  as  to  negligence  of  leaving  blank  spaces  which  can  be 
filled  in  check  to  add  to  the  amount  is  for  jury.  Timbell  v.  Garfield 
Nat.  Bank,  121  App.  Div.  870,  106  N.  Y.  Supp.  497. 

Addition  of  interest  clause  is  material  alteration  affecting  note. 
Witteman  v.  Glass,  117  N.  Y.  Supp.  940. 

Depositors  duty  as  to  blank  spaces  on  his  checks.  Trust  Co.  of 
America  v.  Conklin,  65  Misc.  Rep.  1,   119  N.  Y.  Supp.  367. 

Drawer  of  check  in  blank  owes  no  duty  to  purchaser  of  same  after 
filled  in.    Limick  v.  Nutting  &  Co.,  140  App.  Div.  262,  125  N.  Y.  Supp.  93. 

Plaintiff  must  explain  all  apparent  alterations.  Eisner  v.  Crom- 
mette,  151  N.  Y.  Supp.  3. 

Holder  of  note  signed  in  blank  and  stolen  can  not  recover.  Holz- 
man,  Cohen  &  Co.  v.  Teague,  156  N.  Y.  Supp.  290. 

Addition  of  word  "hundred"  by  a  clerk  upon  a  note  secured  by  a 
mortgage,  the  sum  stated  after  the  addition  to  the  note  did  not  invalidate. 
Donneybrook  State  Bank  v.  Corbett  (N.  D.),  163  N.  W.  275. 

Extension  of  time  is  not  an  alteration.  Richards  v.  Market  Exch. 
Bank  Co.,  81  Ohio  St.  348,  90  N.  E.  1000,  26  L.  R.  A.  (N.  S.)  99. 

Defendant  admitting  signature  of  note  regular  in  form  has  burden 
of  proving  alteration.     Cavitt  v.  Robertson,  42   Okla.  619.   142   Pac.  299. 

Burden  of  showing  Maker's  consent  is  upon  holder  admitting  altera- 
tion.    West  v.  Naten   (Okla.),  152  Pac.  342. 

Defendant  pleading  material  alteration  has  burden  of  proof.  Kapp  v. 
Levyson    (Okla.),    160  Pac.  457. 

Detaching  note  from  contract  v/here  attached  by  perforations  not 
alteration.     Conqueror  Trust  Co.  v.  Simmon   (Okla.),  162  Pac.  1098. 

"Negligence  of  drawer  of  blank  check  is  for  jury."  Snyder  v.  Corn 
Exchange  Nat.  Bank,  221  Pa.  599,  70  Atl.  876. 

Where  no  apparent  alteration  and  no  evidence  of  such  no  question 
for  jury  upon  alteration.  Brcvv^n  v.  Marmaduke,  248  Pa.  252,  93  Atl. 
1021,  1023. 

Plea  of  non  est  factum  on  ground  of  alteration  puts  burden  of  proof 
on  defendant.     Peevey  v.  Buchanan.  131  Tenn.  24,  173  5.  W.  447. 

No  recoverv  by  payee  on  notes  fraudulently  altered.  Columbia  Groc- 
ery Co.  V.  Marshall,  131   Tenn.  270.  174  S.  W.  1108. 

Presumptions  that  stamping  of  v^-aiver  of  protest  was  placed  on  before 
delivery.  Farmers'  &  Stockgrowers  Bank  v.  Pahvant  Valley  Land  Co. 
(Utah),  165  Pac.  462. 

No  recovery  had  v/here  discounting  bank  was  party  to  alteration  of 
note.  Washington  Finance  Corn.  v.  Glass,  74  Wash.  653,  134  Psc.  480. 
46  L.  R.  A.   (N.   S.)   1043. 

Where  note  altered  in  favor  ol  maker  and  he  makes  no  objection, 
note  is  held  to  be  valid.  Harper  v.  Clear  Fork  Co.  (W.  Va.),  92  S. 
E.  565. 


534  NEGOTIABLE   INSTRUMENTS.  §  124 

Material  alteration  before  passage  of  negotiable  instruments  law 
affects  the  recovery.    Hecht  v.  Shenners,  126  Wis.  27,  105  N.  W.  359. 

Authority  to  fill  blanks  not  authority  to  change  place  of  payment 
designated.     First  Nat.   Bank.  v.  Barnuni,   160   Fed.  245. 

Application  to  material  alteration  after  maturity.  Pensacola  State 
Bank  v.  Melton,  210  Fed.  Rep.  57. 

Party  offering  note  with  material  and  suspicious  alteration  must  give 
evidence  to  explain  the  condition.     Ofenstein  v.  Bryan,  20  App.  D.  C.   1. 

Suspicious  character  of  alteration  is  for  court  and  question  as  to 
when  made  for  the  jury.     Towles  v.  Tanner,  21  App.  D.  C.  530. 

When  leaving  of  spaces  which  can  be  filled  is  violation  of  customer's 
duty  to  bank.     Scholfield  v.  Londesborough   (1896),  A.  C.  514. 

Recovery  in  suit  for  return  of  money  paid  on  certified  check  altered 
and  in  hands  of  holder  in  due  course.  Imperial  Bank  v.  Bank  of  Hamil- 
ton (1903),  A.  C.  49. 

Customer's  duty  to  bank  as  to  blank  spaces  in  check  and  jury's  find- 
ing. Colonial  Bank  of  Australasia  v.  Marshall  (1906),  A.  C.  559,  Privy 
Council. 

Effect  of  employee  adding  words  and  figures  to  check  of  his  employer 
and    absconding   with    money.    London   Joint    Stock    Bank    v.    Macmillan 

(1918),  A.  c.  m. 

Alteration  is  apparent  if  bank  can  point  it  out  to  holder.  Leeds 
&  County  Bank  v.  Walker,  11   Q.   B.   D.  84. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

^/a5awfa.— Bledsoe  v.  City  Nat.  Bank,  7  Ala.  App.  195,  60  So.  942; 
Green  v.  Harsh,  86  So.  392. 

Arkansas.— KrnoXA  v.  Wood  (1917),  127  Ark.  234,  191  S.  W.  960; 
Hamilton  Nat.  Bank  v.  Emigh   (Ark.),  192  S.  W.   913. 

California.— '^mx'Ca  v.  Hirst  (1917),  163  Pac.  334,  32  Cal.  App.  507. 

Colorado.— hyx^s  v.  Walker   (1913).  54  Colo.   571. 

Connecticut. — Fairfield  Co.  Nat.  Bank  v.  Hammer  (1915),  87  Conn. 
592,  95  Atl.  31. 

F/onia.— Bland  v.  Fidelity  Trust  Co..  71  Fla.  499,  71  So.  630. 

Illinois. — Peterson  v.  Emery  (1910),  154  111.  App.  294;  Fry  v.  Jen- 
kins (1912),  173  111.  App.  486. 

/owa.— John.ston   v.   Hoover    (1908),    139   Iowa    143,    117    N.   W.   277. 

Kansas. — McCormick  Harvesting  Machine  Co.  v.  Lauber  (1898),  7 
Kans.  Ct.  of  App.  739;  New  York  L.  Ins  Co.  v.  Martindale  (1907V,  75 
Kans.  142,  88  Pac.  559,  121  Am.  St.  362;  Plolyfield  v.  Harrington  (1911), 
84  Kans,  760.  115  Pac.  546;  Fisher  v.  Spillman  (1911),  85  Kans.  552; 
Edington  v.  McLeod  (1912),  87  Kans.  426,  124  Pac.  163,  41  L.  R.  A. 
(N.  S.)  230. 

Kenfucky.—Stariley  v.  Davis,  32  Ky.  L.  1135,  107  S.  W.  773;  Diamond 
Distilleries  Co.  v.  Gott  (1910),  137  Ky.  585,  126  S.  W.  131;  White  v. 
Shepherd  (1910),  140  Ky.  349,  131  S.  W.  17;  Tyler  v.  First  Nat.  Bank 


§  124  DISCHARGE   OF    INSTRUMENTS.  635 

of  Winslow  (1912),  ISO  Ky.  515;  Robertson  v.  Commercial  Security 
Co.  (1913),  152  Kv.  336,  153  S.  W.  450;  Aud  v.  McElvoy  (1917).  197 
S.  W.  824;  Commercial  Bank  v.  Arden  (1917),  197  S.  W.  951;  Pratt 
V.  Rounds,  160  Ky.  358,  169  S.  W.  848;  Harrison  v.  Pearcy,  174  Kv.  485, 
192  S.  W.  513. 

Massachusetts. — Stone  v.  Sargent,  220  Mass.  445,  107  N.  E.  1014; 
Mass.  Nat.  Bank  v.  Snow,  187  Mass.  159.  72  N.  E.  959;  Andrews  v. 
Sibley,  220  Mass.  10,  107  N.  E.  395;  Jeffrey  v.  Rosenfield  (1901),  179 
Mass.  506;  61  N.  E.  421;  Thorpe  v.  White  (1905).  188  Mass.  333,  74  N. 
E.  592;  Wood  v.  Shelley  (1907).  196  Mass.  114,  81  N.  E.  872;  Tower  v. 
Stanley  (1915),  220  Mass.  429,  107  N.  E.  1010;  Broadway  Nat.  Bank  v. 
Hefferman,  220  Mass.  247,  107  N.  E.  921;  Sherman  v.  Connecticut  Mut. 
Life  Ins.  Co.,  222  Mass.  159,  110  N.  E.  159;  Munroe  v.  Stanley,  220  Mass. 
438,  107  N.  E.  1012. 

Michigan.— Ensign  v.  Fogg  (1913),  177  Mich.  317,  143  N.  W.  82, 

Missouri.— Bank  of  Flat  River  v.  Walton,  187  Mo.  App.  621,  173  S. 
W.  76;  Clifford  Banking  Co.  v.  Donovan  Co,  195  Mo.  App.  262.  94  S. 
W.  527 ;  S.  S.  Allen  Grocery  Co.  v.  Bank  of  Buchanan  Co.,  192  Mo.  App. 
476,  182  S.  W.  777. 

Minnesota.— Public  Bk.  of  N.  Y.  v.  Burchard  Mer.  Co.  (1916),  160  N. 
W.  667;  Trustees  of  German,  etc.,  Congregation  v.  Merchants  Nat.  Bk. 
(Minn.)  165  N.  W.  491. 

Nebraska.— Bothell  v.  Schweitzer  (1909).  84  Neb.  271,  120  N.  W.  1129, 
22  L.  R.  A.  (N.  S.)  263;  Bothell  v.  Miller  (1910),  87  Neb.  835; 
Marshall  &  Co.  v.  Kirschbaum  &  Louis,  100  Neb.  876;  Teske  v.  Baumgart, 
99  Neb.  479,  156  N.  W.  1044. 

New  Hampshire.— Bishec  v.  Pulpit  Farm  Dairy  (1917),  100  Atl.  672. 

New  Jersey.—Staniord  v.  Stanford   (1917),  101  Atl.  388. 

New  York.— Crititn  v.  Chemical  Nat.  Bk.  (1901),  60  A.  D.  241;  Mut. 
Loan  Assn.  v.  Lesser  (1902).  76  A.  D.  614.  78  N.  Y.  Supp.  629;  Mer- 
chants Bank  v.  Brown  (  1903),  86  A.  D.  599.  83  N.  Y.  Supp.  1037;  Pack- 
ard V.  Windholz  (1903).  40  Misc.  347,  affirmed  88  A.  D.  365;  180  N.  Y. 
549;  Birmingham  Tr.  Co.  v.  Whitney  (1904),  95  A.  D.  280.  88  N.  Y. 
Supp.  578;  Moskowitz  v.  Deutsch  (1905),  46  Misc.  603,  92  N.  Y.  Supp.  721 ; 
603;  Moskowitz  v.  Deutsch  (1905),  46  Misc.  603.  92  N.  Y.  Supp.  721; 
Colonial  Nat.  Bank  v.  Duerr  (1905).  108  A.  D.  215.  95  N.  Y.  Supp.  810; 
Colonial  Nat.  Bank  of  Citv  of  Brooklvn  v.  Gridley  (1906).  112  A.  D. 
398,  98  N.  Y.;  Elias  v.  Whitney  (1906),  98  N.  Y.  Supp.  667,  50  Misc.  326; 
Smith  V.  State  Bank  (1907),  54  Misc.  550.  104  N.  Y.  Supp.  750;  Timbel  v. 
Garfield  Nat.  Bk.  (1907).  121  A.  D.  870,  106  N.  Y.  Supp.  497;  Nat.  Ex. 
Bk.  of  Albany  v.  Lester  (1909\  194  N.  Y.  461,  87  N.  E.  79;  Witteman  v. 
Glass  (1909).  117  N.  Y.  Supp.  940;  Usefof  v.  Herzenstein  (1909),  65  Misc. 
45,  119  N.  Y.  Supp.  290;  Trust  Co.  of  Am.  v.  Conklin  (1909),  65  Misc. 
1,  119  N.  Y.  Supp.  367;  Eisner  v.  Crommette,  151  N.  Y.  Supp.  3;  Holz- 
man,  Cohen  &  Co.  v.  Teague,  156  N.  Y.  Supp.  290;  Limick  v.  Nutting  & 
Co.,  125  N.  Y.  Supp.  93,  140  A.  D.  262. 

North  Dakota.—Sa.wyer  State  Bank  v.  Sutherland  (1917),  162  N.  W. 
696;  Donneybrook  State  Bank  v.  Corbett  (N.  D.)  163  N.  W-  275. 


636  NEGOTIABLE    INSTRUMENTS.  §  125 

Ohio. — Hoffman  v.  Wiedeman  Brewing  Co.  (1910),  31  Ohio  Cir.  Ct. 
609;  Richards  v.  Market  Exch.  81  Ohio  St.  348,  90  N.  E.  1000,  26  L. 
R.   A.   (N.  S.)   99. 

Oklahoma. — Commonwealth  Nat.  Bank  of  Dallas  v.  Baughman 
(1910),  27  Okla.  175,  111  Pac.  332;  Barrett  v.  Effenbcr  (1911),  29  Okla. 
Sup.  Ct.  679;  Cox  v.  Kirkwood  (1916).  158  Pac.  930;  Kapp  v.  Levyson 
(Okla.),  160  Pac.  457;  Cavitt  v.  Robertson,  42  Okla.  619,  142  Pac.  299; 
West  V.  Najten  (Okla.),  152  Pac.  342;  Zehr  v.  Champlin  (1916),  159 
Pac.  118;  Conqueror  Trust  Co.  v.  Simmon   (1917),  162  Pac.  1098. 

Pennsylvania. — Snyder  v.  Commercial  Ex.  Nat.  Bank  (1908),  221 
Pa.  599,  70  Atl.  876;  Brown  v.  Marmaduke,  248  Pa.  252,  93  Atl.  1021, 
1023. 

Rhode  Island.— Ahram  v.  Greer    (1913),  88  Atl.  884. 

Tennessee. — Aioss  v.  Maddux  (1902),  108  Tenn.  405;  Peevey  v.  Bu- 
chanan, 131  Tenn.  27,  173  S.  W.  447 ;  Columbia  Grocery  Co.  v.  Marshall, 
131  Tenn.  270,  174  S.  W.   1108. 

Texas.— Landon  v.  Halcomb   (1916),  184  S.  W.  1098. 

Utah.— Wostenhoime  v.  Smith  (1908),  34  Utah,  300,  97  Pac.  329; 
Farmers  &  Stock  Growers'  Bank  v.  Pahvant  Valley  Land  Co.  (1917), 
165  Pac.  462. 

Virginia.— Uofiman  v.  Planter's  Nat.  Bank  (1901),  99  Va.  480,  39 
S.  E.  134;  Am.  Bank  of  Orange  v.  McComb  (1906),  105  Va.  473,  54 
S.  E.  14;  Nottingham  v.  Ackiss  (1907),  107  Va.  63,  57  S.  E.  592. 

Washington. — Washington  Finance  Corporation  v.  Glass  (1913),  74 
Wash.  653.  134  Pac.  480,  46  L.  R.  A.  (N.  S.)  1043;  Davis  v.  Byrne  (1916), 
152  Pac.  14;  Lombardo  v.  Lomburdini  (1910).  57  Wash.  352,  106  Pac. 
907;  Pitt  v.  Little  (1910),  58  Wash.  355,  108  Pac.  941. 

West  Virginia.— Harper  v.   Clear  Fork  Co.   (  W.Va.),  92  S.  E.  565. 

Wisconsin.— Uecht  v.  Shenners   (1905),  126  Wis.  27,  105  N.  W.  309. 

United  States.— First  Nat.  Bank  of  Wilkesbarre  v.  Barnum  (1908), 
160  Fed.  245;  First  Nat.  Bank  of  Shenandoah  v.  Linver  (1911),  187  Fed. 
16,  109  C.  C.  A.  70;  Towles  v.  Tanner  (1903),  21  App.  D.  C.  530;  Pen- 
.sacola  State  Bank  v.  Melton    (1913),  210  Fed.   57. 

§  125.  What  constitutes  a  material  alteration.  Any  alter- 
ation which  changes : 

.1  The  date ; 

2.  The  sum  payable,  either  for  principal  or  interest; 

3.  The  time  or  place  of  payment ; 

4.  The  number  or  the  relations  of  the  parties; 


§  125  DISCHARGE   OF   INSTRUMENTS.  637 

5.  The  medium  or  currency  in  which  payment  is  to  be  made ; 
or  which  adds  a  place  of  payment  where  no  place  of  payment  is 
specified,  or  any  other  change  or  addition  which  alters  the  effect 
of  the  instrument  in  any  respect,  is  a  material  alteration.*-  ** 

See  text,  §   188. 

Cross  sections:  13,  14,  64,  28,  124. 

Corresponding  provision  of  English  Bills  of  Exchange  Act:  64  (2) 
omits  words  "either  for  principal  or  interest" ; 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Legal  import  not  changed  by  filling  in  rate  of  interest  in  blank. 
Haas  V.  Commerce  Trust  Co.,  194  Ala.  672,  69  So.  894. 

Substitution  of  word  "bearer"  for  "order"  is  material  alteration  of 
note.  Builders'  Lime  &  Cement  Co.  v.  Weimer,  170  Iowa  444,  151  N. 
W.  100,  Ann  Cas.  1917C,  1174. 

Addition  of  an  indorser  before  delivery  to  payee  is  not  a  material 
alteration  releasing,  a  prior  indorser.  Devoy  &  Kuhn  Coal  Co.  v.  Huttig, 
174  Iowa  357,  156  N.  W.  413. 

Changing  "I  promise"  to  "We  promise"  where  signed  by  two  makers 
is  not  material  and  does  not  avoid  note.  Stanley  v.  Davis,  32  Ky.  Law 
Rep.  1135,  107  S.  W.  111. 

Addition  of  "Pt."  to  name  of  payee  is  material  and  releases  maker 
who  wrote  "surety"  after  his  name.  Tyler  v.  First  Nat.  Bk.,  150  Ky. 
515,  150  S.  W.  665. 

Alteration  should  be  described  in  a  bill  in  equity  for  relief  there- 
from,.   Jeffrey  v.  Rosenfeld,  179  Mass.  506,  61  N.  E.  49. 

Annexing  revenue  stamp  when  not  an  alteration.  Rowe  v.  Bow- 
man, 183  Mass.  488,  67  N.  E.  636. 

Adding  interest  clause  is  material  alteration.  Broadway  Nat.  Bank 
V.  Hefferman,  220  Mass.  247,  107  N.  E.  921. 

Indorsement  by  stranger  to  note  not  alteration.  Ensign  v.  Fogg, 
177  Mich.  317,  134  N.  W.  82. 

Pencil  addition  of  indorser's  address  for  record  purposes  by  bank 
is  not  an  alteration  which  relieves  indorser.  Merchants  Bank  of  Canada 
V.  Brown,  86  App.  Div.  599,  83  N.  Y.  Supp.  1037. 

Addition  of  "cash"  to  indorsee's  name  not  material  where  agreed 
that  note  should  be  discounted  at  bank  where  indorsee  was  cashier. 
Birmingham  Trust  Co.  v.  Whitney,  95  App.  Div.  280,  88  N.  Y.  Supp.  578. 

"With  interest"  added  to  note  is  material  alteration.  Columbia  Dis- 
tilling Co.  V.  Rech,  151  App.  Div.  128,  135  N.  Y.  Supp.  206. 

Payee's  addition  of  words  "with  interest"  with  authority  of  maker 
is  valid.     Levy  v.  Arons,  81  Misc.  165,  142  N.  Y.  Supp.  312. 

Filling  in  blank  on  note  margin  showing  extension  of  time  in  accord- 
ance with  agreement  with  maker  not  alteration.  Eaton  v.  Delav,  32 
N.  D.  328,  155  N.  W.  644,  L.  R.  A.  1916D,  528. 

Writing  "protest  waived"  above  indorsement  is  material  alteration  of 
indorsement.  Sawyer  State  Bank  v.  Sutherland,  36  N.  D.  493,  162  N. 
W.  696. 

Alteration  in  the  maturity  of  note  is  material.  Palomcki  v.  Laurel! 
(Ore.),   168  Pac.  935. 


638  NEGOTIABLE   INSTRUMENTS.  §  125 

Addition  of  name  of  witness  to  sureties'  signature  is  material  altera- 
tion.    Swank  v.  Kaufman,  255  Pa.  316^99  At).  1000,  L.  R.  A.  1917D,  826. 

Filling  in  payee's  name  and  date  but  changing  month  is  not  material 
alteration  as  to  accommodation  makers.  Holman  v.  Higgins,  134  Tenn. 
387,  183  S.  W.  IOCS,  L.  R.  A.  1916F,  1263. 

Change  of  name  of  payee  is  material  alteration.  Hoffman  v.  Plant- 
ers' Nat.  Bank,  99  Va.  480,  39  S.  E.  134. 

Where  note  recited  that  it  was  due  in  1903,  and  was  payable  one 
year  after  October  24,  1892,  alteration  of  date  to  1903  not  material. 
Lombardo  v.  Lomburdini,  57  Wash.  352,  106  Pac.  907,  32  L.  R.  A.  (N.  S.) 
515. 

Addition  of  another  maker  is  material  alteration  as  to  prior  makers. 
Handsaker  v.  Pederson,  71  Wash.  218,  128  Pac.  230. 

Addition  of  figure  increasing  amount  of  check  is  material  alteration. 
Lawless  v.  State,  114  Wis.   189,  89  N.  W.  891. 

Where  bank  named  had  ceased  to  exist  and  now  operated  under  an- 
other name,  the  change  of  name  to  present  name  not  material.  Melton 
V.  Pensacola  Bank,  190  Fed.  Rep.  126.  Ill  C.  C.  A.  166. 

Effect  of  striking  out  "order"  where  statute  does  not  reqiure  in- 
strument to  be  payable  to  order.     Meyer  v.  Decroix   (1891),  A.  C.  520. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama.— Crzwiord  v.  Simonton,  163  Ala.  609,  50  So.  1024;  Haas  v. 
Commerce  Trust  Co.,  194  Ala.  672,  69  So.  894. 

California.—Smith  v.  Hirst  (1917),  163  Pac.  334,  32  Cal.  App.  507. 

Colorado.— Ayres  v.  Walker    (1913),  54  Colo.  571,  131   Pac.  384. 

///mow.— Fry   v.    Jenkins    (1912),    173    111.   App.    486. 

Iowa.— Devoy  &  Kuhn  Coal  Co.  v.  Huttig,  174  Iowa  357,  156  N.  W. 
413;  Builder's  Lime  &  Cement  Co.  v.  Weimer,  170  Iowa  444,  151  N.  W. 
100,  Ann.  Cas.  1917C,  1174. 

Florida.— Gamble  v.   Malsby   (1914),  64  So.  437. 

Kansas.— Holyfield  v.  Harrington  (1911),  84  Kans.  760,  115  Pac.  546; 
Fisher  v.  Spillman  (1911).  85  Kans.  552;  Edington  v.  McLeod  (1912), 
87  Kans.  426,  124  Pac.   163,  41  L.  R.  A.  (N.  S.),  230. 

Kentucky.— Mitchell  v.  Reed's  Exr.,  32  Ky.  Law  Rep.  683,  106  S.  W. 
833;  Tyler  v.  First  Nat.  Bank  of  Winslow  (1912),  150  Ky.  515,  150 
S.  W.  665;  Stanley  v.  Davis,  32  Ky.  Law  Rep.  1135,  107  S.  W.  773. 

Massachusetts.— Jeffrey  v.  Rosen f eld  (1901),  179  Mass.  506;  61  N. 
E.  49;  Rowe  v.  Bowman  (1903),  183  Mass.  488,  67  N.  E.  636;  Broadway 
Nat.  Bank  of  Chelsea  v.  Hefferman  (1915),  220  Mass.  247,  107  N.  W. 
921;  Lewis  v.  Blume   (1917),  116  N.  E.  271. 

Michigan.— Ensign  v.  Fogg  (1913),  177  Mich.  317,  143  N.  W.  82. 

Minnesota.— KieieT  v.  Tolbert  (1915),  151  N.  W.  529,  Spiering  v. 
Spiering  (1917),  164  N.  W.  583. 

Monfono.— State  v.  Milton   (1908),  37  Mont.  366,  96  Pac.  926. 


§  125  DISCHARGE    OF   INSTRUMENTS.  639 

New  Jersey.— Siznlor 6.  v.  Stanford   (1917),  101  Atl.  388. 

New  For/t— Colonial  Nat.  Bank  v.  Duerr,  95  N.  Y.  Supp.  810,  108  A. 

D.  215;  Witteman  v.  Glass  (1909),  117  N.  Y.  Supp.  940;  Merchants' 
Bank  of  Canada  v.  Brown,  86  App.  Div.  599,  83  N.  Y.  Supp.  1037 ;  Bir- 
mingham Tr.  Co.  V.  Whitney  (1904),  95  A.  D.  280,  88  N.  Y.  Supp. 
578;  Dumbrow  v.  Gelb,  130  N.  Y.  Supp.  182,  72  Misc.  Rep.  400;  Colum- 
bia Distilling  Co.  v.  Rech  (1912),  151  A.  D.  128,  135  N.  Y.  Supp.  206; 
Levy  V.  Arons.  142  N.  Y.  Supp.  312,  81  Misc.  165. 

North  Dakota. — Merchants  Nat.  Bank  of  Wimbledon  v.  Bastrup 
(1918),  168  N.  W.  42;  Eaton  v.  Delay,  32  N.  D.  328,  155  N.  W.  644, 
L.  R.  A.  1916D,  528;  Sawyer  State  Bank  v.  Sutherland,  36  N.  D.  493, 
162  N.  W.  696. 

O^jo.— Hoffman  v.  Wiedeman  Brewing  Co.  (1910),  31  Ohio  C.  C.  609. 

Oklahoma. — Conqueror  Trust  Co.  v.  Simmon   (1917),  162  Pac.    1098. 

Or^^ow.— Palomcki  v.  Laurell   (1917),  168  Pac.  935. 

Pennsylvania.— Sv/znk  v.  Kaufman,  255  Pa.  316,  99  Atl.  1000,  L.  R.  A. 
1917D,  826. 

Rhode  Island.— Ahrzm  v.    Greer    (1913),   88    Atl.   884. 

Tennessee. — Moss  v.  Maddux  (1902),  108  Tenn.  405;  Holman  v.  Hig- 
gins,  134  Tenn.  387,  183  S.  W.  1008,  L.  R.  A.  1916F,  1263. 

Texas.—Spencer  v.  Triplett   (1916),  184  S.  W.  712. 

Utah. — Farmers  &  Stock  Growers'  Bank  v.  Palivant  Valley  Land  Co. 
(1917),  165  Pac.  462. 

Virginia.— Hofimzn  v.  Planter's  Nat.  Bank  (1901),  99  Va.  480,  39  S. 

E.  134;  Nottingham  v.  Ackiss,  107  Va.  63,  57  S.  E.  592,  67  S.  E.  351. 

Washington. — Lombardo  v.  Lomburdini  (1910),  57  Wash.  352,  106 
Pac.  907,  32  L.  R.  A.  (N.  S.)  515;  Pitt  v.  Little  (1910),  58  Wash.  355, 
108  Pac.  941;  Handsaker  v.  Pedersen  (1912),  71  Wash  218,  128  Pac. 
230;  Washington  Finance  Corporation  v.  Glass  (1913),  134  Pac.  480; 
Gould  V.  Gould  (1917),  169  Pac.  324. 

Wisconsin.— Lzv/less   v.   State    (1902),   114  Wis.   189,  89  N.  W.  891. 

United  States.— Melton  v.  Pensacola  Bank,  190  Fed.  Rep.  126,  111  C 
C.  A.  166;  Pensacola  State  Bank  v.  Melton   (1913),  210  Fed.   57. 


ARTICLE  IX. 
BILLS    OF   EXCHANGE— FORM   AND    INTERPRETATION. 


§  126.  Bill  of  exchange  defined. 

127.  Bill    not    an    assignment    of 

funds  in  hands  of  drawee. 

128.  Bill  addressed  to  more  than 

one  drawee. 


§  129.  Inland   and   foreign   bills   of 
exchange. 

130.  When  bill  may  be  treated  as 

promissory  note. 

131.  Drawee  in  case  of  need. 


Sections  126  to  131  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  Law  in  the  various  states 
and  territories  beginning  on  page  360. 

§  126.  Bill  of  exchange  defined.  A  bill  of  exchange  is  an 
unconditional  order  in  writing  addressed  by  one  person  to  an- 
other, signed  by  the  person  giving  it,  requiring  the  person  to 
whom  it  is  addressed  to  pay  on  demand  or  at  a  fixed  or  deter- 
minable future  time  a  sum  certain  in  money  to  order  or  to 
bearer.*'  *■ 

See  text,  §  39. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act: 
Sees.  3  (1),  (2),  8  (4)— Bills  of  Exchange  Act:  3   (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Contractor's  order  on  owner  not  payable  to  "order  or  bearer"  as  ne- 
gotiable paper.  Simpson  v.  E.  C.  Payne  Lumber  Co.,  —  Ala.  — ,  82  So. 
649. 

Bill  of  exchange  as  term  of  pleading.  Knox  v.  Rivers  Bros.,  —  Ala. 
App.  — ,  88  So.  33. 

An  order  drawn  upon  no  one  in  particular  is  too  indefinite.  Dugane 
V.  Hvezda  Pokroku  No.  4  (Iowa),  119  N.  W.  141. 

Contractor's  order  to  owner  of  building  to  pay  from  amount  finally 
due  a  certain  sum  is  not  a  bill  of  exchange.  Buttrick  Lumber  Co.  v. 
Collins,  202  Mass.  413,  89  N.  E.  138. 

Voucher  draft  becomes  negotiable  when  receipted  in  the  manner  pro- 
vided therein.  Van  Blatz  Brewing  Co.  v.  Interstate  Ice  Co.,  161  Mo. 
App.  531,  143  S.  W.  542. 

Bill  designating  on  its  face  that  it  is  to  be  paid  from  special  funds 
when  they  come  into  existence  is  not  negotiable.  Tisdale  Lumber  Co. 
V.  Piquet,  153  App.  Div.  266,  137  N.  Y.  Supp.  1021. 

640 


§  126  BILLS   OF   EXCHANGE — FORM.  641 

Defendant's  giving  a  bill  of  exchange  knowing  that  same  will  not 
be  paid  is  not  an  equitable  assignment  of  defendant's  rights.  American 
Luxfer  Prism  Co.  v.  Bartolicius  Star  Iron  Works,  152  N.  Y.  Supp.  1014. 

Bill  of  exchange  is  valid  even  though  not  dated.  Lewis  Hubbard 
Co.  v.  Morton,  80  W.  Va.  137,  92  S.  E.  252. 

Orders  authorizing  the  deduction  of  one  dollar  per  month  from 
monthly  pay  to  be  paid  to  physician  are  bills  binding  on  drawee  after 
acceptance.     Skeets  v.  Coast  Coal  Co.,  74  Wash.  327,   133  Pac.  433. 

A  time  check  as  a  negotiable  instrument.  National  Market  Co.  v. 
Maryland  Casualty  Co.,  —  Wash.  — ,  179  Pac.  479. 

Telegraph  transfer  draft  as  a  commercial  instrument.  Postal  Tele- 
graph-Cable Co.  v.  Citizens'  Nat.  Bank,  228  Fed.  Rep.  601,  143  C.  C.  A. 
123. 

Acceptor  of  bill  of  exchange  struck  out  the  words  "or  order,"  but 
under  English  statute  this  did  not  affect  it  so  as  to  render  alteration 
material.    Meyer  v.  Decroix  (1891),  A.  C.  520. 

Instrument  in  form  of  bill  of  exchange  not  bearing  a  drawer's  sig- 
nature is  not  a  bill  of  exchange.  Lawson's  Executors  v.  Watson  (1907), 
Session  Cases  1353. 

*■  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Knox  v.  Rivers  Bros.,  88  So.  33;  Simpson  v.  E.  C.  Payne 
Lumber  Co.,  82  So.  649. 

Colorado.— Van  Buskirk  v.  State  Bk.  of  Rocky  Ford  (1905),  35  Colo. 
142,  83  Pac.  778,  117  Am.  St.  182. 

Connecticut.— Windsor  Cement  Co.  v.  Thompson    (1913),  86  Atl.  1. 

Delazvare.— Law  son  v.  Layton  &  Layton  (1913),  86  Atl.  105. 

Iowa.— Bugane  v.  Hvezda  Pokroku  No.  4  (1909),  119  N.  W.  141. 

Massachusetts.— BuUrkk  Lumber  Co.  v.  Collins  (1909).  202  Mass. 
413,  89  N.  E.  138. 

Mississippi. — Country  Shiloh  &  Savannah  Turnpike  Co.  v.  Goch 
(1917),  113  Miss.  50,  73  So.  869. 

Missouri.— Ya\  Blatz  Brewing  Co.  v.  Interstate  Ice  &  C.  (1912),  143  S. 
W.  542. 

New  York.— Amsinck  v.  Rogers  (1907).  189  N.  Y.  252,  82  N.  E.  134 
12  L.  R.  A.  (N.  S.)  875,  121  Am.  St.  858. 

North  Carolina.— Johnson  v.  Lasseter   (1911),  155  N.  Car.  47. 

New  M^;rico.— Clayton  Town  Site  Co.  v.  Clayton  Drug  Co.  (1915), 
147  Pac.  460. 

New  York.—Thda\e  Lumber  Co.  v.  Piquet  (1912).  137  N.  Y.  Supp. 
1021. 

Oregon.— v.  S.  Nat.  Bk.  v.  First  Trust  &  Sav.  Bk.  (1911),  60  Ore. 
266,  119  Pac.  343. 


642  NEGOTIABLE    INSTRUMENTS.  §  127 

Tennessee. — First  Nat.  Bk.  of  Murfreesboro  v.  First  Nat.  Bk.  of 
Nashville  (1913),  154  S.  W.  965. 

Washington. — Frederick  &  Nelson  v.  Spokane  Grain  Co.  (1907),  47 
Wash.  85,  91  Pac.  570;  The  State  v.  Garland  (1908),  65  Wash.  666; 
Skeets  V.  Coast  Coal  Co.  (1913),  133  Pac.  433;  Plaza  Farmer's  Union 
Warehouse  &  Elevator  Co.  v.  Ryan  (1914),  138  Pac.  651;  National  Mar- 
ket Co.  V.  Maryland  Casualty  Co.  (1918),  179  Pac.  479. 

West  Virginia.— Lewis  Hubbard  &  Co.  v.  Morton  (1917),  92  S.  E.  252. 

Wisconsin.— Wcstherg  v.  Chicago  Lumber  Co.  (1903),  117  Wis.  589, 
94  N.  W.  572;  Columbian  Banking  Co.  v.  Bowen  (1908),  134  Wis.  218, 
114  N.  W.  451. 

Wyoming.— Brown  v.  Cowr  Creek  Co.   (1912),  126  Pac.  886. 

United  5fa/^.y.— United  States  v.  Chase  Nat.  Bk.   (1917),  241  Fed.  535. 

§  127.     Bill  not  an  assignment  of  funds  in  hands  of  drawee. 

A  bill  of  itself  does  not  operate  as  an  assignment  of  the  funds 
in  the  hands  of  the  drawee  available  for  the  payment  thereof 
and  the  drawee  is  not  liable  on  the  bill  unless  and  until  he  accepts 
the  same.*'  ** 

See  text.  §  72. 

Cross   sections :      See  section   325  as  to  checks. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
53   (1),   (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Bill  of  itself  not  an  assignment  of  funds.  Iowa  State  Sav.  Bank  of 
Fairfield  v.  City  Nat.  Bank  of  Tipton,  —  Iowa  — ,  168  N.  W.  148. 

An  unaccepted  draft  is  not  an  assignment  of  drawer's  funds.  Jones 
V.  Grumpier,  119  Va.  143,  89  S.  E.  232. 

An  order  to  pay  X  at  end  of  each  month  moneys  due  from  certain 
source  is  not  an  equitable  assignment.  Frederick  &  Nelson  v.  Spokane 
Grain  Co.,  47  Wash.  85,  91  Pac.  570. 

Giving  a  check  for  a  sum  larger  than  his  deposit  is  an  intended  as- 
signment of  deposit.  British  Linen  Co.  Bank  v.  Carruthers,  10  Sess.  Cas. 
923. 

Presentation  of  an  accepted  bill  payable  at  bank  operates  as  an  in- 
tended assignment  of  acceptor's  funds.  British  Linen  Co.  v.  Rainey,  12 
Sess.  Cas.  825. 

*"  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Delaware. — Lawson  v.  Layton  &  Layton   (1913),  86  Atl.  105. 

Florida— Fulton  v.  Gesteding  (1904),  47  Fla.  150,  36  So.  56* 


§§  128-129  BILLS    OF    EXCHANGE — FORM.  643 

Iowa. — Iowa  State  Sav.  Bank  of  Fairfield  v.  City  Nat.  Bank  of  Tipton, 
168  N.  W.  148. 

Kansas.— Ramho  v.  The  First  State  Bk.  of  Argentine  (1912),  88  Kans. 
257. 

Oregon.— [J.  S.  Nat.  Bk.  v.  First  Trust  &  Sav.  Bk.  (1911),  60  Oreg. 
266,  119  Pac.  543. 

Tennessee. — First  Nat.  Bk.  of  Murfrcesboro  v.  First  Nat.  Bk.  of 
Nashville  (1913),  154  S.  W.  965. 

Virginia.— K  &  O.  R.  R.  Co.  v.  First  Nat.  Bk.   (1904),  47  S.   E.  837. 

Washington.— V^2,dhcLms  v.  Portland  V.  &  Y.  R.  Co.  (1905),  Z7  Wash. 
86,  79  Pac.  597;  Frederick  &  Nelson  v.  Spokane  Grain  Co.  (1907),  47 
Wash.  85,  91  Pac.  570;  Nelson  v.  Nelson  Bennett  Co.  (1903),  31  Wash. 
116,  71  Pac.  749;  Skeets  v.  Coats  Coal  Co.  (1913),  133  Pac.  433;  Plaza 
Farmer's  Union  Warehouse  &  Elevator  Co.  v.  Ryan  (1914),  138  Pac.  651. 

§  128.     Bill  addressed   to  more   than  one  drawee,     A  bill 

may  be  addressed  to  two  or  more  drawees  jointly,  whether  they 
are  partners  or  not ;  but  not  to  two  or  more  drawees  in  the  alter- 
native or  in  succession.*'  ** 

See  text,  §  52. 

The  words,  "or  in  succession,"  are  not  included  in  the  Wisconsin  act. 

Corresponding  provision  of  English  Bills  of  Exchange  Act :  Sec. 
6  (2). 

§  129.  Inland  and  foreign  bills  of  exchange.  An  inland 
'bill  of  exchange  is  a  bill  which  is,  or  on  its  face  purports  to  be, 
both  drawn  and  payable  within  this  state.  Any  other  bill  is  a 
foreign  bill.  Unless  the  contrary  appears  on  the  face  of  the  bill, 
the  holder  may  treat  it  as  an  inland  bill.*-  *" 

See  text,  §  39. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
4   (1),  (2). 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

//Knois.— Sublette  Ex.   Bk.  v.  Fitzgerald    (1912),   168  111.   App.  240. 

Indiana— B'mgh^m  v.  New  Town  Bk.   (1918),  118  N.  E.  318. 

Massachusetts.— 'Exxtinck  Lumber  Co.  v.  Collins  (1909),  202  Mass. 
413,  89  N.  E.  138. 

Missouri— Bk.  of  Laddonia  v.  Bright-Coy  Comm.  Co.  (1909),  120  S. 
W.  648. 


644  NEGOTIABLE    INSTRUMENTS.  §§  130-131 

New  For^.— Amslnck  v.  Rogers  (1907),  189  N.  Y.  252,  82  N.  E.  134, 
12  L.  R.  A.  (N.  S.)  875,  121  Am.  St.  858;  Graham  v.  York  (1910),  140 
A.  D.   639. 

§  130.  When  bill  may  be  treated  as  promissory  note. 
Where  in  a  bill  the  drawer  and  drawee  are  the  same  person  or 
where  the  drawee  is  a  fictitious  person,  or  a  person  not  having 
capacity  to  contract,  the  holder  may  treat  the  instrument,  at  his 
option,  either  as  a  bill  of  exchange  or  a  promissory  note.*'  ** 

See  text,  §  52. 

The  Wisconsin  act  omits  "or  a  person." 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
5   (2). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Agent's  draft  upon  principal  by  the  latter's  authority  need  not  be  ac- 
cepted by  drawee.  First  Nat.  Bank  v.  Home  Ins.  Co.,  16  N.  M.  66,  113 
Pac.  815. 

Draft  by  agent  upon  principal  at  latter's  direciton  may  be  treated 
as  promissory  note.  C.  M.  Keyes  Commission  Co.  v.  Miller  (Okla.), 
157  Pac.   1029. 

Draft  may  be  treated  as  either  bill  or  note  by  holder.  Alex  Woldert 
Co.  V.  Citizens  Bank  of  Ft.  Valley,  Ga..  —  Tex.  Civ.  App.  — ,  234  S.  W. 
124. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

New  Mexico. — First  Nat.  Bk.  of  Artesia  v.  Home  Ins.  Co.  of  N.  Y. 
(1911),  16  N.  Mex.  66,  113  Pac.  815. 

New  For^.— Graham  v.  York  (1910),  140  A.  D.  639;  Pavenstedt  v. 
N.  Y.  Life  Ins.  Co.  (1911),  203  N.  Y.  91. 

Pennsylvania. — Hannon  v.  Allegheny  Bellevue  Land  Co.  (1910),  44 
Pa.  Super.  Ct.  266. 

Washington.— dtmtns  v.  E.  H.  Stanton  Co.  (1911),  61  Wash.  419, 
112  Pac.  494. 

§  131.  Referee  in  case  of  need.  The  drawer  of  a  bill  and 
any  indorser  may  insert  thereon  the  name  of  a  person  to  whom 
the  holder  may  resort  in  case  of  need,  that  is  to  say  in  case  the 
bill  is  dishonored  by  non-acceptance  or  non-payment.  Such 
person  is  called  the  referee  in  case  of  need.  It  is  in  the  option 
of  the  holder  to  resort  to  the  referee  in  case  of  need  or  not  as  he 
may  see  fit.*-  ** 

See  text,  §§  155,  52. 


§  131  BILLS    OF   EXCHANGE FORM.  645 

Corresponding    provision    of    the    English    Bills    of    Exchange    Act: 
Sec.  15. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Presentment  within  reasonable  time  of  demand  note.     American  Trust 
Co.  V.  Manley,  187  N.  Y.  Supp.  895. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

New  York. — American  Trust  Co.  v.  Manley,  187  N.  Y.  Supp.  895. 

Texas. — Alex  Woldert  Co.  v.  Citizens  Bank  of  Fort  Valley,  Ga.  (Tex. 
Civ.  App.),  234  S.  W.  124. 


ARTICLE  X. 


ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 


132.  Acceptance,      how      made, 

etc. 

133.  Holder   entitled   to   accept- 

ance on  face  of  bill. 

134.  Acceptance      by      separate 

instrument. 

135.  Promise    to    accept ;    when 

equivalent  to  acceptance. 

136.  Time    allowed    drawee    to 

accept. 


§  137.  Liability  of  drawee  re- 
taining or  destroying 
bill. 

138.  Acceptance    of    incomplete 

bill. 

139.  Kinds  of  acceptance. 

140.  What    constitutes     a     gen- 

eral acceptance. 

141.  Qualified  acceptance. 

142.  Rights     of     parties    as    to 

qualified  acceptance. 


Sections  132  to  142  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  law  in  the  various  states 
and  territories  beginning  on  page  360. 

§132.  Acceptance;  how  made,  et  cetera.  The  acceptance 
of  a  bill  is  the  signification  by  the  drawee  of  his  assent  to  the 
order  of  the  drawer.  The  acceptance  must  be  in  writing  and 
signed  by  the  drawee.  It  must  not  express  that  the  drawee  will 
perform  his  promise  by  any  other  means  than  the  payment  of 
money.-^'  *" 

See  text,  §§71,  11. 

Cross  sections:     Sec.  191. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Complaint  need  not  allege  a  written  acceptance.  Faircloth-Byrd  Mer- 
cantile Co.  v.  Adkinson,  167  Ala.  344,  52  So.  419. 

Entry  of  check  in  passbook  not  an  acceptance  where  passbook  has 
notice  that  checks  are  entered  conditionally.  National  Produce  Bank 
of  Chicago  v.  Dodds,  205  111.  App.  444. 

Acceptance  in  writing.  Iowa  State  Sav.  Bank  of  Fairfield  v.  City 
Nat.  Bank  of  Tipton,  —  Iowa  — ,  168  N.  W.  148. 

Bank  not  liable  on  an  uncertified  or  unaccepted  check  even  if  cashier 
did  say  check  was  good.  Rambo  v.  First  Nat.  Bank,  88  Kan.  257,  128 
Pac.  182. 

Drawee  not  bound  by  oral  acceptance.  Ewing  v.  Citizens'  Nat.  Bank, 
162  Ky.  551. 


646 


§  132  ACCEPTANCE    OF   BILLS.  647 

Acceptance  by  telegram.  Commercial  Bank  of  Woodville,  Miss.,  v. 
First  Nat.  Bank,  —  La.  — ,  86  So.  342. 

Foreign  bill  payable  in  another  state  not  controlled  by  this  section. 
Bank  of  Laddonia  v.  Bright-Coy  Commission  Co.,  139  Mo.  App.  110, 
120  S.  W.  648. 

Telegram  stating  sufficiency  of  funds  to  pay  is  not  acceptance.  Car- 
michael  v.  Tishomingo  Banking  Co.   (Mo.  App.),  191   S.  W.  1043. 

Implied  acceptance  from  acts  showing  intention  to  comply  with 
drawer's   intention.     Southern   Creosoting    Co.  v.   Chicago  &  A.   R.   Co., 

—  Mo.  — ,  205  S.  W.  716. 

Payee  who  telephones  bank  before  receiving  check  and  was  informed 
check  was  good  entitled  to  recover  from  bank.  Gruenther  v.  Bank  of 
Monroe,  90  Neb.  280,  133  N.  W.  402. 

The  stamping  of  a  bill  of  exchange  with  word  "paid"  is  not  an  ac- 
ceptance.    Hanna  v.  McCrory,  19  N.  M.  183,  141  Pac.  996. 

Oral  acceptance  not  binding.  Clayton  Town  Site  Co.  v.  Clayton  Drug 
Co.,  20  N.  M.  185,  147  Pac.  460. 

Unaccepted  order  is  not  equitable  assignment  unless  drawn  on  a  par- 
ticular fund.     Izzo  V.  Ludington,  79  App.  Div.  272,  79  N.  Y.  Supp.  744. 

Constructive  acceptances  not  affected  by  this  section.  Wisner  v. 
First  Nat.  Bank,  220  Pa.  21,  68  Atl.  955.  17  L.  R.  A.    (N.  S.)   1266. 

Acceptance  of  draft  must  be  in  writing.     First  Nat.  Bank  v.  Sanford, 

—  Tex.  Civ.  App.  — ,  228  S.  W.  650. 

Oral  acceptance  of  bill  of  exchange  not  binding  on  drawee.  Nelson 
V.  Nelson-Bennett  Co.,  31  Wash.  116,  71  Pac.  749. 

Complaint  must  allege  a  written  acceptance  in  suit  against  drawee. 
Wadhams  v.  Portland  Ry.  Co.,  Zl  Wash.  86,  79  Pac.  597. 

Drawee's  note  on  bill  of  exchange  admitting  amount  but  returning 
bill  is  not  an  acceptance.  Plaza  Farmers'  Union  v.  Ryan,  78  Wash. 
124.  138  Pac.  651. 

Plea  is  one  of  a  written  agreement  unless  affirmatively  showing  one 
in  parol.     Barnsdall  v.  Waltemeyer,  142  Fed.  Rep.  415,  IZ  C.  C.  A.  515. 

*^  The  following-  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Alabama. — Faircloth-Byrd  ^Tercantile  Co.  v.  Adkinson,  167  Ala.  344, 
52  So.  419. 

CpIorado.—Vzr\  Buskirk  v.  State  Bk.  of  Rocky  Ford  (1905),  35  Colo. 
142,  83  Pac.  778,  177  Am.  St.  182. 

///mo7V— Dumbeck  v.  Walsh  (1913),  179  111.  App.  239;  National  Pro- 
duce Bank  of  Chicago  v.  Dodds,  205  111.  App.  444. 

7oww.— Dugane  v.  Hvezda  Pokroku  No.  4  (1909),  119  N.  W.  141; 
Wells  V.  Western  Un.  Tel.  Co.  (1910),  123  N.  W.  371;  Iowa  State  Sav. 
Bank  of  Fairfield  v.  City  Nat.  Bank  of  Tipton,  168   N.  W.  148. 

i^'an.ya^.— Rambo  v.  The  First  State  Bk.  of  Argentine  (1912),  88 
Kans.  257,  128  Pac.  182. 

Kentucky.— Ewing  v.  Cit.  Nat.  Bk.  (1915),  162  Ky.  551.  172  S.  W. 
955;  Selma  Sav.  Bk.  v.  Webster  County  Bk.   (1919),  206  S.  W.  870. 

Louisiara. — Commercial  Bank  of  Woodville,  Miss,,  v.  First  Nat.  Bank, 
86  So.  342. 


648  NEGOTIABLE    INSTRUMENTS.  §  132 

Mississippi. — County  Shiloh  &  Savannah  Turnpike  Co.  v.  Goch  (1917), 
113  Miss.  50,  73  So.  869. 

Missouri. — Bank  of  Laddonia  v.  Bright-Coy  Commission  Co.,  139  Mo. 
App.  110,  120  S.  W.  648;  Lehnhard  v.  Sedway  (1911),  160  Mo.  App.  83, 
141  S.  W.  430;  Carmichael  v.  Tishomingo  Banking  Co.  (1917)  (Mo. 
App.),  191  S.  W.  1043;  Southern  Creosoting  Co.  v.  Chicago  &  A.  R.  Co. 
(1918),  205  S.  W.  716. 

Nebraska.— State  Bk.  of  Beaver  Co.  v.  Bradstreet  (1911),  89  Neb. 
186,  130  N.  W.  1038;  Gruenther  v.  Bank  of  Monroe  (1911),  90  Neb.  280, 
133  N.  W.  402. 

New  Mexico. — Clayton  Town  Site  Co.  v.  Clayton  Drug  Co.  (1915),  20 
N.  M.  185,  147  Pac.  460;  Hanna  v.  McCrory,  19  N.  M.  183,  141  Pac.  996. 

New  York.—lzzo  v.  Ludington  (1903),  79  A.  D.  272,  79  N.  Y.  Supp. 
744;  Nat.  Citizens  Bk.  v.  Toplitz  (1903),  81  A.  D.  593,  81  N.  Y.  Supp. 
422;  Colcord  v.  Banco  de  Tamanlipas   (1918),  168  N.  Y.  Supp.  710. 

Oklahoma.— Ea.\\en  &  Friedman  v.  Bk.  of  Krenlin  (1913),  130  Pac. 
539;  First  Nat.  Bk.  of  Tulsa  v.  Muskorgee  Pipe  Line  Co.  (1914),  139 
Pac.  1136. 

Oregon. — First  Nat.  Bk.  of  Cottage  Grove  v.  Bk.  of  Cottage  Grove 
(1911),  59  Oreg.  388,  117  Pac.  293;  U.  S.  Nat.  Bk.  v.  First  Trust  & 
Savings  Bk.,  60  Oreg.  .266,  119  Pac.  343. 

Pennsylvania.— CXarke  &  Co.  v.  Warren  Sav.  Bk.  (1906),  31  Pa.  Su- 
per. Ct.  647;  Wisner  v.  First  Nat.  Bk.  of  Gallitzin  (1908),  220  Pa.  21, 
68  Atl.  955,  17  L.  R.  A.  (N.  S.)  1266;  Croyle  v.  Guelich  (1908),  35  Pa. 
Super.  Ct.  356;  Colonial  Tr.  Co.  v.  Nat.  Bk.  of  Western  Pa.  (1912),  50 
Pa.  Super.  Ct.  510. 

Soxith  Dakota.— F\rs>t  Nat.  Bk.  of  Pukwana  v.  Brule  Nat.  Bk.  of 
Chamberlain   (1917),  161  N.  W.  616. 

Tenncssee.—Watanga  Co.  Bk.  v.  McQueen  (1914),  170  S.  W.  1025; 
First  Nat.  Bank  of  Murfreesboro  v.  First  Nat.  Bank  of  Nashville,  154 
S.  W.  965;  Ahrens  &  Ott  Co.  v.  Moore  &  Sons  (1915),  174  S.  W.  270; 
First  Nat.  Bk.  v.  Sanford,  228  S.  W.  650. 

Washington.— 1ilt\soi\  v.  Nelson  Bennett  Co.  (1903),  31  Wash.  116, 
71  Pac.  749;  Wadhams  v.  Portland  V.  &  Y.  R.  Co.  (1905),  37  Wash.  86, 
79  Pac.  597;  Seattle  Shoe  Co.  v.  Packard  (1906),  43  Wash.  527,  86  Pac. 
845,  117  Am.  St.  1064;  Skeets  v.  Coast  Coal  Co.  (1913),  74  Wash.  327, 
133  Pac.  433;  Plaza  Farmer's  Union  Warehouse  &  Elevator  Co.  v.  Ryan 
(1914),  78  Wash.  124,  138  Pac.   651. 

Virginia.— B.  &  O.  R.  R.  Co.  v.  First  Nat.  Bk.  (1904),  102  Va.  753, 
47  S.  E.  837. 

United  5"/af^j.— Barnsdall  v.  Waltemeyer,  142  Fed.  Rep.  415,  20  N.  M. 
185,  147  Pac.  460;  First  Nat.  Bk.  of  Dimn,  N.  C,  v.  First  Nat.  Bk.  of 
Massilon,  Ohio  (1913),  210  Fed.  542;  John  A.  Schmitt's  Sons  v.  Shadrach 
(1918),  251  Fed.  874. 


§§    133-134  ACCEPTANCE   OF    BILLS.  649 

§  133.     Holder  entitled  to  acceptance  on  face  of  bill.     The 

holder  of  a  bill  presenting  the  same  for  acceptance  may  require 
that  the  acceptance  be  written  on  the  bill,  and  if  such  request  is 
refused,  may  treat  the  bill  as  dishonored.*'  ** 

See  text,  §  7Z. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Bill  payable  at  fixed  time  may  be  presented  for  acceptance  at  any 
time.  National  Park  Bank  v.  Saitta,  127  App.  Div.  624,  111  N.  Y.  Supp. 
927. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Nebraska. — Swenson  Co.  v.  Commercial  State  Bk.  (1915),  154  N.  W. 
233. 

New  York.— Nsit.  Park  Bk.  v.  Saitta  (1908),  127  A.  D.  624,  111  N.  Y. 
Supp.  927. 

Oklahoma. — First  Nat.  Bk.  of  Tulsa  v.  Muskogee  Pipe  Line  Co. 
(1914),  139  Pac.  1136. 

§  134.  Acceptance  by  separate  instrument.  Where  an  ac- 
ceptance is  written  on  a  paper  other  than  the  bill  itself,  it  does 
not  bind  the  acceptor  except  in  favor  of  a  person  to  whom  it  is 
shown  and  who,  on  the  faith  thereof,  receives  the  bill  for 
value.*'  *" 

See  text,  §82. 

In  Illinois  and  South  Dakota  the  following  words,  "to  whom  it  is 
shown  and,"  are  omitted. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Acceptance  on  paper  other  than  bill.  Iowa  State  Sav.  Bank  of  Fair- 
field V.  City  Nat.  Bank  of  Tipton,  —  Iowa  — ,  168  N.  W.  148. 

Letter  as  accommodation  acceptance  stating  that  acceptor  was  not  to 
pay  the  draft  was  not  acceptance.  Lehnhard  v.  Sedway,  160  Mo.  App. 
83,  141  S.  W.  430. 

Defendant  answered  plaintifif's  wire  "Will  pay  M's  draft  on  me,  two- 
fifty  for  horses,"  and  was  liable  thereon.  State  Bank  v.  Bradstreet,  89 
Neb.  186,  130  N.  W.  1038,  38  L.  R.  A.  747. 

President  has  no  authority  to  bind  bank  on  past-dated  checks.  Swen- 
son Bros.  V.  Commercial  State  Bank,  98  Neb.  702,  154  N.  W.  233. 

Bank's  telegram  that  draft  "is  good"  is  not  acceptance.  Colcord  v. 
Banco  der  Tamaulipes,  181  App.  Div.  295,  168  N.  Y.  Supp.  710. 


650  NEGOTIABLE    INSTRUMENTS.  §  135 

Drawee's  letter  of  acceptance  of  draft  is  not  valid  as  to  anyone  who 
did  not  see  it.    Jones  v.  Clumpier,  119  Va.  143,  89  S.  E.  232. 

Before  taking  checks  payee  telegraphed  bank  to  see  if  checks  would 
be  paid.  Bank  replied  "checks  will  undoubtedly  be  taken  care  of"  and 
was  held  to  have  accepted  them.  First  Nat  Bk.  of  Dunn  v.  First  Nat. 
Bk.  of  Massilon,  210  Fed.  542. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Arkansas.— First  Nat.  Bk.  of  Tulsa  v.  Muskogee  Pipe  Line  Co. 
(1914),  139  Pac.  1136. 

lotm.—Wdh  v.  Western  Un.  Tel.  Co.  (1910),  123  N.  W.  371;  Iowa 
State  Sav.  Bank  of  Fairfield  v.  City  Nat.  Bank  of  Tipton,  168  N.  W.  148. 

Kentucky.—Se\msi  Sav.  Bk.  v.  Webster  County  Bk.  (1919).  206  S. 
W.  870. 

ikf moim.—Lehnhard  v.  Sedway  (1911),  160  AIo.  App.  83,  141  S.  W. 
430. 

Nebraska—State  Bk.  of  Beaver  Co.  v.  Bradstreet  (1911),  89  Neb. 
186,  130  N.  W.  1038,  38  L.  R.  A.  747;  Swenson  Bros.  v.  Commercial 
State  Bank,  98  Neb.  702,  154  N.  W.  233. 

New  York.— Colcord  v.  Banco  der  Tamaulipes,  168  N.  Y.  Supp.  710, 
181  A.  D.  295. 

Oklahoma.— First  Nat.  Bk.  v.  Muskogee  Pipe  Line  Co.  (1914),  139 
Pac.  1136. 

Virginia.— ]arr\es  v.  Clumpier  (1916),  119  Va.  143,  89  S.  E.  232. 

United  States.— BarnsdaW  v.  Waltemayer  (1905),  142  Fed.  415,  73  C. 
C.  A.  515;  First  Nat.  Bk.  of  Dunn,  N.  C.  v.  First  Nat.  &k.  of  Massil- 
on, Ohio  (1913),  210  Fed.  542. 

§135.     Promise  to  accept;  when  equivalent  to  acceptance. 

An  unconditional  promise  in  writing  to  accept  a  bill  before  it  is 
drawn  is  deemed  an  actual  acceptance  in  favor  of  every  person 
who,  upon  the  faith  thereof,  receives  the  bill  for  value.'-  '^ 

See  text,  §  82. 

The  Illinois  Act  inserts  the  words  "or  after"  following  the  word  "be- 
fore." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Telegraphic  communication  as  to  future  acceptance  of  certain  sum 
on  a  certain  signature.  Iowa  State  Sav.  Bank  of  Fairfield  v.  City  Nat. 
Bank  of  Tipton,  —  Iowa.  — ,  168  N.  W.  148. 

Defendants  not  liable  on  orders  because  of  oral  promise  to  pay  them. 
Nagle  v.  Richards,  134  App.  Div.  25,  118  N.  Y.  Supp.  53. 


§  136  ACCEPTANCE   OF  BILLS.  651 

Collateral  written  promise  to  accept  bill  upon  condition  is  not  accept- 
ance. MuUer  v.  Kling,  149  App.  Div.  176,  133  N.  Y.  Supp.  614,  209  N.  Y. 
239,  108  N.  E.  138. 

Letter  suggesting  that  agent  draw  on  principal  occasionally  is  not  ac- 
ceptance   Bank  of  Morgantown  v.  Hay,  143  N.  C.  326,  55  S.  E.  811. 

Telegraphed  authority  to  draw  on  defendant  which  was  attached  to 
draft  and  induced  bank  to  cash  draft  was  acceptance.  First  Nat.  Bank 
of  Tulsa  V.  Muskogee  Pine  Line  Co.,  40  Okla.  603,  139  Pac.  1136,  L.  R.  A. 
1916B,    1021. 

Acceptance  must  be  in  writing.  First  Nat.  Bank  v.  Sanford,  —  Tex. 
Civ.  App.  — ,  228  S.  W.  650. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

ZoTOO.— Wells  V.  Western  Union  Tel.  Co  .(1910),  123  N.  W.  371; 
Iowa  State  Bk.  of  Fairfield  v.  City  Nat.  Bk.  of  Tipton  (1918),  168  N. 
W.  148. 

Missouri.— Ensign  v.  Clark  Bros.  Co.   (1917),  193  S.  W.  961. 

New  York.— Nagle  v.  Richards  (1909),  134  A.  D.  25,  118  N  .Y.  Supp. 
53;  Muller  v.  Kling  (1912),  133  N.  Y.  Supp.  614,  149  A.  D.  176,  239  N. 
Y.  239,  108  N.  E.  138;  Lemon  Importing  Co.  v.  Garfield  Sav.  Bk.  (1919), 
173  N.  Y.  Supp.  55. 

North  Carolina.— Bk.  of  Morgantown  v.  Hay  (1906),  143  N.  Car.  326, 
55  S.  E.  811. 

Oklahoma.— First  Nat.  Bank  of  Tulsa  v.  Muskogee  Pipe  Line  Co., 
40  Okla.  603,  139  Pac.  1136,  L.  R.  A.  1916B,  1021. 

Texas.— First  Nat.  Bank  v.  Sanford,  228  S.  W.  650. 

United  States.— BarnsdaW  v.  Waltemayer  (1905),  142  Fed.  415,  75  C. 
C.  A.  515. 

§  136.  Time  allowed  drawee  to  accept.  The  drawee  is 
allowed  twenty-four  hours  after  presentment  in  which  to  decide 
whether  or  not  he  will  accept  the  bill ;  but  the  acceptance,  if 
given,  dates  as  of  the  day  of  presentation.*-  ** 

See  text,  §90. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Bank  stamped  a  note  paid  and  rendered  itself  liable  thereon.  Nine- 
teenth Ward  Bank  v.  First  Nat.  Bank,  184  Mass.  49,  67  N.  E.  670. 

Drawee  bank  after  marking  check  paid  charging  depositor's  account 
and  crediting  the  account  of  the  holder  cannot  change  its  entries  and 
cancel  the  paid  mark  on  check.  Consolidated  Nat.  Bank  v.  First  Nat. 
Bank,  129  N.  Y.  App.  Div.  538,  114  N.  Y.  Supp.  308,  affirmed  199  N.  Y. 
516. 


f9a:\ 


652  NEGOTIABLE    INSTRUMENTS.  §  137 

Mingling  checks  and  drafts  with  bank  property  and  forwarding  check 
for  amount  makes  bank  owner  of  checks  and  drafts  sent  for  collection. 
German  Nat.  Bank  v.  Carnegie  Trust  Co.,  172  App.  Div.  158,  158  N.  Y. 
Supp.  222. 

Charging  drawer's  account  with  a  check  is  a  paj'ment  and  entitles 
payee  to  the  amount.  First  Nat.  Bank  v.  Nat.  Park  Bank,  110  Misc. 
Rep.  31.,  165  N.  Y.  Supp.  15. 

Where  drawee  bank  merely  stamped  check  paid  and  neither  made  de- 
livery or  gave  notification  it  did  not  make  acceptance.  First  Nat.  Bank 
of  Murfreesboro  v.  First  Nat.  Bank  of  Nashville,  127  Tenn.  205,  154  S. 
W.  965. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Massachusetts. — Nineteenth  Ward  Bank  v.  First  Nat.  Bank,  184  Mass. 
49,  67  N.  E.  670. 

New  For/c— Consolidated  Nat.  Bank  v.  First  Nat.  Bank,  129  N.  Y. 
App.  Div.  538,  114  N.  Y.  Supp.  308,  affirmed  199  N.  Y.  516;  First  Nat. 
Bank  v.  Nat.  Park  Bank,  165  N.  Y.  Supp.  15,  110  Misc.  Rep.  31;  German 
Nat  Bank  v.  Carnegie  Trust  Co.,  158  N.  Y.  Supp.  222,  172  App.  Div.  158. 

Tennessee. — First  Nat.  Bk.  of  Murfreesboro  v.  First  Nat.  Bk.  of 
Nashville   (1913),  127  Tenn.  205,  154  S.  W.  965. 

§  137.  Liability  of  drawee  retaining  or  destroying  bill. 
Where  a  drawee  to  whom  a  bill  is  delivered  for  acceptance  de- 
stroys the  same,  or  refuses  within  twenty-four  hours  after  such 
delivery,  or  within  such  other  period  as  the  holder  may  allow, 
to  return  the  bill  accepted  or  non-accepted  to  the  holder,  he  will 
be  deemed  to  have  accepted  the  same.*'  ^^ 

See  text,  §  85. 

Illinois  and  South  Dakota  omit  this  section. 

In  Pennsylvania  the  following  proviso  has  been  added:  "Provided, 
that  the  mere  retention  of  such  bill  by  the  drawer,  unless  its  return  has 
been  demanded,  will  not  amount  to  an  acceptance ;  and  provided  further 
that   this  section  shall  not  apply  to  checks." 

The  Wisconsin  act  adds:  "Mere  retention  of  the  bill  is  not  accept- 
ance." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Retention  as  acceptance.  St.  Louis  &  S.  W.  Ry.  Co.  v.  James,  78 
Ark.  490,  95  S.  W.  804. 

Accidental  destruction  not  acceptance,  but  question  of  purpose  of  de- 
struction for  jury.  Bailey  &  Co.  v.  S.  W.  Veneer  Co.,  126  Ark.  257, 
190  S.  W.  430. 


§  138  ACCEPTANCE    OF   BILLS.  653 

Bank  liable  as  acceptor  where  it  paid  the  check  upon  forged  in- 
dorsement of  payee's  name.  Chamberlain  Metal,  Etc.,  Co.  v.  Bank  of 
Pleasanton,  98  Kan.  611,  160  Pac.  1138. 

Retention  not  acceptance.     Dickinson  v.  Marsh,  57  Mo.  App.  566. 

Mere  retention  not  acceptance.     Matteson  v.  Moulton,  79  N.  Y.  627. 

Failure  to  return  bill  as  acceptance.  Standard  Trust  Co.  v.  Commer- 
cial Nat.  Bank,  166  N.  C.  112,  81   S.  E.  1074. 

Delivery  of  check  by  bank  to  notary  public  does  not  relieve  drawee 
from  liability  Provident  S.  &  B.  Co.  v.  First  Nat.  Bank.  Zl  Pa.  Super. 
Ct.  17. 

Failure  to  return  bill  within  24  hours  is  acceptance.  Wisncr  v.  First 
Nat.  Bank,  220  Pa.  21,  68  Atl.  955,  17  L.  R.  A.  (N.  S.)  1266. 

Payment  by  drawee  bank  is  not  acceptance.  Union  Nat.  Bank  v. 
Franklin  Nat.  Bank,  249  Pa.  375,  94  Atl.  1080. 

Presentment  for  payment  or  acceptance  not  distinguished.  People's 
Nat.  Bank  v.  Swift,  134  Tenn.  175.  183  S.  W.  725. 

Mere  retention  of  bill  is  not  acceptance  without  destruction  or  refusal 
to  return.    Westberg  v.  Chicago  Lumber  Co.,  117  Wis.  589,  94  N.  W.  572. 

Presentment  for  payment  is  not  delivery  for  acceptance  within  this 
section.  First  Nat.  Bank  of  Omaha  v.  Whitmore,  177  Fed.  Rep.  397,  101 
C.  C.  A.  401. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Arltayisas.—V>7a\ty  &  Co.  v.  Southwestern  Veneer  Co.  (1919),  126  Ark. 
257,  190  S.  W.  430;  St.  Louis  &  S.  W.  Ry.  Co.  v.  James,  78  Ark.  490,  95 
S.  W.  804. 

Kansas. — Chamberlain  Metal,  Etc.,  Co.  v.  Bank  of  Pleasanton,  98 
Kan.  611,  160  Pac.  1138. 

Missouri. — Dickinson  v.  Marsh,  57  Mo.  App.  566. 

New  For^.— Matteson  v.  Moulton,  79  N.  Y.  627;  State  Bk.  v.  Weiss 
(1904),  46  Misc.  93.  91  N.  Y.  Supp.  276;  Foley  v.  N.  Y.  Sav.  Bk.  (1913), 
139  N.  Y.  Supp.  915. 

North  Carolina. — Standard  Trust  Co.  v.  Commercial  Nat.  Bank,  166  N. 
Car.  112,  81  S.  E.  1074. 

Pennsylvania.— Wisner  v.  First  Nat.  Bk.  of  Gallitzin  (1908),  220  Pa. 
21,  68  Ati.  955,  17  L.  R.  A.  (N.  S.)  1266;  Providence  Securities  &  Bank- 
ing Co.  v.  First  Nat.  Bk.  of  Gallitzin  (1908).  37  Pa.  Super  Ct.  17;  Union 
Nat.  Bank  v.  Franklin  Nat.  Bank,  249  Pa.  375,  94  Atl.  1080. 

Tennessee.— Veovle's  Nat.  Bk.  v.  Swift,  134  Tenn.  175,  183  S.  W.  725. 

Wisconsin.— Westherg  v.  Chicago  Lumber  Co.  (1903),  117  Wis.  589, 
94  N.  W.  572. 

United  States.— First  Nat.  Bk.  of  Omaha  v.  Whitmore  (1910),  177 
Fed.  Rep.  397,  101  C.  C.  A.  401. 

§  138.  Acceptance  of  incomplete  bill.  A  bill  may  be  ac- 
cepted before  it  has  been  signed  by  the  drawer,  or  while  other- 


654  NEGOTIABLE   INSTRUMENTS.  §§  139-141 

wise  incomplete,  or  when  it  is  overdue,  or  after  it  has  been  dis- 
honored by  a  previous  refusal  to  accept,  or  by  non-payment.  But 
when  a  bill  payable  after  sight  is  dishonored  by  non-acceptance 
and  the  drawee  subsequently  accepts  it,  the  holder,  in  the  absence 
of  any  different  agreement,  is  entitled  to  have  the  bill  accepted 
as  of  the  date  of  the  first  presentment.*'  ** 

See  text,  §  11. 

Cross  sections :    See  Sec.  14. 

In  South  Dakota  there  is  probably  a  clerical  error  by  inserting  the 
word  "payable"  between  the  word  "bill"  and  the  word  "accepted." 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Acceptance  before  name  of  drawer  is  filled  in.  Stafford  v.  Hill,  — 
Cal.  App.  — ,  200  Pac.  33. 

*^  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Co7^orj«"a.— Stafford  v.  Hill   (Cal.  App.),  200  Pac.  ZZ. 

§  139.  Kinds  of  acceptance.  An  acceptance  is  either  gen- 
eral or  qualified.  A  general  acceptance  assents  without  qualifica- 
tion to  the  order  of  the  drawer.  A  qualified  acceptance  in  express 
terms  varies  the  effect  of  the  bill  as  drawn. 

See  text,  §§  78,  79. 

§  140.  What  constitutes  a  general  acceptance.  An  accept- 
ance to  pay  at  a  particular  place  is  a  general  acceptance  unless  it 
expressly  states  that  the  bill  is  to  be  paid  there  only  and  not 
elsewhere. 

See  text,  §79. 

§  141.  Qualified  acceptance.  An  acceptance  is  qualified, 
which  is: 

1.  Conditional,  that  is  to  say,  which  makes  payment  by  the 
acceptor  dependent  on  the  fulfillment  of  a  condition  therein 
stated : 

2.  Partial,  that  is  to  say,  an  acceptance  to  pay  part  only  of 
the  amount  for  which  the  bill  is  drawn ; 


§  142  ACCEPTANCE    OF    BILLS.  655 

3.  Local,  that  is  to  say,  an  acceptance  to  pay  only  at  a  par- 
ticular place ; 

4.  Qualified  as  to  time ; 

5.  The  acceptance  of  some  one  or  more  of  the  drawees,  but 
not  of  all.*'  ^^ 

See  text,  §80. 

Cross  section :     See   Sec.  140. 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states: 

Acceptance  depending  on  happening  of  a  certain  condition  is  condi- 
tional. Milwaukee  Corrugating  Co.  v.  Traylor,  95  Kan.  562,  148  Pac. 
653. 

Acceptance  is  conditional  when  dependent  on  fulfillment  of  conditions 
therein  stated.    Crane  Co.  v.  Druid  Realty  Co.,  —  Md.  — ,  112  Atl.  621. 

Telegram,  "Will  honor  your  draft,  telegram  attached,"  is  uncondi- 
tional acceptance  although  another  telegram  intended  to  be  attached.  En- 
sign V.  Clark  Cutlery  Co.,  195  Mo.  App.  584.  193  S.  W.  961. 

"Will  pay  M's  draft  on  me  for  two-fifty  for  horses"  is  uncondi- 
tional acceptance.  State  Bank  of  Beaver  Co.  v.  Bradstreet,  89  Neb.  186, 
130  N.  W.  1038,  38  L.  R.  A.  (N.  S.)  747. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

ivcH^fa^.— Milwaukee,  Carrington  Co.  v.  Taylor   (1915),  148  Pac.  653. 

Maryland.— Crane  Co.  v.  Druid  Realty  Co.,  112  Atl.  621. 

Nebraska— Staie  Bank  of  Beaver  Co.  v.  Bradstreet,  89  Neb.  186,  130 
N.  W.  1038,  38  L.  R.  A.   (N.  S.)   747. 

§  142.  Rights  of  parties  as  to  qualified  acceptance.  The 
holder  may  refuse  to  take  a  qualified  acceptance,  and  if  he  does 
not  obtain  an  unqualified  acceptance,  he  may  treat  the  bill  as  dis- 
honored by  non-acceptance.  Where  a  qualified  acceptance  is 
taken,  the  drawer  and  indorsers  are  discharged  from  liability 
on  the  bill,  unless  they  have  expressly  or  impliedly  authorized 
the  holder  to  take  a  qualified  acceptance,  or  subsequently  assent 
thereto.  "Vl^en  the  drawer  or  an  indorser  receives  notice  of  a 
qualified  acceptance,  he  must  within  a  reasonable  time  express 
his  dissent  to  the  holder,  or  he  will  be  deemed  to  have  assented 
thereto.*'  ** 

See  text,  §§  121,  75. 


656  NEGOTIABLE    INSTRUMENTS.  §    142 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Payee  taking  conditional  acceptance  without  notice  thereof  to  drawer 
discharged  the  latter.  Lewis  Hubbard  &  Co.  v.  Morton,  80  W.  Va.  137, 
92   S.  E.  252. 

*'The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

West  Virginia.— Lewis  Hubbard  &  Co.  v.  Morton  (1917),  92  S.  E.  252. 


ARTICLE  XI. 


PRESENTMENT  OF  BILLS  OF  EXCHANGE  FOR  ACCEPTANCE. 


§  143.  When    presentment    for    ac- 
ceptance must  be  made. 

144.  When   failure   to   present  re- 

leases drawer  and  indorser. 

145.  Presentment ;  how  made. 

146.  On    what    days    presentment 

may  be  made. 
§  147.  Presentment ;    where   time   is 
insufficient. 


148.  When     presentment     is     ex- 

cused. 

149.  When    dishonored    by    non- 

acceptance. 

150.  Duty    of    holder    where    bill 

not  accepted. 

151.  Rights   of   holder   where  bill 

not  accepted. 


Sections  143  to  151  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  Law  in  the  various  states 
and  territories  beginning  on  page  360. 

§  143.     When  presentment  for  acceptance  must  be   made. 

Presentment  for  acceptance  must  be  made: 

1.  Where  the  bill  is  payable  after  sight,  or  in  any  other  case 
where  presentment  for  acceptance  is  necessary  in  order  to  fix  the 
maturity  of  the  instrument ;  or, 

2.  Where  the  bill  expressly  stipulates  that  it  shall  be  pre- 
sented for  acceptance ;  or, 

3.  Where  the  bill  is  drawn  payable  elsewhere  than  at  the 
residence  or  place  of  business  of  the  drawee. 

In  no  other  case  is  presentment  for  acceptance  necessary  in 
order  to  render  any  party  to  the  bill  liable.*" 

See  text,  §§151.  88. 

Cross  section :    147. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act;  Sec. 
39  (2)  (3). 

*■  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Alabama.— UaW  v.  First  Bk.  of  Crosville  (1916),  72  So.  171 


657 


658  NEGOTIABLE    INSTRUMENTS.  §§  144-145 

Colorado.— Vzn  Buskirk  v.  State  Bk.  of  Rocky  Ford  (1905),  35  Colo. 
142,  83  Pac.  778,  117  Am.  St.  182. 

/Winow.— Simonoff  v.  Granite   City   Nat.   Bk.    (1917),   116  N.  E.  636. 

New  York.— Gordon  v.  Benquist  (1916),  159  N.  Y.  Supp.  1;  Cham- 
pion Shoe  Machine  Co.  v.  Landin   (1917),  162  N.   Y.  Supp.  346. 

United  States.— First  Nat.  Bk.  of  Omaha  v.  Whitmore  (1910),  177 
Fed.  Rep.  397,  101   C.  C.  A.  401. 

§  144.  When  failure  to  present  releases  drawer  and  in- 
dorser.  Except  as  herein  otherwise  provided,  the  holder  of 
a  bill  which  is  required  by  the  next  preceding  section  to  be  pre- 
sented for  acceptance  must  either  present  it  for  acceptance  or 
negotiate  it  within  a  reasonable  time.  If  he  fails  to  do  so,  the 
drawer  and  all  indorsers  are  discharged.** 

See  text,  §   153. 
Cross   section :     193. 

Corresponding    provision    of    the    English    Bills    of    Exchange    Act: 

Sec.  40  (1). 

i»The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Illinois.— Simonofi  v.   Granite  City  Nat.  Bk.   (1917),  116  N.   E.  636. 

Kentucky.-Emns  v.  Cit.  Nat.  Bk.  (1915),  172  S.  W.  955. 

§  145.  Presentment;  how  made.  Presentment  for  accept- 
ance must  be  made  by  or  on  behalf  of  the  holder  at  a  reasonable 
hour  on  a  business  day,  and  before  the  bill  is  overdue,  to  the 
drawee  or  some  person  authorized  to  accept  or  refuse  acceptance 
on  his  behalf ;  and 

1.  Where  a  bill  is  addressed  to  two  or  more  drawees  who 
are  not  partners,  presentment  must  be  made  to  them  all,  unless 
one  has  authority  to  accept  or  refuse  acceptance  for  all,  in 
which  case  presentment  may  be  made  to  him  only ; 

2.  Where  the  drawee  is  dead,  presentment  may  be  made  to 
his  personal  representative; 

3.  Where  the  drawee  has  been  adjudged  a  bankrupt  or  an 
insolvent,  or  has  made  an  assignment  for  the  benefit  of  cred- 
itors, presentment  may  be  made  to  him  or  to  his  trustees  or  as- 
signee. 


§§  146-147  PRESENTMENT    FOR    ACCEPTANCE.  659 

See  text,   §§  89,  90. 

Cross   sections:      141,   Subd.   5;    148,   Subd.    1. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act : 
Sec.  41    (1)    (a),  41   (1)    (b),  41    (1)    (c),  41    (1)    (d). 

Erroneous  engrossing  omitted  the  word  "his"  before  the  word  "be- 
half"  in   New  York  Act. 

§  146.  On  what  days  presentment  may  be  made.  A  bill 
may  be  presented  for  acceptance  on  any  da}-  on  which  negotia- 
ble instruments  may  be  presented  for  payment  under  the  pro- 
visions of  sections  132  and  145  of  this  act.  When  Saturday  is 
not  otherwise  a  holiday,  presentment  for  acceptance  may  be 
made  before  twelve  o'clock  noon  on  that  day.^  ■'■* 

See  text,  §  153. 

Arizona  statute  omits  the  last  sentence. 

Kentucky  omits  the  last  sentence  of  this  section. 

The  sections  above  were  referred  to  as  sections  72  and  85  by  mis- 
take in  the  original  New  York  act. 

In  North  Carolina  the  word  "otherwise"  is  omitted  after  the  words 
"when  Saturday  is  not,"  and  a  second  section  in  the  amenditory  act  is 
added  in  the  following  words :  "There  shall  be  no  difference  between 
Saturday  and  any  other  secular  or  business  day,  as  far  as  negotiable 
instruments  are   concerned." 

The  Wisconsin  act  (Sec.  1681-3)  omits  the  last  sentence,  while  the 
Colorado  act  (Sec.  146)  substitutes  for  the  last  sentence  the  following: 
"When  any  day  is  in  part  a  holiday,  presentment  for  acceptance  may 
be  made  during  reasonable  hours  of  the  part  of  such  day  which  is  not 
a  holiday." 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act : 
Sec.  92. 

§  147.  Presentment;  where  time  is  insufficient.  Where 
the  holder  of  a  bill  drawn  payable  elsewhere  than  at  the  place 
of  business  or  the  residence  of  the  drawee  has  not  time  with 
the  exercise  of  reasonable  diligence  to  present  tlie  bill  foi  ac- 
ceptance before  presenting  it  for  payment  on  the  day  tliat  it  falls 
due,  the  delay  caused  by  presenting  the  bill  for  acceptance  be- 
fore presenting  it  for  payment  is  excused  and  does  not  discharge 
the  drawers  and  indorsers.-^* 

See  text.  §  15". 

Cross  section  :   143. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
39  (4). 


660  NEGOTIABLE   INSTRUMENTS.  §§148-149 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

New  Foryfe.— Baldwins  Bk.  of  Pen  Yan  v.  Smith  (1915),  215  N.  Y.  76, 
109  N.  E.  138. 

§  148.  Where  presentment  excused.  Presentment  for  ac- 
ceptance is  excused  and  a  bill  may  be  treated  as  dishonored  by 
non-acceptance  in  either  of  the  following  cases: 

1.  Where  the  drawee  is  dead,  or  has  absconded,  or  is  a  fic- 
titious person  or  a  person  not  having  capacity  to  contract  by 
bill: 

2.  Where  after  the  exercise  of  reasonable  diligence,  present- 
ment cannot  be  made; 

3.  Where  although  presentment  has  been  irregular,  accept- 
ance has  been  refused  on  some  other  ground.** 

See  text,  §  92. 

Cross  section :   145,   Subd.  2. 

Corresponding  provisions  of  the  English  Bills  of  Exchange  Act : 
Sec.  41   (2)    (a),  41   (2)    (b),  41   (2)    (c). 

*'  The  following  is  a  complete  1  ist  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Arkansas.— ]&gg<irs  v.  Sparks   (1917),  193  S.  W.  67. 

///mow.— Simonoff   v.   Granite   City    Nat.    Bk.    (1917),    116  N.   E.   6^6. 

§  149.  When  dishonored  by  non-acceptance.  A  bill  is  dis- 
honored by  non-acceptance : 

1.  When  it  is  duly  presented  for  acceptance,  and  such  an 
acceptance  as  is  prescribed  by  this  act  is  refused  or  cannot  be 
obtained ;  or, 

2.  When  presentment  for  acceptance  is  excused  and  the  bill 
is  not  accepted.*^ 

See  text,  §  154. 

In  the  North  Carolina  act  (Sec.  149)  the  word  "executed"  is  used 
instead  of  the  word  "excused." 

Corresponding  provision?  of  the  English  Bills  of  Exchange  Act: 
S?C.  43  (1)    (a)    (b). 


§§  150-151  PRESENTMENT    FOR    ACCEPTANCE.  661 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

New  For^.— Nat.  Park  Bk.  v.  Saitta  (1908),  127  A.  D.  624.  Ill  N.  Y. 
Supp.  927. 

§  150.  Duty  of  holder  where  bill  not  accepted.  Where  a 
bill  is  duly  presented  for  acceptance  and  is  not  accepted  within 
the  prescribed  time,  the  person  presenting  it  must  treat  the  bill 
as  dishonored  by  non-acceptance  or  he  loses  the  right  of  recourse 
against  the  drawer  and  indorsers.** 

See  text,   §   154. 

Cross  section:     117. 

Corresponding  provisions  of  the  English  Bills  of  Exchange  Act : 
Sec.    42. 

*"  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

New  For^.— Nat.  Park  Bk.  v.  Saitta  (1908),  127  A.  D.  624,  111  N.  Y. 
Supp.  927. 

§  151.  Rights  of  holder  where  bill  not  accepted.  When  a 
bill  is  dishonored  by  non-acceptance,  an  immediate  right  of  re- 
course against  the  drawers  and  indorsers  accrues  to  the  holder, 
and  no  presentment  for  payment  is  necessary.*^ 

See  text,  §  154. 

Corresponding  provisions  of  the  English  Bills  of  Exchange  Act : 
Sec.  43  (2). 

^*  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Nezv  York.—^zt.  Park  Bk.  v.  Saitta  (1908),  127  A.  D.  624,  111  N.  Y. 
Supp.  927. 


ARTICLE  XII. 


PROTEST  OF  BILLS  OF  EXCHANGE. 


152.  In  what  cases  protest  neces- 

sary. 

153.  Protest ;  how  made. 

154.  Protest;  by  whom  made. 

155.  Protest ;  when  to  be  made. 

156.  Protest ;  where  made. 


§  157.  Protest  both  for  non-accept- 
ance and  non-payment. 

158.  Protest    before     maturity 

where    acceptor     insolvent. 

159.  When  protest  dispensed  with. 

160.  Protest ;    where    bill    is    lost, 

et  cetera. 


Sections    152    to    160    above    are    the    sections    used    by    the    commis- 
sioners. 

See  table  of  corresponding  sections  of  the  Law  in  the  various 
states  and  territories  beginning  on  page  360. 

§  152.  In  what  cases  protest  necessary.  Where  a  foreign 
bill  appearing  on  its  face  to  be  such  is  dishonored  by  non-ac- 
ceptance, it  must  be  duly  protested  for  non-acceptance,  and 
where  such  a  bill  which  has  not  previously  been  dishonored  by 
non-acceptance,  is  dishonored  by  a  non-payment,  it  must  be  duly 
protested  for  non-payment.  If  it  is  not  so  protested,  the  drawer 
and  indorsers  are  discharged.  Where  a  bill  does  not  appear  on 
its  face  to  be  a  foreign  bill,  protest  thereof  in  case  of  dishonor 
is  unnecessary 


1.  la 


See  text,   §  178. 

Cross  sections:   129,   118. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
51(2). 

•*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Holder  is  entitled  to  recover,  from  the  tlrawer  of  a  dishonored  for- 
eign bill,  re-exchange  although  the  foreign  currency  has  depreciated  since 
the  drawing  of  the  bill.  Simonoff  v.  Granite  City  Nat.  Bank,  279  III. 
248.  116  N.  E.  636. 

Protest  of  notes  under  former  statute  not  now  required.  Williams 
V.  Paintsville  Nat.  Bank,  143  Kv.  781.  137  S.  W.  535,  Ann  Cas  1912D, 
350. 

Legality  of  payment  is  governed  by  law  where  bill  is  made  payable. 
Belestin  v.  First  Nat.  Bank.  177  Mo.  App.  300,  164  S.  W.  160. 


662 


§  153  PROTEST   OF    BILLS.  663 

Law  of  place  of  drawing  controls  the  liability  of  drawer.  Casper  v. 
Kuhne,  79  Misc.  Rep.  411,  140  N.  Y.  Supp.  86. 

Recovery  is  the  amount  of  money  required  to  purchase  the  stipulated 
amount  of  foreign  money  at  date  of  maturity.  Gross  v.  Mendel,  171 
App.  Div.  237,  157  N.  Y.  Supp.  357. 

Drawer's  liability  fixed  by  law  of  place  where  he  draws  the  bill  of 
exchange  and  not  where  payable.  Amsinck  v.  Rogers,  189  N.  Y.  252,  82 
N.  E.  134,  12  L.  R.  A.  (N.  S.)  875,  121  Am.  St.  Rep.  858. 

Affect  of  depreciations  of  currency  in  country  where  drawn  on  a  bill 
calling  for  payment  in  a  foreign  country  in  the  money  of  the  latter. 
Pavenstedt  v.  N.  Y.  Life  Ins.  Co.,  203  N.  Y.  90,  96  N.  E.  104,  Ann.  Cas. 
1913A,  805. 

Notes  placed  on  same  basis  as  a  bill  of  exchange  renders  them  sub- 
ject to  bill  of  exchange  statute  of  limitations.  Pensacola  Bank  v.  Thorn- 
berry,  226  Fed.  Rep.  611,  141  C.  C.  A.  367. 

*^The  following-  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

///woiV.— Sublette  Ex.  Bk.  v.  Fitzgerald  (1912).  168  111.  App.  240; 
Simonoff  v.  Granite  City  Nat.  Bank,  279  111.  248,  116  N.  E.  636. 

Kentucky.— WUWams  v.  Paintsville  Nat.  Bank,  143  Ky.  781,  137  S.  W. 
535,  Ann.  Cas.  1912D,  350. 

New  York.— Amsmck  v.  Rogers  (1907),  189  N.  Y.  252,  82  N.  E.  134, 
12  L.  R.  A.  (N.  S.),  875,  121  Am.  St.  858;  McBride  v.  Illinois  Nat.  Bk. 
(1910),  138  A.  D.  339;  Casper  v  Kuhne  (1913),  140  N.  Y.  Supp.  86;  Gross 
V.  Mendel,  171  App.  Div.  237,  157  N.  Y.  Supp.  357;  Pavenstedt  v.  N.  Y. 
Life  ns.  Co.,  203  N.  Y.  90,  96  N.  E.  104,  Ann.  Cas.  1913A,  805. 

Missouri.— Belestin  v.  First  Nat.  Bank,  177  Mo.  App  300,  164  S.  W. 
160. 

South  Carolina.— City  Nat.  Bk.  v.  Givin   (1916),  87  S.  E.  998. 

Tennessee. — Wasterhouse  v.   Sterchi   Bros.    (1918),  201    S.  W.   ISO. 

West  Virginia.— Deming  Nat.  Bk.  v.  Baker    (1919),  98  ^.  E.  438. 

United  States. — Pensacola  Bank  v.  Thornberry,  226  Fed.  Rep.  611,  141 
C.  C.  A.  367. 

§  153.  Protest;  how  made.  The  protest  mtist  be  annexed 
to  the  bill,  or  must  contain  a  copy  thereof,  and  must  be  under 
the  hand  and  seal  of  the  notary  making-  it,  and  must  specify: 

1.  The  time  and  place  of  presentment; 

2.  The  fact  that  presentment  was  made  and  the  manner 
thereof ; 

3.  The  cause  or  reason  for  protesting  the  bill; 


664  NEGOTIABLE    INSTRUMENTS.  §§  154-155 

4.  The  demand  made  and  the  answer  given,  if  any,  or  the 
fact  that  the  drawee  or  acceptor  could  not  be  found.*'  ** 

See  text,  §  175. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sec. 
51  (7). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Protest  must  be  under  seal  of  protest  officer  showing  him  proper  pro- 
test officer  or  the  liability  of  the  drawer  is  not  established.  London  & 
River  Plate  Bank  v.  Carr,  54  Misc.  Rep.  94,  105  N.  Y.  Supp.  679. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Illinois.— Suhhtte  Ex.  Bk.  v.  Fitzgerald   (1912),  168  111.  App.  240. 

New  ForJ^.— London  &  River  Plate  Bk.  v.  Carr  (1904),  105  N.  Y. 
Supp.  679,  54  Misc.  Rep.  94. 

§154.  Protest;  by  whom  made.  Protest  may  be  made 
by: 

1.  A  notary  public ;  or, 

2.  By  any  respectable  resident  of  the  place  where  the  bill  is 
dishonored,  in  the  presence  of  two  or  more  credible  wit- 
nesses.** 

See  text,  §  175. 

In  the  Arkansas  act  the  word  "responsible"  was  used  for  the  word 
"respectable"  in  subsection  2. 

In  the  second  subsection  of  the  Washington  act  the  word  "respons- 
ible" was  substituted  for  "respectable." 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act : 
Sec.  94. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed: 

Alabama.— Roo-per  v.  Herring  (1915),  70  So.  308. 

Illinois.— Sublette  Ex.  Bk.  v.  Fitzgerald    (1912),  168  111.  App.  240. 

New  For/e.— McGrath  v.  Francoline    (1915),   156  N.   Y.   Supp.  981. 

§  155.  Protest;  when  to  be  made.  When  a  bill  is  protested, 
such  protest  must  be  made  on  the  day  of  its  dishonor,  unless 


§§  156-158  PROTEST   OF    BILLS.  665 

delay  is  excused  as  herein  provided.  When  a  bill  has  been  duly 
noted,  the  protest  may  be  subsequently  extended  as  of  the  date 
of  the  noting.*'  ** 

See  text.  §  175. 

Cross  section :     159. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sees. 
51    (4),  93;  51    (4). 

■'■  Digest  of  some  of  the  decisions  in  v^^hich  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Drawer  of  check  is  not  entitled  to  protest  notice  after  countermand- 
ing payment.     First  Nat.   Bank  v.  Korn    (Mo.  App.),  179  S.   W.  721. 

Protest  invalid  where  noting  of  protest  on  bill  dated  on  day  prior  to 
protest.     McPherson  v.  Wright,  12  Sess.  Cas.  942. 

•^*  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Missouri.— First  Nat.  Bk.  of  Grant  City  v.  Korn  (1915),  179  S.  W. 
721. 

New  Fory^.— Amsinck  v.  Rogers,  103  App.  Div.  428,  93  N.  Y.  Supp.  87. 

§  156.  Protest;  where  made.  A  bill  must  be  protested  at 
the  place  where  it  is  dishonored,  except  that  when  a  bill  drawn 
payable  at  the  place  of  business  or  residence  of  some  person 
other  than  the  drawee,  has  been  dishonored  by  non-acceptance, 
it  must  be  protested  for  non-payment  at  the  place  where  it  is 
expressed  to  be  payable  and  no  further  presentment  for  pay- 
ment to,  or  demand  on,  the  drawee  is  necessary.** 

See  text,  §  175. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sees. 
51    (6)    and  51    (6)    (b). 

§  157.     Protest  both  for  non-acceptance  and  non-payment. 

A  bill  which  has  been  protested  for  non-acceptance  may  be  sub- 
sequently protested  for  non-payment.** 

See  text,  §  175. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act.:  Sec. 
51   (3). 

§  158.  Protest  before  maturity  where  acceptor  insolvent. 
Where  the  acceptor  has  been  adjudged  bankrupt  or  an  insolvent 
or  has  made  an  assignment  for  the  benefit  of  creditors,  before 


6(^  NEGOTIABLE    INSTRUMENTS.  §§  159-160 

the  bill  matures,  the  holder  may  cause  the  bill  to  be  protested 
for  better  security  against  the  drawer  and  indorser. 

See  text,  §  180. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act .  Sec. 
51  (5). 

§  159.  When  protest  dispensed  with.  Protest  is  dispensed 
with  by  any  circumstances  which  would  dispense  with  notice  of 
dishonor.  Delay  in  noting  or  protesting  is  excused  when  delay 
is  caused  by  circumstances  beyond  the  control  of  the  holder  and 
not  imputable  to  his  default,  misconduct,  or  negligence.  When 
the  cause  of  delay  ceases  to  operate,  the  bill  must  be  noted  or 
protested   with   reasonable  diligence.^* 

See  text,  §  179. 

Cross  sections:     109,   115,  117. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sec. 
51   (9). 

^*  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

Kansas.— Y)\\\on  v.  Bron    (1915),  150  Pac.  553. 

§  160.  Protest  where  bill  is  lost,  et  cetera.  Where  a  bill 
is  lost  or  destroyed  or  is  wrongly  detained  from  the  person  en- 
titled to  hold  it,  protest  may  be  made  on  a  copy  or  written  par- 
ticulars thereof.-^ 

See  text,  §  180. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sec. 
51   (8). 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Bank  is  liable  for  checks  lost  in  the  mail  while  being  forwarded  for 
collection.  Heinrich  v.  First  Nat.  Bank  of  Middletown,  219  N.  Y.  1, 
113  N.  E.  531. 


ARTICLE  XIII. 


ACCEPTANCE  OF  BILLS  OF  EXCHANGE  FOR  HONOR. 


§  166,  Maturity  of  bill  payable 
after  sight;  accepted  for 
honor. 

167.  Protest     of     bill    accepted 

for   honor,   et    cetera. 

168.  Presentment    for    payment 

to     acceptor     for    honor ; 
how  made. 

169.  When      delay     in      making 

presentment    is    excused. 

170.  Dishonor    of    bill    by    ac- 

ceptor   for   honor. 


§  161.  When  bill    may   be  accept- 
ed  for  honor. 

162.  Acceptance       for       honor ; 

how  made. 

163.  When  deemed  to  be  an  ac- 

ceptance    for     honor     of 
the   drawer. 

164.  Liability    of    acceptor    for 

honor. 

165.  Agreement  of  acceptor  for 

honor. 


Sections  161  to  170  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  law  in  the  various  states 
and   territories  beginning  on  page  360. 

§  161.  When  bill  may  be  accepted  for  honor.  Where  a 
bill  of  exchange  has  been  protested  for  dishonor  by  non-accept- 
ance or  protested  for  better  security  and  is  not  overdue,  any 
person  not  being  a  party  already  liable  thereon  may,  with  the 
consent  of  the  holder,  intervene  and  accept  the  bill  supra  pro- 
test for  the  honor  of  any  party  liable  thereon  or  for  the  honor  of 
the  person  for  whose  account  the  bill  is  drawn. 

The  acceptance  for  honor  may  be  for  part  only  of  the  sum  for 
which  the  bill  is  drawn ;  and  where  there  has  been  an  acceptance 
for  honor  for  one  party,  there  may  be  a  further  acceptance  by  a 
different  person  for  the  honor  of  another  party.** 

See  text,  §  93. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  See 
1st  par.  65  (1),  2nd  par.  1st  and  2nd  Clause  65  (2). 

■•*  This  section  construed : 

New  For^.— Canning  v.  Lane    (1913),  139  N.  Y.   Supp.  884. 

§  162.  Acceptance  for  honor;  hov/  made.  An  acceptance 
for  honor  supra  protest  must  be  in  writing,  and  indicate  that  it 


667 


668  NEGOTIABLE    INSTRUMENTS.  §§  163-165 

is  an  acceptance  for  honor,  and  must  be  signed  by  the  acceptor 
for  honor.'" 

See  text,  §93. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act.:  Sec. 
65  (3). 

**  This  section  construed : 

Louisiana.— Th\c\  v.  Butker   (1910),  125  La.  473,  51   So.  500. 

New  ForA'.— German-Am.  Bk.  v.  Cunningham  (1904),  97  A.  D.  244, 
89  N.  Y.  Supp.  836. 

§  163.  When  deemed  to  be  an  acceptance  for  honor  of  the 
drawer.  Where  an  acceptance  for  honor  does  not  expressly 
state  for  whose  honor  it  is  made,  it  is  deemed  to  be  an  accept- 
ance for  the  honor  of  the  drawer.** 

See  text,  §  93. 

Corresponding  section  of  the   English   Bills   of   Exchange   Act :     Sec 

65  (3). 

*"  This  section  construed  : 

New  ForA".— German- Am.  Bk.  v.  Cunningham  (1904),  97  A.  D.  244, 
89  N.  Y.  Supp.  836. 

Rhode  Islaud.— McLean  v.  Bryer    (1903),  24  R.   I.  599,  54  Atl.  373. 

§  164.  Liability  of  acceptor  for  honor.  The  acceptor  for 
honor  is  liable  to  the  holder  and  to  all  parties  to  the  bill  subse- 
quent to  the  party  for  whose  honor  he  has  accepted. 

See  text,   §  93.  , 

Corresponding  section   of  the  English   Bills  of  Exchange  Act :     Sec. 

66  (2). 

§  165.    Agreement  of  acceptor  for  honor.    The  acceptor  for 

honor,  by  such  acceptance  engages  that  he  will  on  due  present- 
ment pay  the  bill  according  to  the  terms  of  his  acceptance,  pro- 
vided it  shall  not  have  been  paid  by  the  drawee,  and  provided 
also  that  it  shall  have  been  duly  presented  for  payment  and 
protested  for  non-paymertt  and  notice  of  dishonor  given  to 
him.** 

See  text,  §  93. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act;  Sec, 
^  (1). 


§§  166-169  ACCEPTANCE    FOR    HONOR.  669 

*"  This  section  construed : 

New  For^.— German- Am.  Bk.  v.  Cunningham  (1904),  97  A.  D.  244, 
89  N.  Y.  Supp.  836. 

§  166.  Maturity  of  bill  payable  after  sight,  accepted  for 
honor.  Where  a  bill  payable  after  sight  is  accepted  for 
honor,  its  maturity  is  calculated  from  the  date  of  the  noting  for 
non-acceptance  and  not  from  the  date  of  the  acceptance  for 
honor. 

See  text,  §93. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
65  (5). 

§  167.    Protest  of  bill  accepted  for  honor,  et  cetera.    Where 

a  dishonored  bill  has  been  accepted  for  honor  supra  protest  or 
contains  a  reference  in  case  of  need,  it  must  be  protested  for 
non-payment  before  it  is  presented  for  payment  to  the  acceptor 
for  honor  or  referee  in  case  of  need. 

See  text,  §93. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
67  (1).' 

§  168.  Presentment  for  payment  to  acceptor  for  honor,  how 
made.  Presentment  for  payment  to  the  acceptor  for  honor 
must  be  made  as  follows: 

1.  If  it  is  to  be  presented  in  the  place  where  the  protest 
for  non-payment  was  made,  it  must  be  presented  not  later  than 
the  day  following  its  maturity ; 

2.  If  it  is  to  be  presented  in  some  other  place  than  the  place 
where  it  was  protested,  then  it  must  be  forwarded  within  the 
time  specified  in  section  one  hundred  four. 

See  text,  §  93. 

In  North  Carolina  the  words  "in  this  chapter  specified"  are  substi- 
tuted for  "section  one  hundred  four"  in  subsection  2. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec 
67   (2). 

§  169.  When  delay  in  making  presentment  is  excused. 
The  provisions  of  section  one  hundred  and  forty-one  apply 
where  there  is  delay  in  making  presentment  to  the  acceptor  for 
honor  or  referee  in  case  of  need.** 


670  NEGOTIABLE    INSTRUMENTS.  §  170 

See  text,  §93. 

In  the  original  New  York  act,  "section  81"  instead  of  141,  by  mistake. 

Corresponding  section  of  the  English   Bills  of  Exchange  Act:     Sec. 
67  (3). 


la 


This  section  construed: 


New  Fory^.— German- Am.  Bk.  v.  Cunningham  (1904),  97  A.  D,  244, 
89  N.  Y.  Supp.  836. 

Wisconsin.— Cnrry  v.  Wis.  Nat.  Bk.    (1912),  149  Wis.  413. 

§  170.  Dishonor  of  bill  by  acceptor  for  honor.  When  the 
bill  is  dishonored  by  the  acceptor  for  honor,  it  must  be  protested 
for  non-payment  by  him. 

See  text,  §93. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
67  (4). 


ARTICLE  XIV. 
PAYMENT  OF  BILLS  OF  EXCHANGE  FOR  HONOR. 


§  171.  Who   may   make   payinent 
for  honor. 

172.  Payment   for   honor;   how 

made. 

173.  Declaration     before      pay- 

ment  for  honor. 

174.  Preference    of    parties    of- 

fering to  pay  for  honor. 


§  175.  Effect  on  subsequent  par- 
ties where  bill  is  paid  for 
honor. 

176.  Where    holder    refuses    to 

receive      payment       supra 
protest. 

177.  Rights  of  payer  for  honor. 


Sections  171  to  177  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corjesponding  sections  of  the  law  in  the  various  states 
and  territories  beginning  on  page  360. 

§  171.  Who  may  make  payment  for  honor.  Where  a  bill 
has  been  protested  for  non-payment,  any  person  may  intervene 
and  pay  it  supra  protest  for  the  honor  of  any  person  hable 
thereon  or  for  the  honor  of  the  person  for  whose  account  it  was 
drawn.*'  ** 

See  text,  §  183. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
68  (1). 

•^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Drawer  paying  check  after  dishonor  as  for  his  honor  or  to  discharge 
obligation.     Hooper  v.  Herring  (Ala.),  70  So.  308. 

-^"  This  section  construed : 

Alabama. — Hooper  v.  Herring   (1915),  70  So.  303. 

§172.  Payment  for  honor;  how  made.  The  payment  for 
honor  supra  protest  in  order  to  operate  as  such  and  not  as  a 
mere  voluntary  payment  must  be  attested  by  a  notarial  act  of 
honor  which  may  be  appended  to  the  protest  or  form  an  ex- 
ension  to  it. 

See  text,  §  183. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act :  Sec. 
68  (3). 

671 


672  NEGOTIABLE    INSTRUMENTS.  §§    173-177 

§  173.  Declaration  before  payment  for  honor.  The  notarial 
act  of  honor  must  be  founded  on  a  declaration  made  by  the 
payer  for  honor  or  by  his  agent  in  that  behalf  declaring  his 
intention  to  pay  the  bill  for  honor  and  for  whose  honor  he  pays. 

See  text,  §  183. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act :  Sec. 
68  (4). 

§  174.     Preference  of  parties    offering    to    pay    for    honor. 

Where  two  or  more  persons  offer  to  pay  a  bill  for  the  honor  of 
different  parties,  the  person  whose  payment  will  discharge  most 
parties  to  the  bill  is  to  be  given  the  preference.-^* 

See  text,  §  183. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
68  (2). 

•^*  This  section  construed  : 

Louisiana. — Cammer  Bk.  v.  Sanders   (1914),  66  So.  854. 

§  175.  Effect  on  subsequent  parties  where  bill  is  paid  for 
honor.  Where  a  bill  has  been  paid  for  honor  all  parties  subse- 
quent to  the  party  for  whose  honor  it  is  paid  are  discharged,  but 
the  payer  for  honor  is  subrogated  for,  and  succeeds  to,  both  the 
rights  and  duties  of  the  holder  as  regards  the  party  for  whose 
honor  he  pays  and  all  parties  liable  to  the  latter. 

See  text,  §  183. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act :  Sec. 
68   (5). 

§  176.  Where  holder  refuses  to  receive  payment  supra  pro- 
test. Where  the  holder  of  a  bill  refuses  to  receive  payment 
supra  protest,  he  loses  his  right  of  recourse  against  any  party 
who  would  have  been  discharged  by  such  payment. 

See  text,  §  183. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
68  (7). 

§  177.  Rights  of  payer  for  honor.  The  payer  for  honor  on 
paying  to  the  holder  the  amount  of  the  bill  and  the  notarial  ex- 
penses incidental  to  its  dishonor,  is  entitled  to  receive  both  the 
bill  itself  and  the  protest. 

See  text,  §  183. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
68  (6). 


ARTICLE  XV. 


BILLS  IN  A  SET. 


§  178.  Bills     in     sets     constitute  §  181.  Acceptance  of  bills  drawn 

nne  bill.  in  sets. 

179    Rights    of     holders    where  182.  Payment     by    acceptor     of 

uifferent    parts    are   nego-  bills   drawn   in   sets, 

tiated.  183.  Effect     of     discharging     one 

180.  Liability  of  holder  who  in-  of  a  set. 
dorses  two  or  more  parts 
of  a  set  to  different  per- 
sons. 

Sections  178  to  183  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  law  in  the  various  states 
and  territories  beginning  on  page  360. 

§  178.  Bills  in  sets  constitute  one  bill.  Where  a  bill  is 
dra-wn  in  a  set,  each  part  of  the  set  being  numbered  and  con- 
taining a  reference  to  the  other  parts,  the  whole  of  the  parts 
constitute  one  bill.*^ 

See  text,  §60. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
71  (1). 

^*  This  section  construed : 

New  York.— Caras  v.  Thalmann  (1910),  138  A.  D.  297,  123  N.  Y. 
Supp.  97;  Casper  v.  Kuhne,  159  App.  Div.  389,  144  N.  Y.  Supp.  502. 

§  179.  Rights  of  holders  where  different  parts  ard  nego- 
tiated. Where  two  or  more  parts  of  a  set  are  negotiated 
to  different  holders  in  due  course,  the  holder  whose  title  first 
accrues  is  as  between  such  holders  the  true  owner  of  the  bill. 
But  nothing  in  this  section  affects  the  rights  of  a  person  who  in 
due  course  accepts  or  pays  the  part  first  presented  to  him. 

See  text,  §60. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sec. 
71   (3). 

§  180.  Liability  of  holder  who  indorses  two  or  more  parts 
of  a  set  to  different  persons.     Where  the  holder  of  a  set  in- 


673 


674  NEGOTIABLE    INSTRUMENTS.  §§181-183 

dorses  two  or  more  parts  to  different  persons  he  is  liable  on 
every  such  part,  and  every  indorser  subsequent  to  him  is  liable 
on  the  part  he  has  himself  indorsed,  as  if  such  parts  were  sep- 
arate bills.^^ 

See  text,  §60. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:  Sec. 
71   (2). 

**  This  section  construed : 

Louisiana — Interstate  Trust  &  Banking  Co.  v.  Young  (1914),  65  So. 
611. 

§  181.  Acceptance  of  bills  drawn  in  sets.  The  acceptance 
may  be  written  on  any  part  and  it  must  be  written  on  one  part 
only..  If  the  drawee  accepts  more  than  one  part,  and  such  ac- 
cepted parts  are  negotiated  to  different  holders  in  due  course, 
he  is  liable  on  every  such  part  as  if  it  were  a  separate  bill. 

See  text  §§  60,  86. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sec. 
71    (4). 

§  182.  Payment  by  acceptor  of  bills  drawn  in  sets.  When 
the  acceptor  of  a  bill  drawn  in  a  set  pays  it  without  requiring 
the  part  bearing  his  acceptance  to  be  delivered  up  to  him,  and 
that  part  at  maturity  is  outstanding  in  the  hands  of  a  holder  in 
due  course,  he  is  liable  to  the  holder  thereon.** 

See  text,  §§  122,  60. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act :  Sec. 
71    (5). 

*'  This  section  construed  : 

Massachusetts.— Svmonds  v.  Riley  (1905),  188  Mass.  470,  74  N.  E. 
926. 

§  183.  Effect  of  discharging  one  of  a  set.  Except  as  herein 
otherwise  provided,  where  any  one  part  of  a  bill  drawn  in  a  set 
is  discharged  by  payment  or  otherwise  the  whole  bill  is  dis- 
charged.*" ** 

See  text,  §§  122,  60. 

The  Wisconsin  act  inserts  an  article,  not  found  in  the  other  acts, 
entitled  "Damages  on  Bills,"  as  follows: 


^  183  BILLS    IN    A    SET.  675 

"§  1682.  Whenever  any  bill  of  exchange  drawn  or  indorsed  within 
this  state  and  payable  without  the  limits  of  the  United  States  shall 
be  duly  protested  for  non-acceptance  or  non-payment,  the  party  liable 
for  the  contents  of  such  bill  shall,  on  due  notice  and  demand  thereof, 
pay  the  same  at  the  current  rate  of  exchange  at  the  time  of  the  demand 
and  damages  at  the  rate  of  five  per  cent  upon  the  contents  thereof,  to- 
gether with  interest  on  the  said  contents,  to  be  computed  from  the  date 
of  the  protest ;  and  said  amount  of  contents,  damages  and  interest  shall  be 
in  full  of  all  damages,  charges  and  expenses. 

"§  1683.  If  any  bill  of  exchange  drawn  upon  any  person  or  corpora- 
tion out  of  this  state,  but  within  some  state  or  territory  of  the  Unied 
States,  for  the  payment  of  money  shall  be  duly  presented  for  acceptance 
or  payment  and  protested  for  non-acceptance  or  non-payment,  the  drawer 
or  indorser  thereof,  due  notice  being  given  of  such  non-acceptance  or 
non-payment,  shall  pay  said  bill  with  legal  interest,  according  to  its 
tenor  and  five  per  cent  damages,  together  with  costs  and  charges  of 
protest.'' 

Corresponding  provision  of  the  English  SHls  of  Exchange  Act:  Sec. 
71    (6). 

*■  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Payment  of  part  one  of  a  two-part  bill  of  exchange  discharged  both 
under  French  Code.  Caras  v.  Thalmann,  138  App.  Div.  297,  123  N.  Y. 
Supp.  97. 

Validity  of  payment  in  good  faith  of  part  of  a  bill  of  exchange 
where  indorsements  are  forged.  Casper  v.  Kuhne,  159  App.  Div.  389,  144 
N.  Y.  Supp.  502. 

^*  This  section  construed : 

New  York.— Caras  v.  Thalmann  (1910).  138  A.  D.  297,  123  N.  Y. 
Supp.  97;  Casper  v.  Kuhne  (1913),  159  A.  D.  389,  144  N.  Y.  Supp.  502. 


ARTICLE  XVI. 


PROMISSORY  NOTES  AND  CHECKS. 


§  184.  Promissory  note  defined. 

185.  Check  defined. 

186.  Within    what    time    a    check 
must    be    presented. 

§  187.  Certification    of    check;    ef- 
fect of. 


188.  Effect      where      holder      of 

check  procures  it  to  be  cer- 
tified. 

189.  When  check  operates  as  an 

assignment. 


Sections  184  to  189  above  are  the  sections  used  by  the  commission. 

See  table  of  corresponding  sections  of  the  law  in  the  various  states 
and  territories  beginning  on  page  360. 

§  184.  Promissory  note  defined.  A  negotiable  promissory 
note  within  the  meaning  of  this  act  is  an  unconditional  promise 
in  writing  made  by  one  person  to  another  signed  by  the  maker 
engaging  to  pay  on  demand  or  at  a  fixed  or  determ.inable  future 
time,  a  sum  certain  in  money,  to  order  or  to  bearer.  Where  a 
note  is  drawn  to  the  maker's  own  order,  it  is  not  complete  until 
indorsed  by  him.*'  ** 

See  text,  §38. 


Corresponding  sections  of  the  English   Bills  of  Exchange  Act: 
1st  par.  83  (1) ;  last  par.  83  (2),  83  (1). 


See 


*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Certificate  of  deposit  not  ipso  facto  a  negotiable  instrument.  Clay- 
ton V.  Bank  of  East  Chattanooga,  —  Ala.  — ,  85  So.  271. 

Provisions  which  do  not  affect  negotiability  of  note.  Navajo  County 
Bk.  v.  Dolson,  163  Cal.  485,  126  Pac.  153. 

Negotiability  not  affected  by  certain  provisions.  Longmont  Nat.  Bk. 
V.  Loukonen,  53  Colo.  489,  127  Pac.  947,  Ann.  Cas.  1914B,  208. 

Extension  of  time  provision  affects  the  negotiability  of  note.  Union 
Stockyards  Nat.  Bank  v.  Bolan,  14  Idaho  87,  93  Pac.  508,  125  American 
State  Rep.  146. 

Provisions  not  affecting  negotiability.  Stitzel  v.  Miller,  250  111.  72,  95 
N.  E.  53,  34  L.  R.  A.  (N.  S.)   1004.  Ann.  Cas.  1912B,  412. 

Instrument  not  negotiable  where  impossible  to  fix  time  of  payment. 
Wayne 'County  Nat.  Bank  v.  Cook,  —  Ind.  App.  — ,  127  N.  E.  773. 

Provision  for  indefinite  extension  of  time  renders  non-negotiable. 
Woodbury  v.  Roberts,  59  Iowa  348. 


676 


§  184  PROMISSORY    NOTES    AND    CHECKS. 


677 


Negotiability  not  affected.  Farmer,  Thompson  &  Helsell  v.  Bank, 
130  Iowa  469,  107  N.  W.  170. 

Clause  giving  consent  of  payee  or  holder  to  extensions  renders  note 
non-negotiable.     Manhard  v.  First  Nat.  Bank   (Iowa),   165  N.   W.  185. 

Provision  for  extensions  of  time  render  note  non-negotiable.  Ross- 
ville  State  Bank  v.  Heslet,  84  Kan.  315,  113  Pac.  1052. 

Negotiable  instruments  law  make  promissory  notes  on  same  footing 
as  bills  of  exchange.  Williams  v.  Paintsville  Nat.  Bank,  143  Ky.  781, 
137  S.  W.  535,  Ann.  Cas.  1912D,  350. 

Negotiable  instruments  law  changed  the  effect  of  the  statute  of  limi- 
tations on  promissory  notes.  Southern  Nat.  Bank  v.  ^chimpler,  159  Ky. 
372,  167  S.  W.  148. 

Effect  on  notes  not  negotiated  before  maturity.  Sim  v.  Citizen's 
Bank,  173  Ky.  799,  191  S.  W.  489. 

Note  not  non-negotiable  because  of  provisions  for  extension  of  time, 
notes  becoming  payable  earlier  upon  bankruptcy  and  for  application  of 
properties  to  payment  after  maturity.  Hibernia  Bank  &  Trust  Co.  v. 
Dresser,  132  La.  538,  61  So.  569. 

Conditions  providing  for  extension  of  time,  earlier  due  date  because 
of  bankruptcy  and  use  of  properties  in  paying  note  after  maturity  do 
not  affect  negotiability.     Bonart  v.  Rabito,  141  La.  970,  76  So.  166. 

Provisions  which  do  not  affect  negotiability.  Wolfboro  L.  &  B.  Co.  v. 
Rollins,  195  Mass.  323.  81  N.  E.  204. 

What  provisions  in  note  do  not  affect  its  negotiability.  Davis  v.  Mc- 
Coll,  176  Mo.  App.  198,  166  S.  W.  1113. 

Provisions  which  do  not  change  note's  negotiability.  First  Nat,  Bk. 
V.  Balchrim.  100  Neb.  25,  158  N.  W.  371. 

Certificates  of  deposit  "payable  to  the  order  of  ourselves,  on  return 
of  this  certificate  properly  indorsed"  as  negotiable  instruments.  Jensen 
V.  Wilslef,  36  Nev.  Z1 ,  132  Pac.  16. 

Provision  for  extension  of  time  by  one  or  more  of  the  parties  to 
note  without  notice  does  not  permit  extension  without  notice  to  payee 
or  holder.  First  Nat.  Bank  v.  Stover,  21  N.  M.  453,  155  Pac.  905,  L.  R. 
A.  1916D,  1280. 

A  promise  to  pay  coupled  with  the  statement  "having  been  cause  of 
a  money  loss"  creates  a  valid  promissory  note.  Hickok  v.  Bunting,  92 
App.  Div.  167,  86  N.  Y.  Supp.  1059. 

When  complaint  must  allege  maker's  indorsement.  Simon  v.  Mintz, 
51  Misc.  Rep.  670,  101  N.  Y.  Supp.  86. 

Maker's  indorsement  must  be  pleaded  where  note  payable  to-  his  order. 
Edelman  v.  Rams,  58  Misc.  Rep.  561,  109  N.  Y.   Supp.  816. 

Payee  maker's  subsequent  indorsement  and  negotiation  binds  indorser. 

Yonker's  Nat.  Bank  v.  Mitchell,  156  App.  Div.  318,  141  N.  Y.  Supp.  128. 

Extension  of  time  provision  as  affecting  negotiability.     First  Nat.  Bk. 

of  Pomeroy  v.  Buttery,  17  N.  D.  226,  116  N.  W.  341.  16  L.  R.  A.  (N.  S.) 

878,  17  Ann.  Cas.  52. 

What  provisions  in  note  affect  negotiability.  City  Nat.  Bk.  v.  Kelly 
(Okla.).  151  Pac.  1172. 

Words  "any  extension  of  time  of  payment"  indicate  contemplation  of 
more  than  one  extension.  Pioneer  Construction  Co.  v.  First  State  Bank 
(Okla.),  158  Pac.  894. 

Granting  of  extension  of  time  provision  as  authority  for  more  than 
one  extension.     Kreemke  v.  Radamaker   (Okla.),   159  Pac.  475. 


678  NEGOTIABLE    INSTRUMENTS.  §  184 

Negotiability  not  affected  by  certain  provisions.  Bank  v.  White,  136 
Tenn.  634,  191  S.  W.  332. 

Effect  wlicre  note  is  payable  to  one  of  several  makers.  Reid  v.  Wind- 
sor, 111.  Va.  825,  69  S.   E.  1101. 

Negotiable  note  must  be  payable  in  money.  Rector  v.  Hancock,  — 
Va.  — ,  102  S.  E.  663. 

Certificate  of  deposit  "payable  on  the  return  of  this  certificate  prop- 
erlv  indorsed"  are  negotiable  instruments.  Forrest  v.  Safety  Banking 
&  Trust  Co.,  174  Fed.  345. 

Sureties  provision  consenting  to  extension  of  time  does  not  apply  to 
joint  makers.  Smith  v.  Nelson  Land  &  Cattle  Co.,  212  Fed.  Rep.  56, 
128  C.  C.  A.  512. 

A  promise  to  pay  to  the  order  of  A  a  specific  sum  of  money  held  not 
a  note  but  a  contract.  Leitcr  v.  Poindexter,  220  Fed.  Rep.  610,  136  C. 
C.  A.  68. 

Certificates  of  deposit  are  negotiable  instruments  when  payable  upon 
return  properly  indorsed.     National  City  Bank  v.  Titlow,  233  Fed.  838. 

The  clause  "No  time  given  to,  or  security  taken  from,  or 
composition  or  arrangement  entered  into,  with  either  party  hereto  shall 
prejudice  the  rights  of  the  holder  to  proceed  against  any  other  party," 
did  not  affect  the  note's  negotiability.  Kirkwood  v.  Carroll  (1903),  1  K. 
B.  531. 

**  The  following-  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Alabama.— Ger.-Am.  Nat.  Bk.  v.  Lewis  (1913),  63  So.  741;  Clayton  v. 
Bk.  of  East  Chattanooga,  85  So.  271. 

Arisona.— Sherman  v.  Goodwin,  11  Ariz.  141,  89  Pac.  517. 
California.— "Mavajo  County  Bk.  v.  Dolson,  163  Cal.  485,  126  Pac.  153. 
Colorado.— Lougmont  Nat.  Bank  v.  Loukonen,  53  Colo.  489,  127  Pac. 
947,  Ann.  Cas.  1914B,  208. 

/7/oWrfa.— Baumeister  v.  Kuntz,  53  Fla.  340,  42  So.  886. 

Illinois.— Van  Kleeck  v.  Channon  (1912),  175  111.  App.  626;  Stitzel 
V.  Miller,  250  111.  72,  95  N.  E.  53,  34  L.  R.  A.  (N.  S.)  1004,  Ann.  Cas. 
1912B,  412. 

Idaho.— Vn'ion  Stock  Yards  Nat.  Bk.  v.  Bolan  (1908),  14  Ida.  87,  93 
Pac.  508,  125  Am.  St.  Rep.  146. 

Indiana. — Wayne  County  Nat.   Bank  v.   Cook,  127  N.  E.  773. 

Iowa.— Farmer,  Thompson  &  Helsell  v.  Bank,  130  Iowa  469,  107  N. 
W.  170;  Quinn  v.  Bane  (Iowa).  164  N.  W.  788;  Manhard  v.  First  Nat. 
Bank   (Iowa),  165  N.  W.  185;  Woodbury  v.   Roberts,  59  la.  348. 

A'a«ja.y.— Rossville  State  Bk.  v.  Haslet,  84  Kan.  315,  113  Pac.  1052. 

Kentucky.— WWViams  v.  Paintsville  Nat.  Bank,  143  Ky.  781,  137  S.  W. 
535,  Ann.  Cas.  1912D,  350;  Gahren  v.  Parkersburg  Nat.  Bank,  157  Ky. 
266,  162  S.  W.  1135;  Pratt  v.  Rounds,  160  Ky.  358,  169  S.  W.  848; 
Southern   Nat.  Bank  v.   Schimpler,   159  Ky.  372,  167  S.  W.  148;  Sims 


§  184  PROMISSORY    NOTES    AND    CHECKS.  679 

V.  Citizens  Bank,  173  Ky.  799,  191  S.  W.  489;  Alexander  v.  Hazelrigg 
(1906),  123  Ky.  €11,  97  S.  W.  353;  Weltlaufer  v.  Baxter  (1910),  137  Ky. 
362,  125  S.  W.741 

Louisiana. — Hibcrnia  Bank  &  Trust  Co.  v.  Dresser,  132  La.  538,  61  So. 
569;  Bonart  v.  Rabito,  141  La.  970,  76  So.  166. 

Massaclmsetts.—Womord  L.  &  B.   Co.  v.   Rollins,   195   Mass.  323,  81 

N.  E.  204. 

Missouri.— Market  &  Fulton  Nat.  Bk.  v.  Ettenson's  Estate  (1913),  158 
S.  W.  448 ;  City  Nat.  Bank  v.  Goodloe-McClelland  Com.  Co.,  93  AIo.  App. 
123;  Davis  v.  McColl,  176  Mo.  App.  198,  166  S.  W.  1113. 

Nebraska.— First  Nat.  Bk.  v.  Balchrim,  100  Neb.  25,   158  N.  W.  371. 

Nevada.— Jensen  v.  Wilslef,  36  Nev.  37,  132  Pac.  16. 

New  Mexico. — First  Nat.  Bank  v.  Stover,  21  N.  M.  453.  155  Pac. 
905,  L.  R.  A.  1916D,   1280. 

New  York.— Hkkok  v.  Bunting,  86  N.  Y.  Supp.  1059,  92  A.  D.   167 
Young  V.   Am.   Bk.   No.   1    (1904),   44   Misc.  305.   89  N.   Y.    Supp.   913 
Young  V.  Am.   Bk.   No.  2    (1904),   44  Misc.   308,  89   N.   Y.   Supp.   915 
Simon  v.   Murtz   (1906),  51   Misc.  670,  101   N.  Y.   Supp.  86;  Colborn  v. 
Arbrean    (1907),  54  Misc.  623,  104  N.  Y.   Supp.  968;   Edelman  v.  Rams 
(1908),   58  Misc.   561,   109  N.   Y.   Supp.  816;   Ed.   Tr.   Co.   of  N.   Y.   v. 
Newman    (1910),   127   N.   Y.    Supp.  243;   Yonkers   Nat.    Bk.    v.   Mitchell 
(1913),  156  A.   D.  318,   141   N.  Y.   Supp.   128;   Ryan  v.   Sullivan    (1911), 
143  A.  D.  471. 

North  Carolina.— Ferry  Co.  v.  Taylor  (1908),  148  N.  Car.  362; 
Johnson  v.  Lasseter  (1911),  155  N.  Car.  47. 

North  Dakota.— Farquhar  Co.  v.  Higham  (1907),  16  N.  Dak.  106, 
112  N.  W.  657;  First  Nat.  Bk.  of  Pomeroy  v.  Buttery  (1908),  17  N.  Dak. 
226,  116  N.  W.  341,  16  L.  R.  A.  (N.  S.)  878,  17  Ann.  Cas.  52. 

Oklahoma.— Iowa  State  Sav.  Bk.  v.  Wignall  (1916),  157  Pac.  725; 
Missouri  Trust  Co.  v.  Long,  31  Okla.  1,  120  Pac.  291;  De  Groat  v.  Focht, 
37  Okla.  267,  131  Pac.  172;  City  Nat.  Bk.  v.  Kelly  (Okla.),  151  Pac.  1172; 
Kremke  v.  Radamaker  (Okla.),  159  Pac.  475;  Pioneer  Construction  Co. 
V.  First  State  Bank   (Okla.),  158  Pac.  894. 

Pennsylvania. — Milton  Nat.  Bk.  v.  Beaver  (1904),  25  Pa.  Super.  Ct. 
494. 

Tennessee.— Bank  v.  White,  136  Tenn.  634,  191  S.  W.  332;  Moore  v. 
Cary,  138  Tenn.  332,  197  S.  W.  1093. 

Virginia. — Rector  v.  Hancock,  102  S.  E.  663;  Reid  v.  Windsor,  111  Va. 
825,  69  S.  E.  1101. 

Wyoming. — Brown  v.  Cow  Creek  Co.,  21  Wyo.  1,  126  Pac.  886. 

United  States. — Forrest  v.  Safety  Banking  &  Trust  Co.,  174  Fed. 
345;  Nat.  City  Bank  v.  Titlow,  233  Fed.  838;  Leiter  v.  Poindexter  220 
Fed.  Rep.  610,  136  C  C  A.  68, 


680  NEGOTIABLE    INSTRUMENTS.  §  185 

§  185.  Check  defined.  A  check  is  a  bill  of  exchange  drawn 
on  a  bank  payable  on  demand.  Except  as  herein  otherwise  pro- 
vided, the  provisions  of  this  act  applicable  to  a  bill  of  exchange 
payable  on  demand  apply  to  a  check.*'  ** 

See  text,  §200. 

Cross  sections:     Sec.  191.  "bank." 

Corresponding  sections  of  the  English  Bills  of  Exchange  Act:  See 
7Z  (the  word  "banker"  appears  instead  of  "bank"  as  above). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Instrument  drawn  on  bank  is  check.  National  Produce  Bank  of  Chi- 
cago V.  Dodds,  205  111.  App.  444. 

Where  drawer  of  check  payable  on  demand  stops  payment  it  is  the 
same  as  dishonored.    Patterson  v.  Oaks,  —  Iowa  — ,  181  N.  W.  787. 

Check  must  be  drawn  on  a  bank.  Amsinck  v.  Rogers,  103  App.  Div. 
428,  93  N.  Y.  Supp.  87,  affirmed  189  N.  Y.  252,  82  N.  E.  134,  12  L.  R.  A. 
(N.  S.)  875,  12  Am.  St.  Rep.  858. 

Liability  on  check  is  governed  by  law  of  place  where  delivered.  Hen- 
nenlotter  v.  De  Orvananos,  186  N.  Y.  S.  488. 

Cashier's  checks  are  classed  with  bills  of  exchange  payable  on  demand. 
Singer  Mfg.  Co.  v.  Summers,   143  N.  C.  102,  55  S.  E.  522. 

Cashier's  checks  classed  as  bills  of  exchange.  Hannon  v.  Allegheny 
Bellevue  Land  Co.,  44  Pa.  Super.  Ct.  266. 

Certificate  of  deposit  payable  to  order  of  payee  on  return  properly 
indorsed  is  check.  State  v.  Garland,  65  Wash.  666,  118  Pac.  907,  58  L. 
ed.  772. 

Provision  in  check  which  does  not  render  promise  to  pay  conditional. 
Brown  v.  Cow  Creek  Co.,  21  Wyo.  1,  126  Pac.  886. 

An  order  to  pay  "provided  the  receipt  form  at  foot  hereof  is  duly 
signed,  stamped  and  dated,"  is  not  a  check.  Bavins  v.  London  &  S.  W. 
Bank   (1900),  1  Q.  B.  270. 

Requirement  of  receipt  by  payee  affects  negotiability  of  order  to  pay. 
Capital  &  Counties  Bank  v.  Gordon  (1903),  A.  C.  240,  252,  88  L.  T.  R. 
574. 

Provision  that  receipt  on  back  must  be  signed  held  unconditional  or- 
der to  pay.  Nathan  v.  Ogdens  (K.  B.  Div.  Aug.  1905),  21  T.  L.  R.  775, 
93  L.  T.  Rep.  553. 

Note  at  bottom  of  receipt  for  pension  providing  by  whom 
it  shall  be  presented  and  when  renders  it  non-negotiable.  Jones  &  Co.  v. 
Coventry  (1909),  2  K.  B.  1029. 

Check  written  on  blank  sheet  of  paper  not  rendered  conditional  as  to 
•bank  by  words  "to  be  retained"  on  its  face.  Roberts  &  Co.  v.  Marsh 
(1915),  1  K.  B.  42. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Colorado.— Y^n  Buskirk  v.  State  Bk.  of  Rocky  Ford  (1905),  35  Colo. 
J42,  83  Pac.  778,  117  Am.   St.  182;  Norman  v.  McCarthy   (1913),   138 


§  185  PROMISSORY    NOTES    AND    CHECKS. 


681 


Pac.  28;  Wedge  Mines  Co.  v.  Denver  Nat.  Bank,  19  Colo.  App.   182,  11 
Pac.  873. 

Wa/io.— Camas  Prairie  State  Bk.  v.  Newman  (1909),  99  Pac.  833,  12 
Id.  719. 

///wou.— Sublette  Ex.  Bk.  v.  Fitzgerald  (1912),  168  111.  App.  240; 
People  V.  Miller  (1917),  116  N.  E.  131,  278  111.  490;  Natl.  Produce  Bank 
of  Chicago  v.  Dodds,  205  111.  App.  444. 

/«j!a»a.— Williams  v.  Lowe    (1916),   113   N.   E.  471. 

/owa.— Patterson  v.  Oaks,  181   N.  W.  787. 

Kentucky.— ^o?,\s^\\  v.  Citizen's  Sav.  Bank,  123  Ky.  485,  96  S.  W.  797 ; 
Ewing  V.  Cit.  Nat.  Bk.   (1915),  172  S.  W.  955. 

il/oo'/anrf.— American  Agricultural  Chemical  Co.  v.  Scrimger  (1917), 
100  Atl.  774. 

Massachuseits.—'SiymonA^  v.  Riley  (1905),  188  Mass.  470,  74  N.  E. 
926;  Gordon  v.  Levine  (1907),  194  Mass.  418,  80  N.  E.  505;  Gordon  v. 
Levine   (1908),  197  Mass.  267,  83  N.   E.  861,  15  L.  R.  A.    (N.   S.)   243. 

Missouri.— ^2X.  Bk.  of  Commerce  v.  Am.  Nat.  Bk.  (1910),  127  S.  W. 
429;  Nelson  v.  Diffenderfifer  (1914),  178  Mo.  App.  48,  163  S.  W.  271; 
Kansas  City  Gas  Co.  v.  Westport  Ave  Bk.   (1915),  177  S.  W.  1092. 

N ehraska.—'^w^n^on  Co.  v.  Commercial  State  Bk.  (1915),  154  N.  W. 
233. 

l^ew  For^.— State  Bk.  v.  Weiss  (1904),  46  Misc.  93,  91  N.  Y.  Supp. 
276  Amsinck  v.  Rogers  (1907),  189  N.  Y.  252,  82  N.  E.  134.  12  L.  R. 
A.  (N.  S.)  875,  121  Am.  St.  858;  Schlesinger  v.  Kurzrok  (1905),  94 
N.  Y.  Supp.  442.  47  Misc.  634;  Riddle  v.  Bk.  of  Montreal  (1911),  145  A. 
D.  207,  130  N.  Y.  Supp.  15;  Casper  v.  Kuhne  (1913),  140  N.  Y.  Supp. 
86;  Hennenlotter  v.  De  Orvananos,  186  N.  Y.  S.  488. 

North  Caro/ina.— Singer  Manufacturing  Co.  v.  Summers  (1906),  143 
N.  Car.  102.  55  S.  E.  522. 

Oklahoma.— ^2\\(in  &  Friedman  v.  Bk.  of  Krenlin  (1913),  130  Pac. 
539;  Turner  v.  Kimble    (1913),  130   Pac.  563. 

Oregon.— State  v.  Hammelsev  (1908),  52  Oreg.  156.  96  Pac.  865; 
U.  S.  Nat.  Bk.  v.  First  Trust  &  Sav.  Bk.  (1911).  60  Oreg.  266.  119  Pac. 
343;  Triphonoflf  v.  Sweeney   (1913).  130  Pac.  979. 

Pennsylvania.— ^\sv^^x  v.  First  Nat.  Bk.  of  Gallitzin  (1908),  220 
Pa.  21,  68  Atl.  955.  17  L.  R.  A.  (N.  S.)  1266;  Hannon  v.  Allegheny  Bel- 
levue  Land  Co.   (1910),  44  Pa.  Super.  Ct.  266. 

Tennessee.— \5n^V^  Nat.  Bk.  v.  Butler  (1904).  113  Tenn.  574,  83 
S.  W.  655;  Am.  Nat.  Bk.  v.  Nat.  Fertilizer  Co.  (1911).  125  Tenn.  329. 
143  S.  W.  597;  First  Nat.  Bk.  of  Murfreesboro  v.  First  Nat.  Bk.  of  Nash- 
ville (1913),  154  S.  W.  965. 

Vermont.—Y\x%\  Nat.  Bank  of  Montpelier  v.  BertoH  (1914),  89 
Atl.  359. 

Virginia.—^.  &  O.  R.  R.  Co.  v.  First  Nat.  Bk.  (1904),  102  Va.  753, 
47  S.  E.  837. 


682  NEGOTIABLE    INSTRUMENTS.  §  186 

Washington.— The  State  v.  Garland  (1911),  65  Wash.  666,  118  Pac. 
907,  58  L.  ed.  772;  Peninsula  Nat.  Bk.  v.  Pederson   (1916),  158  Pac.  246. 

Wisconsin.— Columbian  Banking  Co.  v.  Bowen  (1908),  134  Misc. 
218,  114  N.  W.  451. 

Wyotning.— Brown  v.  Cow  Creek  Co.  (1912),  126  Pac.  886. 

§  186.  Within  what  time  a  check  must  be  presented.  A 
check  must  be  presented  for  payment  within  a  reasonable  time 
after  its  issue  or  the  drawer  will  be  discharged  from  liability 
thereon  to  the  extent  of  the  loss  caused  by  the  delay.*'  ** 

See  text,   §  202. 

Cross  section :  193. 

In  Illinois  the  words  "and  notice  of  dishonor  given  to  the  drawer 
as  provided  for  in  the  case  of  bills  of  exchange"  are  interpolated  after 
the  words  "after  its  issue." 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
74  (1). 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Afifect  of  successive  transfers  where  check  delivered  at  same  place 
where  drawee  bank  is  located  at  time  for  presentment  for  payment. 
Swift  &  Co.  V.  Miller,  62   Ind.  App.  312,  113  N.  E.  447. 

Forwarding  check  to  drawee  in  a  distant  place  for  collection  rather 
than  collection  agent  not  shown  harmful  Citizens'  Bank  v.  First  Nat. 
Bank,  135  Iowa  605.  113  N.  W.  481,  13  L.  R.  A.  (N.  S.)  303. 

Burden  of  proof  in  suit  upon  check  not  presented  for  payment  within 
reasonable  time.     Cox  v.  Citizens'  State  Bank,  73  Kan.  789,  85  Pac.  762. 

Failure  of  payee  or  indorsers  to  present  check  by  close  of  following 
day  discharges  drawer.  Gordon  v.  Levine,  194  Mass.  418,  80  N.  E.  505, 
120  Am.   St.  Rep.   565. 

Failure  of  holder  of  check  to  present  it  for  payment  for  an  addi- 
tional day  within  which  time  drawer  had  failed,  renders  holder  an 
ordinary  creditor.     Furber  v.  Dane,  203  Mass.  108,  89  N.  E.  227. 

Time  for  presentment  for  payment  not  extended  by  clearing  house 
custom.     Edminston  v.  Hcrpresheimer,  66  Neb.  94,  92  N.  W.  138. 

Defendant  must  show  his  loss  occasioned  by  failure  to  present  for 
payment  within  reasonable  time.  Dehoust  v.  Lewis,  128  N.  Y.  App. 
Div.  131,  112  N.  Y.  Supp.  559. 

Due  diligence  in  view  of  the  New  York  clearing  house  custom.  Za- 
loom  v.  Gamin,  72  Misc.  Rep.  36,  129  N.  Y.  Supp.  85, 

Time  for  presentment  for  payment  is  not  extended  by  transfer  to 
successive  holders  where  delivered  in  same  place  where  drawee  bank  is 
located.— Sulsberger  &  Sons  Co.  v.  Cramer,  170  App.  Div.  114,  155  N.  Y. 
Supp.  775. 

Clearing  House  Association  cannot  change  law  merchant  rules.  Co- 
lumbia-Knickerbocker Trust  Co.  V.  Miller,  215  N.  Y.  191,  109  N.  E.  179. 


§  186  PROMISSORY    NOTES    AND   CHECKS.  683 

Drawers  contract  is  that  check  will  be  paid  upon  presentment.  Lin- 
ton V.  Columbia  Trust  Co.  185  N.  Y.  S.  198. 

Affect  of  forwarding  check  to  drawee  bank  for  collection.  Pickett 
V.  Thomas  J.  Baird  Co.,  22  N.  D.  343,  133  N.  W.  1026. 

Delay  necessary  to  discharge  drawer  of  check  where  drawn  on  bank 
in  same  town.  Matlock  v.  Scheuerman,  51  Ore.  49,  93  Pac.  823,  17  L. 
R.  A.  (N.  S.)  747. 

The  drawing  out  of  the  firm's  money  by  one  partner  and  settlement 
of  partnership  without  ascertaining  whether  firm  check  had  been  paid 
held  cause  of  loss  and  not  failure  of  presentment  for  payment.  Heralds 
of  Liberty  v.  Hurd,  44  Pa.  Super.  Ct.  478. 

Holding  tellers  check  on  local  bank  for  two  days  released  the  in- 
dorser  because  of  unreasonable  delay  in  presentment,  for  payment. 
Hannon  v.  Allegheny  Bellcvue  Land  Co.,  44  Pa.  Super  Ct.  266. 

New  York  Clearing  House  Association  custom  as  to  presentment  for 
payment  of  checks  received  after  banking  hours  as  affecting  the  time  of 
presentment.     Willis  v.  Finley,   173  Pa.  28,  34  Atl.  213. 

Defendant  has  burden  of  showing  loss  by  reason  of  failure  to  pre- 
sent for  payment  within  reasonable  time.  Rosenbaum  v.  Hazard,  233 
Pa.  206,  82  Atl.  62. 

When  time  for  presentment  for  payment  is  not  extended  by  clearing 
house  custom.  Dorchester  v.  Merchants  Bank,  106  Tex.  201,  163  S.  W. 
5,  50  L.  R.  A.   (N.  S.)   542. 

Burden  of  proof  where  payee  negligent  in  giving  notice  of  check's 
dishonor.  ]\Torris-Miller  Co.  v.  Von  Pressentin,  63  Wash,  74,  114  Pac. 
912. 

Effect  of  failure  to  present  check  for  payment  within  reasonable  time. 
Ger.-Am.  Bank  v.  Wright,  85  Wash.  460,  148  Pac.  769. 

When  bank  becomes  prima  facie  owner  of  check  deposited,  it  must 
present  same  for  payment  within  reasonable  time  to  bind  payee.  Aebi  v. 
Bank  of  Evansville,  124  Wis.  72,  102  N.  W.  329,  68  L.  R.  A.  964,  109 
Am.   St.  Rep.  925. 

**  The  following  is  a  complete  list  of  the  cases,  arranored  alpha- 
betically by  states,  where  this  section  has  been  construed: 

^/a&awia.— Wallace  v.  City  Nat.   Bk.  of  Decatur   (1919),   80  So.  405. 

/owa.— Citizens  Bank  v.  First  Nat.  Bank.  135  Iowa.  605.  113  N.  W. 
481,  13  L.  R.  A.  (N.  S.)  303;  Plover  Sav.  Bk.  v.  Moodie  (1906),  135 
Iowa  685,  110  N.  W.  29. 

Kansas.— C-Q^i  v.  Citizens  State  Bank,  73  Kan.  789,  85  Pac.  762. 

Massachnsefts— Gordon  v.  Levine  (1907),  194  Mass.  418,  80  N.  E. 
505;  Gordon  v.  Levine  (1909),  197  Mass.  263,  83  N.  E.  861.  15  L.  R.  A. 
(N.  S.)  243;  Furber  v.  Dane   (1909),  203  Mass.  108,  89  N.  E.  227. 

Missouri— F\rs\.  Nat.  Bk.  of  Grant  Citv  v.  Korn  (1915),  179  S.  W. 
721;  City  of  Brunswick  v.  Peoples  Sav.  Bk.  (1916),  190  S.  W.  60. 

Nebraska.— 'EAm\ns,\on  v.  Herpresheimer,  66  Neb.  94,  92  N.  W.  138. 

New  Yorh. — Moskowitz  v.  Deutsch,  46  Misc.  Rep.  603,  92  N.  Y.  Supp. 
721;  Kramer  v.  Grant  (1908).  Ill  N.  Y.  Supp.  709;  Dehoust  v.  Lewis 
(1908),  128  A.  D.  131,  112  N.  Y.  Supp.  559;  Zaloom  v.  Gamin   (1911), 


6S4  NEGOTIABLE    INSTRUMENTS.  §  187 

129  N.  Y.  Supp.  85,  72  Alisc.  Rep.  36;  Knickerbocker  Tr. 
Co.  V.  Miller  (1912),  133  N.  Y.  Supp.  989;  Sulsberger  &  Sons  Co.  v. 
Cramer  (1915),  155  N.  Y.  Supp.  775;  McEwen  Bros.  v.  Cobb  (1918), 
172  N.  Y.  Supp.  44;  Columbia-Knickerbq^cker  Trust  Co.  v.  Miller,  215 
N.  Y.  191,  109  N.  E.  179;  Linton  v.  Columbia  Tr.  Co.,  185  N.  Y.  S.  198. 

North  Carolina. — Singer  Mfg.  Co.  v.  Summers  (1906),  143  N.  Car. 
102,  55  S.  E.  522;  Bk.  of  Mt.  Airy  v.  Greensboro  Loan  &  Tr.  Co.  (1912), 
159  N.  Car.  85,  74  S.  E.  747. 

North  Dakota.— Pickett  v.  Thomas  J.  Baird  Co.,  22  N.  D.  343,  133 
N.  W.   1026. 

Oklahoma.— School  District  v.  Eager,  19  Okla.  235,  91  Pac.  847;  Tur- 
ner V.  Kimble,  37  Okla.  92,  130  Pac.  563. 

Oregon.— Matlock  v.  Scheuerman  (1908),  51  Oreg.  49,  93  Pac.  823,  17 
L.  R.  A.  (N.  S.)  747. 

Pennsylvania. — Hannon  v.  Allegheny  Bellevue  Land  Co.  (1910),  44 
Pa.  Super.  Ct.  266;  Rosenbaum  v.  Hazard  (1911),  233  Pa.  206,  82  Atl. 
62;  Willis  v.  Finley,  173  Pa.  28,  34  Atl.  213. 

Texas.— Dorchester  v.  Merchants  Bank,  106  Tex.  201,  163  S.  W.  5. 
SO  L.  R.  A.  (N.  S.)  542. 

Washington. — Morris-Miller  Co.  v.  Van  Prcssentin,  63  Wash.  74,  114 
Pac.  912;  Hunt  v.  Panhandle  Lumber  Co.  (1912),  66  Wash.  645,  120 
Pac.  538;  Peninsula  Nat.  Bk.  v.  Pederson  (1916),  158  Pac.  246;  German- 
American  Bank  v.  Wright,  85  Wash.  460,  148  Pac.  769. 

Wisconsin.— Aeh'i  v.  Bk.  of  Evansville  (1905),  124  Wis.  73,  102  N. 
W.  329,  68  L.  R.  A.  964.  109  Am.  St.  925;  Columbia  Banikng  Co.  v 
Bowen   (1908),  134  Misc.  218,  114  N.  W.  451. 

§  187.  Certification  of  check;  effect  of.  Where  a  check  is 
certified  by  the  bank  on  which  it  is  drawn  the  certification  is 
equivalent  to  an  acceptance.^-  ** 

See  text,  §  203. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Certification  of  post  dated  check  which  was  delivered  to  payee  ren- 
dered bank  liable  upon  presentment  even  if  before  date  of  check.  Smith 
V.  Field,  19  Idaho,  558,  114  Pac.  668,  Ann  Cas.   1912C,  354. 

Acceptance  or  certification  of  check  discharges  drawer.  State  Bank 
of  Chicago  V.  Mid-City  Trust  and  Savings  Bank.  —  111.  — ,  129  N. 
E.  498.. 

Certification  is  equal  to  acceptance.  Commercial  Bank  of  Wood- 
ville,  Miss.,  v.  First  Nat.  Bank,  —  La.  — ,  86  So.  342. 

Certified  post  dated  check  a^  creating  liability  of  bank  at  once.  Mo- 
hawk Bank  v.  Broderick   (N.  Y.),  10  Wend.  304,  13  Wend.  133. 

Effect  of  post  dating  check  and  having  same  certified  without  funds 
in  bank,    Clarke  Nat.  Bank  v.  Bank  of  Albin  (N.  Y.),  52  Barb.  592. 


§  187  PROMISSORY    NOTES    AND    CHECKS.  685 

Notice  to  stop  payment  because  of  loss  of  check  does  not  justify  re- 
fusal to  pay  holder  in  due  course.  Poess  v.  Twelfth  Ward  Bank,  43 
Misc.  Rep.  45,  86  N.  Y.  Supp.  857. 

Indorsee  of  check  had  same  certified  after  death  of  payee  and  draw- 
er's request  for  stopping  payment  and  bank  held  liable  thereon.  Meuer 
V.  Phenix  Nat.  Bank,  94  App.  Div.  331,  88  N.  Y.  Supp.  83. 

Bank  is  liable  on  certified  check  to  the  holder  only.  Schlesinger  v. 
Kurzrok,  47  Misc.  Rep.  634,  94  N.  Y.  Supp.  442. 

Certification  of  check  as  preventing  drawer  or  drawee  setting  up 
set-ofif  against  liability  on  check.  Carnegie  Trust  Co.  v.  First  Nat. 
Bank,  213  N.  Y.  301,  107  N.  E.  693,  L.  R.  A.  1916C,  186. 

Certifying  bank's  liability  not  changed  by  question  of  deposit  in  bank. 
Security  State  Bank  v.  State  Bank  of  Brantford,  31  N.  D.  454,  154  N. 
W.  282. 

Bank  certifying  check  where  no  funds  on  deposit  is  liable  to  holder 
in  due  course.     National  City  Bank  v.  Titlow,  233  Fed.  Rep.  838. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Idaho.—Smhh  v.  Field  (1911),  19  Ida.  558,  114  Pac.  668,  Ann  Cas. 
1912C,  354. 

Illinois. —State  Bank  of  Chicago  v.  Mid-City  Trust  &  Savings  Bank, 
129  N.  E.  498. 

Lowmflna.— Commercial  Bank  of  Woodville,  Miss.  v.  First  Nat.  Bank, 
86  So.  342. 

Massachusetts.— EWiott  v.  Worcester  Tr.  Co.  (1905),  189  Mass  542, 
75  N.  E.  944. 

New  York.— Fotss  v.  Twelfth  Ward  Bk.  (1904),  43  Misc.  45.  86 
N.  Y.  Supp.  857;  Meuer  v.  Phenix  Nat.  Bk.  (1904),  94  A.  D.  331.  88  N. 
Y.  Supp.  83;  Schlesinger  v.  Kurzrok  (1905),  94  N.  Y.  Supp.  442,  47 
Misc.  634;  St.  Regis  Paper  Co.  v.  Gonswanada  B.  &  P.  Co.  (1905),  107 
A.  D.  90,  94  N.  Y.  Supp.  945;  Gallo  v.  Brooklyn  Sav.  Bk.  (1910),  199 
N.  Y.  222;  Davenport  v.  Palmer  (1912).  152  A.  D.  761;  McMahon  v. 
Roseville  Tr.  Co.  (1913).  125  A.  D.  640,  144  N.  Y.  Supp.  841;  Carnegie 
Trust  Co.  V.  First  Nat.  Bank  of  City  of  N.  Y.  (1915).  107  N.  E.  693, 
213  N.  Y.  301,  L.  R.  A.  1916C,  186;  Baldinger  &  Kupferman  Mfg.  Co. 
V.  Manf.  Citizens  Tr.  Co.  (1915),  156  N.  Y.  Supp.  445;  Nat.  Reserve 
Bk.  of  N.  Y.  City  v.  Corn  Exchange  Bk.  (1916),  157  N.  Y.  Supp.  316. 

"^ North  Dakota.— Security  State  Bk.  v.  State  Bk.  of  Brandtford  (1915), 
31  N.  D.  454,  154  N.  W.  282. 

Oregon.— Fhst  Nat.  Bk.  of  Cottage  Grove  v.  Bk.  of  Cottage  Grove 
(1911),  59  Oreg.  388,   117   Pac.  293. 

South  Dakota.— First  Nat.  Bk.  v.  Brule  Nat.  Bk.  (1917),  161  N.  W 
616. 

Tennessee.— Vnaka  Nat.  Bk.  v.  Butler  (1904).  113  Tenn.  674,  83 
S.  W.  655;  Pease  &  Dwyer  Co.  v.  State  Nat.  Bk.  (1905).  114  Tenn.  693. 
88  S.  W.  172;  Farmers  &  Merchants  Bk  v.  Bank  of  Rutherford  (1905), 
115  Tenn.  64,  88  S.  W.  939. 


686  NEGOTIABLE    INSTRUMENTS.  §  188 

§  188.  Effect  where  the  holder  of  check  procures  it  to  be 
certified.  Where  the  holder  of  a  check  procures  it  to  be  ac- 
cepted or  certified  the  drawer  and  all  indorsers  are  discharged 
from  liability  thereon.-^-   ** 

See  text,  §  203. 

^  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Holder  procuring  certification  of  check  received  in  a  letter  which 
designated  that  it  was  in  full  payment  releases  drawer.  SchefTenacker  v. 
Hooper,  113  Md.  Ill,  77  Atl.  130. 

Drawer  who  at  payee's  request  has  check  certified  is  not  discharged. 
Randolph  Nat.  Bank  v.  Hornblower,  160  Mass.  401,  35  N.  E.  850. 

Affect  of  delay  in  presentment  of  check  certified  at  drawer's  request. 
City  of  Brunswick  v.  People's  Sav.  Bank,  194  Mo.  App.  360,  190  S.  W. 
60. 

Where  payee  defrauded  drawer  and  the  latter  returned  the  property 
to  payee  and  directed  that  payment  on  check  be  stopped  the  fact  that 
payee  h'ad  had  check  certified  did  not  bind  drawer.  Merchants  Exch. 
Nat.  Bank  v.  New  Brunswick  Savings  Inst.,  33  N.  J.  L.  170. 

Holder  procuring  certification  of  check  releases  the  drawer  but  it  is 
otherwise  where  drawer  has  check  certified.  Times  Square  Automo- 
bile Co.  V.  Rutherford  Nat.  Bank,  77  N.  J.  L.  649,  73  Atl.  479. 

Drawer  not  discharged  by  payee's  acceptance  of  certified  check  even 
if  bank  transfers  funds  in  bank  to  payee  without  the  latter's  knowl- 
edge. Cullinan  v.  Union  Surety  &  Guaranty  Co.,  79  App.  Div.  409, 
80  N.  Y.  Supp.  58. 

Holder's  procurement  of  certification  of  check  providing  that  it  was 
in  full  payment  releases  drawer.  St.  Regis  Paper  Co.  v.  Tonawanda 
Co.,  107  App.  Div.  90,  94  N.  Y.  Supp.  946. 

Affect  of  holder  having  certified  a  check  sent  to  him  in  a  letter 
stating  that  it  was  in  full  payment.  Dunn  v.  Whalen,  120  App.  Div. 
729.  105  N.  Y.  Supp.  588. 

Drawer  is  not  discharged  when  he  has  check  certified.  Davenport 
v.,  Palmer,  152  App.  Div.  761,  137  N.  Y.  Supp.  796. 

Holder  procuring  certification  of  check  releases  drawer.  Adams 
V.  Weissner.  147  N.  Y.   Supp.  946. 

Effect  of  bank's  acceptance  of  certification  of  check  after  drawee 
bank  refused  to  pay  same.  Lvons  v.  Union  Exch.  Nat.  Bank,  150  App. 
Div.  493,  135  N.  Y.  Supp.  121. 

Certification  at  holder's  request  releases  only  prior  indorsers.  John 
J.  Felin  &  Co.  v.  Petrix,  167  N.  Y.  Supp.  1073. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed: 

Massachusetts.— 'Randolph  Nat.  Bank  v.  Hornblower,  160  Mass.  401, 
35  N.  E.  850. 

Maryland.—Schenenacker  v.  Hooper,  113  Md.  Ill,  77  Atl.  130. 

Missouri— '^at.  Bk.  of  Rolla  v.  First  Nat.  Bk.  of  Salem  (1910), 
141  Mo.  719,  125  S.  W.  513;  Nat.  Bk.  of  Commerce  v.  Mech.  Am.  Nat. 


§  189  PROMISSORY    NOTES    AND    CHECKS.  687 

Bk.    (1910),    127    S.    W.    429;    City   of    Brunswick    v.    Peoples    Sav.    Bk. 
(1916),  190  S.  W.  60. 

New  Jersey. — Merchants  Exchange  Bank  v.  New  Brunswick  Sav. 
Inst.  Z3  N.  J.L.  170;  Times  Square  Auto  Co.  v.  Rutherford  Nat.  Bk. 
(1909),  77  N.  J.  L.  649,  7Z  Atl.  479. 

New  York. — Culliman  v.  Union  Surety  &  Guaranty  Co.  (1903),  79 
A.  D.  409,  80  N.  Y.  Supp.  58;  Meuer  v.  Phenix  Nat.  Bk.  (1904),  94  A. 
D.  331,  88  N.  Y.  Supp.  83;  St.  Regis  Paper  Co.  v.  Tona- 
wanda  B.  &  P.  Co.  (1905),  107  A.  D.  90,  94  N.  Y.  Supp.  946;  Dunn 
V.  Whalen  (1907),  120  A.  D.  729,  105  N.  Y.  Supp.  588;  Schlesinger  v. 
Kurzrok,  47  Misc.  Rep.  634,  94  N.  Y.  Supp.  442;  Gallo  v.  Brooklyn  Sav. 
Bk.  (1910),  199  N.  Y.  222,  92  N.  E.  633,  32  L.  R.  A.  (N.  S.)  66;  Dav- 
enport V.  Palmer  (1912),  152  A.  D.  761;  Lyons  v.  Union  Ex.  Nat.  Bk. 
of  N.  Y.  (1912),  135  N.  Y.  Supp.  121,  150  A.  D.  493;  Cor.  Tr.  Co.  v.  First 
Nat.  Bk.  of  City  of  N.  Y.  (1913),  156  A.  D.  712,  141  N.  Y.  Supp.  745; 
McMahon  v.  Roseville  Tr.  Co.  (1913),  125  A.  D.  640,  144  N.  Y.  Supp. 
841;  Adams  v.  Weissner,  147  N.  Y.  Supp.  946;  Carnegie  Trust  Co.  v.- 
First  Nat.  Bk.  of  City  of  N.  Y.  (1915),  107  N.  E,  693,  213  N.  Y.  301; 
Felin  v.  Petrix  (1918),  167  N.  Y.  Supp.  1073. 

Oregon.— First  Nat.  Bk.  of  Cottage  Grove  v.  Bk.  of  Cottage  Grove 
(1911),  59  Oreg.  388,  117  Pac.  393. 

Oklahoma.— Ch^rdktt  Nat.  Bk.  v.  Union  Tr.  Co.  (1912),  iZ  Okla. 
342,   125   Pac.  464. 

§  189.  When  check  operates  as  an  assignment.  A  check 
of  itself  does  not  operate  as  an  assignment  of  any  part  of  the 
funds  to  the  credit  of  the  drawer  with  the  bank,  and  the  bank 
is  not  Hable  to  the  holder,  unless  and  until  it  accepts  or  cenifies 
the  check.*'  ** 

See  text,  §  207. 

Corresponding  section  of  the  English  Bills  of  Exchange  Act:  Sec. 
53   (1),  73. 

*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued arranged  alphabetically  by  states : 

Telephone  communication  with  bank  about  to  cash  check  not  bind- 
ing on  drawee  bank  as  acceptance.  Van  Buskirk  v.  State  Bank,  35  Colo. 
142,  83  Pac.  778,  117  Am.  St.  Rep.   182. 

Depositor's  check  does  not  operate  as  assignment  although  deposited 
for  purpose  of  paying  check  as  against  garnishment  of  bank.  Kaese- 
meyer  v.  Smith,  22  Idaho,  1,  123  Pac.  943,  43  L.  R.  A.  (N.  S.)   100  note. 

Check  is  not  assignment  pro  tanto  in  favor  of  administrator.  Cook 
V.  Lewis,  172  111.  App.  518. 

Check  as  evidence  of  a  valid  assignment  in  a  gift  causa  mortis. 
First  Nat.  Bank  v.  O'Byrne,   177  111.  App.  473. 

When  check  operates  as  an  assignment  of  funds.  National  Produce 
Bank  of  Chicago  v.  Dodd.  205  111.  444. 


688  NEGOTIABLE    INSTRUMENTS.  §  189 

Payee  of  check  to  whom  an  assignment  of  funds  is  given  may  re- 
cover against  drawee.  Hove  v.  Stanhope  State  Bank,  138  Iowa  39,  115 
N.  W.  476. 

Drawee  not  liable  to  holder  on  check  which  drawee  said  was  good. 
Rambo  v.  First  State  Bank,  88  Kan.  257,  128  Pac.  182. 

Agreement  by  bank  and  drawer  to  pay  drawer's  checks  for  cattle 
binds  bank  even  if  payees  did  not  know  of  agreement.  Ballard  v.  Bank, 
91  Kan.  91,  136  Pac.  935. 

Papee  allowed  to  recover  where  bank  erroneously  paid  check  upon  a 
forged  indorsement  of  payee's  name.  Chamberlain  Metal,  etc.,  Co.  v. 
Bank  of  Pleasanton,  98  Kan.  611,  160,  Pac.  1138. 

Affect  of  agreement  of  drawer  and  drawee  as  to  drawer's  checks  in 
payment  for  cattle  upon  payee's  rights  to  enforce  payment.  Saylors  v. 
Bank,  99  Kan.  515,  163  Pac.  454. 

Depositing  of  money  for  express  purpose  of  paying  a  check  is  not 
assigned  by  issuance  of  the  check.  Boswell  v.  Citizens'  Savings  Bank, 
123  Ky.  485,  96  S.  W.  797. 

Drawee  bank  not  bound  by  telephone  communication  in  which  cashier 
told  another  bank  check  was  good.  Ewing  v.  Citizens'  Nat.  Bank,  162 
Ky.  551,  172  S.  W.  955. 

Drawee  bank  not  liable  to  payee  on  an  unaccepted  or  uncertified 
check.  First  Nat.  Bank  v.  Hargis,  etc..  Bank,  170  Ky.  690,  186  S.  W. 
471. 

Acceptance  by  drawee  renders  him  liable  as  primary  obligor.  Com- 
mercial Bank  of  Woodville,  Miss.  v.  First  Nat.  Bank.  —  La.  — ,  86  So. 
342. 

Words  "To  be  applied  on  paper  held  by  L.  if  found  correct"  written 
across  face  of  check  is  notice  to  indorsee  of  L.'s  interest  therein.  Slim- 
mer V.  State  Bank  of  Halstead,  134  Minn.  349,  159  N.  W.  795. 

Drawee  is  bound  to  pay  check  where  drawer  withdrew  all  funds 
except  enough  to  pay  the  check.  Gruenther  v.  Bank  of  Monroe,  90  Neb. 
280,  133  N.  W.  402. 

Issuance  of  check  is  assignment  of  funds  deposited  for  purpose  of 
paying  the  check.  Farrington  v.  F.  E.  Fleming,  etc.,  Co.,  94  Neb.  108, 
142  N.  W.  297,  47  L.  R.  A.   (N.  S.)  742. 

Drawee's  statement  that  check  is  good  and  will  be  paid  upon  pre- 
sentment does  not  render  drawee  liable  to  holder.  Superior  Nat.  Bank 
v.  National  Bank  of  Commerce,  99  Neb.  833,  157  N.  W.  1023. 

Affect  of  countermanding  order  before  payment  to  or  certification  for 
holder  of  check.  National  Bank  v.  Berrall,  70  N.  J.  Law  757,  58  Atl. 
189,  103  Am.  St.  Rep.  821. 

A  check  is  not  an  assignment  against  the  drawee  but  the  drawer. 
Elgin  V.  Gross-Kelly  Co.,  20  N.  M.  450,  150  Pac.  922,  L.  R.  A.  1916A,  711. 
Check  presented  to  branch  of  drawee  bank,  being  stamped  paid  and 
credit  given  to  account  of  depositor  may  be  returned  as  not  accepted.  . 
Balsam  v.  Mutual  Alliance  Trust  Co.,  74  Misc.  Rep.  465,  132  N.  Y.  Supp. 
325. 

Payee  cannot  enforce  payment  of  check  returned  by  drawee  to  col- 
lection bank  through  the  clearing  house  because  the  drawer  had  made 
assignment  for  creditors.  Hentz  v.  National  City  Bank,  159  App.  Div. 
743,  144  N.  Y.  Supp.  979. 

Right  of  drawer's  administrator  to  recover  from  drawee,  where  pay- 
ment made  without  notice  of  drawer's  death.  Glennan  v.  Rochester 
Trust,  etc.,  Co..  209  N.  Y.  12,  102  N.  E.  537,  52  L.  R.  A.  (N.  S.)  302, 
Ann  Cas.  1915A,  441. 


§  189  PROMISSORY    NOTES    AND    CHECKS.  689 

Drawer  who  gave  check  to  supposed  agent  of  payee  is  not  bound 
when  supposed  agent  had  it  certified  and  forged  name  of  payee.  Anglo- 
South  Am.  Bank  v.  National  City  Bank,  161  App.  Div.  268,  146  N.  Y. 
Supp.  457,  affirmed  217   N.  Y.  726. 

Check  to  his  betrothed  in  contemplation  of  suicide  held  against  pub- 
lic policy  and  not  an  assignment  as  against  bank  or  administrator  of 
estate.  Bainbridgc  v.  Hoes,  163  App.  Div.  870,  149  N.  Y.  Supp.  20. 

Drawee  bank  not  liable  in  suit  by  payee  on  check  paid  by  drawee  to 
payee's  agent  although  agent  had  no  authority.  Elyria  Sav.  etc.,  Co.  v. 
Walker  Bin  Co.,  92  Ohio  St.  406,  111  N.  E.  147,  L.  R.  A.  1916D,  433. 

Bank  certifying  check  by  mistake  can  correct  mistake  by  notice  to 
holder  before  check  passed  to  holder  in  due  course.  Security  Sav.  & 
Trust  Co.  V.  King,  69  Ore.  228,  138  Pac.  465. 

Check  is  not  assignment  of  drawer's  cause  of  action  against  bank. 
Marks  v.  First  Nat.  Bank,  84  Ore.  601,  165  Pac.  673. 

Efifect  of  drawee  paying  checks  to  plaintiffs  agent  and  charging  same 
against  payee's  account.  Tibby  Bros.  Glass  Co.  v.  Farmers'  &  Mechanics' 
Bank,  220  Pa.  1,  69  Atl.  280,  15  L.  R.  A.  (N.  S.)  519. 

Before  payment  or  certification  the  drawer  may  countermand  the  or- 
der.    Pease  &  Dwyer  v.  State  Nat.  Bank,  114  Tenn.  693,  88^  S.  W.  172. 

Where  bank  advised  of  agreement  of  assignment  of  certain  funds  by 
check  between  drawer  and  payee  check  is  an  assignment.  People's  Nat. 
Bk.  V.  Swift,  134  Tenn.  175,  183  S.  W.  725. 

Bank  not  liable  to  payee  where  it  had  charged  to  drawer's  account 
checks  indorsed  by  payee's  agent.  B.  &  O.  Ry.  Co.  v.  First  Nat.  Bank, 
102  Va.  753,  47  S.  E.  837. 

The  writing  of  a  letter  asking  that  checks  be  protected  by  drawee 
bank  is  not  sufficient  as  an  assignment  of  the  drawers  money  and  the 
presentation  of  check  through  clearing  house  and  giving  payee  credit 
is  not  always  acceptance.  Eastman  Kodak  Co.  v.  Nat.  Park  Bk.  231 
Fed.  Rep.  320. 

**  The  following  is  a  complete  list  of  the  cases,  arranged  alpha- 
betically by  states,  where  this  section  has  been  construed : 

Colorado.— Van  Buskirk  v.  State  Bk.  of  Rocky  Ford  (1905),  35  Colo. 
142,  83  Pac.  778,  117  Am.  St.  182. 

Idaho— Smith  v.  Field  (1911).  19  Ida.  558,  114  Pac.  668;  Kaesemeyer 
V.  Smith   (1912),  22  Ida.  1,  123  Pac.  943. 

Illijiois.—Cook  v.  Lewis,  172  111.  App.  518;  The  First  Nat.  Bk.  of 
Chicago  V.  O'Byrne  (1913),  177  111.  App.  473;  Nat.  Produce  Bank  of 
Chicago  V.  Dodd,  205  111.  444. 

Iowa.— Hove  V.  Stanhope  State  Bk.  (1908),  138  Iowa  39,  115  N.  W. 
476. 

i^aH.ra.f.— Rambo  v.  First  State  Bank,  88  Kan.  257,  128  Pac.  182; 
Ballard  v.  Bank,  91  Kan.  91,  136  Pac.  935;  Saylors  v.  Bank,  99  Kan. 
515,  163  Pac.  454;  Chamberlain  Metal  Co.  v.  Bank  of  Pleasanton,  98  Kan. 
611,  160  Pac.  1138. 

Kenfnckv.—BosvfeU  v.  Citizen's  Sav.  Bk.  (1906),  123  Ky.  485;  96 
S.  W.  797;  Ewing  v.  Cit.  Nat.  Bk.  (1915),  162  Ky.  551,  172  S.  W.  955; 
First  Nat.  Bank  v.  Hargis,  etc.,  Bank,  170  Ky.  690,  186  S.  W.  471. 


690  NEGOTIABLE    INSTRUMENTS.  §  189 

Louisiana. — Commercial  Bank  of  Woodville,  Miss.  v.  First  Nat.  Bank, 
86  So.  342. 

Michigan.— Lonier  v.  State  Sav.  Bk.  (1907),  149  Mich.  483,  112  N. 
W.  1119. 

Minnesota.—SUmmer  v.  State  Bank  of  Halstead,  134  Minn.  349,  159 
N.  W.  795. 

Missouri— Kansas  City,  etc.,  Co.  v.  Westport  Ave.  Bank,  191  Mo. 
App.  287,  177  S.  W.  1092. 

New  Jersey.— 'Nat.  Bk.  of  New  Jersey  v.  Berrall  (1904),  70  N.  J.  L. 
757,  50  Atl.  189,  103  Am.  St.  Rep.  821. 

New  Mexico.— Hanna  v.  McCray,  19  N.  M.  183,  141  Pac.  996;  Elgin  v. 
Gross-Kelly  Co.,  20  N.  M.  450,  ISO  Pac.  922,  L.  R.  A.  1916A,  711. 

Nebraska. — Superior  Nat.  Bank  v.  National  Bank  of  Commerce,  99 
Neb.  833,  157  N.  W.  1023;  Farrington  v.  F.  E.  Fleming,  etc.,  Co.,  94 
Neb.  108,  142  N.  W.  297,  47  L.  R.  A.  (N.  S.)  742;  Gruenther  v.  Bank  of 
Monroe,  90  Neb.  280,   113  N.  W.  402. 

New  York.— Foess  v.  Twelfth  Ward  Bk.  (1904),  43  Misc.  45,  86 
N.  Y.  Supp.  857;  Meuer  v.  Phenix  Nat.  Bank  (1904),  94  A.  D.  331,  88 
N.  Y.  Supp.  83;  State  Bk.  v.  Weiss  (1904),  46  Misc.  93, 
91  N.  Y.  Supp.  276;  Schlesinger  v.  Kurzrok  (1905),  94  N.  Y.  Supp. 
442,  47  Misc.  634;  Glennan  v.  Rochester  Tr.  etc.,  Co.,  209  N.  Y.  12,  102 
N.  E.  537,  52  L.  R.  A.  (N.  S.),  302,  Ann.  Cas.  1915A,  441;  Lawrence  v. 
Fox,  20  N.  Y.  268;  Ellery  v.  People's  Bk.  (1909),  114  N.  Y.  Supp.  108; 
Havana  Cent.  R.  Co.  v.  Knickerbocker  Trust  Co  (1910.  135  A.  D.  313; 
Balsam  v.  Mutual  Alliance  Tr.  Co.  (1911),  132  N.  Y.  Supp.  325,  74  Misc. 
Rep.  465;  Shattuck  v.  Guardian  Tr.  Co.  (1912),  130  N.  Y.  Supp.  658,  145  A. 
D.  734;  Bursten  v.  Peoples  Tr.  Co.,  143  A.  D.  165,  127  N.  Y.  Supp.  1092; 
Anglo-South  Am.  Bk.  v.  Nat.  City  Bk.  of  N.  Y.  (1914),  146  N.  Y.  Supp. 
457,  afftrmed  217  N.  Y.  726;  Cor.  Tr.  Co.  v.  First  Nat.  Bk.  of  City  of 
New  York  (1913),  156  A.  D.  712,  141  N.  Y.  Supp.  745;  Hentz  v.  Nat.  City 
Bank  of  N.  Y.  (1913),  159  A.  D.  743,  144  N.  Y.  Supp.  979;  Siegel  v. 
Kovinsky,  157  N.  Y.  Supp.  340,  93  Misc.  Rep.  541 ;  Bainbridge  v.  Hoes, 
149  N.  Y.  Supp.  20,  163  A.  D.  870. 

North  Carolina.— Perry  v.  Bk.  of  Smithfield  (1902),  131  N.  Car.  117, 
42  S.  E.  551. 

North  Dakota.— Crisp  v.  State  Bank  of  Rollo,  32  N.  D.  263,  155  N. 
W.  263,  155  N.  W.  78. 

Ohio.— Elyria  Sav.  etc.,  Co.  v.  Walker  Bin  Co.  ,72  Ohio  St.  406,  111 
N.  E.  147,  L.  R.  A.  1916D,  433. 

Oklahoma.— BaWen  &  Friedman  v.  Bk.  of  Krenlin  (1913),  37  Okla. 
112,  130  Pac.  539. 

Oregon.— Marks  v.  First  Nat.  Bank,  84  Ore.  601,  165  Pac.  673;  U. 
S.  Nat.  Bk.  v.  First  Trust  &  Sav.  Bk.  (1911),  60  Oreg.  266,  119  Pac. 
343 ;  Security  Sav.  &  Trust  Co.  v.  King,  69  Ore.  228,  138  Pac.  465. 

Pennsylvania. — Tibby  Bros.  Glass  Co.  v.  Farmers  &  Mech.  Bk.  of 
Sharpsburg  (1908),  220  Pa.  1,  69  Atl.  280,  15  L.  R.  A.  (N.  S.)  519. 


§  189  PROMISSORY    NOTES    AND    CHECKS.  691 

Tennessee.— Unaka.  Nat.  Bk.  v.  Butler  (1904),  113  Tenn.  674,  83  S, 
W.  655;  Pease  &  Dwyer  Co.  v.  State  Nat.  Bk.  (1905),  114  Tenn.  693,  88  S. 
W.  172;  First  Nat.  Bk.  of  Murfreesboro  v.  First  Nat.  Bk.  of  Nashville 
(1913),  127  Tenn.  205,  154  S.  W.  965;  People's  Nat.  Bank  v.  Swift,  134 
Tenn.  175,  183  S.  W.  725. 

Virginia.— B.  &  O.  R.  R.  Co.  v.  First  Nat.  Bk.  (1904),  102  Va.  753, 
47  S.  E.  837. 

Wisconsin. — Roesser  v.  National  Exchange  Bank,  112  Wis.  591,  88 
N  W.  618,  88  Am.  St.  Rep.  979;  Jacobson  v.  Bedtzler  (1906),  127  Wis. 
566;  Bank  of  Sioux  City  v.  Old  Nat.  Bk.  of  Battle  Creek  (1917),  241 
Fed.  1. 


ARTICLE  XVIL 


GENERAL  PROVISIONS. 


190.  Short    title. 

191.  Definitions    and    meaning    of 

terms. 

192.  Persons    primarily    liable    on 

instrument. 

193.  Reasonable    time,    what    con- 

stitutes. 


§  194.  Time,   how   computed ;   when 
last    day    falls    on    holiday. 

195.  Application   of  chapter. 

196.  Rul(i      o(f      law      merchant : 

when  governs. 


Sections  190  to  196  above  are  the  sections  used  by  the  commissioners. 

See  table  of  corresponding  sections  of  the  Law  in  the  various  states 
and  territories  beginning  on  page  360. 

§  190.  Short  title.  This  act  shall  be  known  as  the  Nego- 
tiable Instrtiments  Law.^* 

See  text,  §  12. 

Arizona,  Connecticut,  District  of  Columbia,  Kentucky,  Massachu- 
setts, Nebraska,  Ne\v  Hampshire,  North  Carolina,  Ohio,  Rhode  Island 
and  Wisconsin  acts  omit  this  section. 

In  some  states  "may  be  cited"  is  substituted  for  "shall  be  known." 
The  word  "uniform"  is  inserted  before  the  word  "negotiable"  in  some 
states. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed. 

Connecticut.— Atwood  v.   Atwood    (1913),  86  Atl.  29. 

Kentucky. — Callaghan  v.  Louisville  Dry  Goods  Co.  (1910),  14  Ky. 
712,  131  S.  W.  995. 

Missouyi— Dickey  v.   Adler    (1910).   127    S.   W.   593. 


CONSTANT  POLICY  OF  COURTS  SHOULD  BE  TO 
ESTABLISH  UNIFORMITY  OF  DECISION. 

Uniformity  of  decision  as  to  the  Negotiable  Instruments 
Law  should  be  the  policy  of  our  courts.  Since  uniformity  was 
the  end  and  aim  of  the  compilers  and  framers  of  the  Law, 
there  should  be  one  rule  to  determine  the  rights  of  a  holder  of 

692 


§  190  GENERAL    PROVISIONS.  693 

negotiable  instruments  in  all  jurisdictions.  The  history  of  the 
act  is  well  known.  The  laws  relating  to  negotiable  paper  had 
not  been  uniform  in  the  different  states  and  as  such  paper  cir- 
culated between  the  different  states  it  was  important  to  the 
commercial  world  that  the  laws  of  the  different  states  relating 
thereto  should  be  uniform.*  The  law  merchant  is  essentially 
the  creation  of  the  business  world,  whose  practices  have  hard- 
ened into  principles,  ,and  these  principles  have  been  shaped  and 
polished  for  centuries  by  the  lapsidaries  of  the  law — all  to  one 
supreme  end,  viz.,  the  protection  of  a  bona  fide  holder  for  value 
who  has  -acquired  a  negotiable  instrument  in  the  due  course  of 
trade  or  business.  Only  such  protection  can  give  confidence,  and 
only  confidence  can  give  free  currency  to  any  medium  of  ex- 
change. This  is  the  capstone  of  the  structure  known  as  "Com- 
mercial Law."  Its  codification  into  a  Uniform  Negotiable  In- 
struments Law  has  been  accomplished,  not  for  the  purpose  of 
altering  any  of  its, essential  principles,  and  certainly  not  for  the 
purpose  of  destroying  or  weakening  its  cardinal  principle,  but 
for  the  purpose  of  harmonizing  certain  minor  dift'erences  ex- 
isting In  the  various  jurisdictions.^  The  result  accomplished 
should  be  protected  at  all  times  by  a  uniformity  of  court  deci- 
sion in  construing  its  various  provisions.  The  primary  purpose 
of  fcthe  several  states  that  have  adopted  the  negotiable  instru- 
ments act  has  been  to  establish  a  uniform  rule  of  law  govern- 
ing such  instruments  and  to  embody  in  a  codified  form,  as  fully 
as  possible,  the  previous  law  on  the  subject  to  the  end  that  the 
negotiable  character  of  commercial  paper  might  not  be  destroyed 
by  local  laws  and  conflicting  decisions,  and  this  object  should  be 
kept  in  mind  in  construing  the  various  provisions  of  the  act.^ 
Not  only  were  the  courts  of  the  country  in  conflict  respecting 
the  attitude  and  liability^  of  a  third  party — a  stranger — who 
placed  his  name  in  blank  on  the  back  of  commercial  paper,  but 
the  situation  was  in  itself  an  anomalous  one  calculated  to  lead, 
as  jt  often  did  lead,  to  confusion  respecting  the  duty  of  the 
holder  of  such  paper  with  regard  to  demand  and  notice.  Alis- 
takes  in  this  respect  were  easy  and  were  frequently  made,  often 
resulting  in  litigation,  and,  not  infrequently,  loss.  To  clear  this 
situation  up,  and  to  establish  a  plain,  easily  understood  rule, 
and  one  of  universal  application,  was  surely  a  result  of  high  im- 
portance to  all  who  deal  in  commercial  paper,  and  the  desire  to 

1  Windsor  Cement  Co.  V.  Thomp-  3  Bank     of     Halstad     v.     Bilstad 

son    (1913),  86  Conn.   511,   514,  86       (mS),  162  la.  433,  435,  136  N.  W. 

^^IJ-    -p    .      r  wk  T       •         204,  144  N.  W.  363. 

^  Ex    Parte    Goraberg    v.    Lewis,  ' 

191  Ala.  356.  366,  67  So.  839,  L.  R. 

A.  191 5F,  1157. 


694  NEGOTIABLE    INSTRUMENTS.  §  190 

accomplish  this  purpose  had  much  to  do  with  inducing  the  en- 
actment of  the  Negotiable  Instruments  Law.'*  The  desirability 
of  uniformity  in  the  laws  of  various  states  .with  reference  to 
negotiable  instruments  is  so  obvious,  the  legislative  intent  to 
harmonize  our  theretofore  conflicting  decisions  with  those  of 
other  jurisdictions  is,  so  clearly  expressed,  that  full  eflFect  should 
be  given  thereto  by  uniformity  of  judicial  interpretation  and 
construction.^ 

It  is  a  matter  of  common  knowledge  that  ^the  Negotiable  In- 
struments Law  was  drafted  for  the  purpose  of  codifying  the 
law  upon  the  subject  of  negotiable  instruments  and  making  it 
uniform  throughout  the  country  through  adoption  by  the  Legis- 
latures of  the  several  states  and  by  the  Congress  of  the  LTnited 
States.  The  design  was  to  obliterate  state  lines  as  to  the  law 
governing  instrumentalities  so  vital  to  the  conduct  of  interstate 
commerce  as  promissory  notes  and  bills  of  exchange,  to  remove 
the  confusion  or  uncertainty  which  might  arise  from  conflict  of 
statutes  or  Judicial  decisions  amongst  the  several  states,  and  to 
make  plain,  certain  and  general  the  controlling  rules  of  law. 
Diversity  was  to  be  moulded  into  uniformity.*  Since  the  Ne- 
gotiable Instruments  Law  has  been  enacted  jn  all  but  one  of 
our  states,  uniform  construction  is  most  desirable.'^  The  efifect 
of  the  uniform  legislation  upon  court  decisions  is  seen  in  a 
Maryland  opinion  jwhere  it  is  said:  "In  all  the  states  holding 
views  similar  to  this  court  prior  to  the  legislation  the  courts 
have  expressly  abrogated  those  old  rules,  and  we,  therefore, 
both  by  the  reasoning  and  by  Jthe  desire  to  comply  with  the 
spirit  of  the  legislation  as  to  uniformity,  do  declare  our  prior 
decisions  on  this  point  to  be  suspended."^ 

In  another  jurisdiction  the  court'  said :  "When  a  question 
arises  in  one  of  the  uniform  statutes,  and  ,the  courts  of  this 
state  have  not  yet  passed  upon  the  interpretation  of  the  portions 
of  the  statute  involved,  I  conceive  it  to  Jbe  the  duty  of  the  trial 
courts,  in  the  interest  of  a  real  uniformity  in  the  application  of 
these  commercial  enactments,  to  adopt  and  follow  here  the  in- 
terpretation adopted  by  the  courts  of  other  commonwealths."* 

4Rockfield  v.  First  Nat.  Bank  (1907),  11  Ohio  St.  311,  331,  83  N.  E. 
392,  14  L.  R.  A.   (N.  S.)  842. 

^Broderick  &  Bascom  Rope  Co.  v.  McGrath,  81  Misc.  Rep.  199,  142 
N.  Y.  Supp.  497. 

« Union  Trust  Co.  v.  McGinty  (1912),  212  Mass.  205,  98  N.  E.  679, 
Ann.  Cas.  1913C,  525;  Fox  v.  Terre  Haute  Nat.  Bank  (1920),  —  Ind. 
App.  — ,  129  N.  E.  ZZ. 

7 American  Trust  Co.  v.  Canevin  (1911),  184  Fed.  657,  663,  107  C. 
C.  A.  543. 

SLeighttier  v.  Roach   (1915),  126  Md.  474,  95  Atl.  62. 

» Brown  v.  Brown,  91  Misc.  Rep.  220,  154  N.  Y.  Supp.  1098. 


§  191  GENERAL    PROVISIONS.  695 

§  191.  Definitions  and  meaning  of  terms.  In  this  act, 
unless  the  context  otherwise  requires : 

"Acceptance"  means  an  acceptance  completed  by  delivery  or 
notification. 

"Action"  includes  counter-claim  and  set-off. 

"Bank"  includes  any  person  or  association  of  persons  carry- 
ing on  the  business  of  banking,  whether  incorporated  or  not. 

"Bearer"  means  the  person  in  possession  of  a  bill  or  note 
which  is  payable  to  bearer. 

"Bill"  means  bill  of  exchange,  and  "note"  means  negotiable 
promissory  note. 

"Delivery"  means  transfer  of  possession,  actual  or  construc- 
tive, from  one  person  to  another. 

"Holder"  means  the  payee  or  indorsee  of  a  bill  or  note  who 
is  in  possession  of  it,  or  the  bearer  thereof. 

"Indorsement"  means  an  indorsement  completed  by  delivery. 

"Instrument"  means  negotiable  instrument. 

"Issue"  means  the  first  delivery  of  the  instrument,  complete 
in  form,  to  a  person  who  takes  it  as  a  holder. 

"Person"  includes  a  body  of  persons,  whether  incorporated 
or  not. 

"Value"  means  valuable  consideration. 

"Written"  includes  printed,  and  "writing"  includes  print.*'  *■ 

See  text,  §§  46,  53,  76,  128,  311. 

*  Digest  of  some  of  the  decisions,  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

Indorsement.  Louisville  Co.  v  International  Trust  Co.,  18  Colo. 
App.  345,  71   Pac.  898. 

Draft  unknowingly  made  to  fictitious  payee  is  not  payable  to  bearer. 
American  Exp.  Co.  v.  Peoples  Sav.  Bank,  —  la.  __,  181  N.  W.  701. 

Placing  in  mail  constitutes  delivery.  Trego  v.  Cunningham's  Estate, 
267  111.  367,  108  N.  E.  350. 

Maker  in  possession  by  theft  after  indorsed  in  blank  by  payee  is 
bearer.     Mass.  Nat.  Bank  v.  Snow,  187  Mass.  159,  12  N.  E.  959. 

Who  holder  in  due  course.  Merchants  Nat.  Bank  of  Billings  v. 
Smith,  —  Mont.  — ,  196  Pac.  523. 

When  name  of  maker  may  be  filled  in  so  that  an  indorsee  from 
payee,  for  value  before  maturity  may  apply  collateral  to  payment  of  note 


696  NEGOTIABLE    INSTRUMENTS.  §  191 

and  other  obligations  owing  by  maker.     Olcon  v.  Rosenbloom,  247   Pa. 
250,  93  Atl.  473,  Ann.  Cas.  1916B,  233,  L.  R.  A.  1915  F,  968. 

Definitions  not  applicable  where  context  otherwise  requires.  Smith 
V.  Nelson  Land  &  Cattle  Co.,  212  Fed.  Rep.  56,  128  C.  C.  A.  512. 

•^*  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed : 

A risona.— Gr2iy  v.  Baron   (1910).  13  Ariz.  70,  108  Pac.  229. 

Colorado. — Louisville  Coal  &  Mining  Co.  v.  Int.  Trust  Co.  (1903), 
18  Colo.  App.  345,  71  Pac.  898. 

Connecticut. — Knapp  Co.  v.  Tidewater  Coal  Co.  (1912),  85  Conn. 
147,  81  Atl.  1063;  New  Haven  Mfg.  Co.  v.  New  Haven  Pulp  Co.  (1903), 
76  Conn.  126,  55  Atl.  604. 

Florida.—Scoit  v.  Taylor   (1912),  63  Fla.  612. 

Idaho.— Craig  v.  Palo  Alto  Stock  Farm  (1901),  16  Ida.  701,  102  Pac. 
393;  Rinker  v.  Lauer   (1907),  13  Ida.  163,  88  Pac.  1057. 

Illinois.— First  Nat.  Bk.  of  Manlius  v.  Garland  (1911),  160  111.  App. 
407;  Trego  v.  Cunningham's  Estate,  267  111.  367,   108  N.  E.  350. 

/owa.— Allison  v.  Hollembeak  (1908),  138  Iowa  479,  114  N.  W.  1059; 

Irwin  v.  Deming   (1909),   142   Iowa  299,   120  N.  W.  645;   Vander   Ploeg 

Van    Zuuk    (1907),    13    L.    R.    A,    (N.    S.)    490,    135    Iowa    350.    112 

N.  W.  807;  Voss  v.  Chamberlain   (1908).  139  Iowa  569,  117  N.  W.  269; 

American  Exp.  Co.  v.  People's  Sav.  Bank,  181  N.  W.  701. 

Kansas.—Smith  v.  Nelson  Land  &  Cattle  Co.    (1914),  212  Fed.  56. 

Kentucky. — Ohio  Valley  Co.  v.  Great  Southern  Fire  Ins  Co.  —  Ky. 
— ,  197  S.  W.  399. 

Massachusetts. — Mass.  Nat.  Bank  v.  Snow,  187  Mass.  159,  72  N.  E. 
959. 

Missouri— 'Bmch&'ct  v.  Fink  (1909),  139  Mo.  App.  381;  German-Am. 
Bk  V.  Martin  (1908),  129  Mo.  App.  484;  Bank  of  Houston  v.  Day,  145 
Mo.  App.  410,  122  S.  W.  756;  Greer  v.  Orchard  (1913),  161  S.  W.  875; 
Night  &  Day  Bk.  v.  Rosenbaum  (1915),  177  S.  W.  693;  Bank  of  Hous- 
ton v.  Day,  145  Mo.  App.  410.  122  S.  W.  756. 

Montana. — Merchants   Nat.   Bank  of  Billings  v.   Smith,   196   Pac.   523. 

Nebraska. — Aurora  State  Bk.  v.  Hayes-Fames  Elevator  Co.  (1911), 
88  Neb.  187. 

New  Jersey.— R.  M.  Owen  &  Co.  v.  Storms  &  Co.,  78  N.  J.  L.  154, 
72  Atl.  441. 

Nezv  For^.— Barkley  v.  Muller  (1914),  149  N.  Y.  Supp.  620,  164  A. 
D.  351;  Davenport  v.  Palmer  (1912).  152  A.  D.  761;  Gilbert  v.  Adams 
(1911),  131  N.  Y.  Supp.  787;  Lyons  v.  Union  Ex.  Nat.  Bk.  of  N,  Y. 
(1912),  135  N.  Y.  Supp.  121,  150  A.  D.  493;  Manufacturer's  Commercial 
Co.  V.  Blitz  (1909),  131  A.  D.  17,  115  N.  Y.  Supp.  402,  Schwartzman  v. 
Post  (1903),  84  N.  Y.  Supp.  922,  94  A.  D.  474;  Wolfin  v.  Security  Bk. 
of  N.  Y.  (1915),  156  N.  Y.  Supp.  474. 


§  192  GENERAL    PROVISIONS.  697 

North  Carolina.— Mdiycrs  v.  McRimmon  (1906),  140  N.  Car.  640,  Si 
S.  E.  447,  111  Am.  St.  879;  Steinhilpcr  v.  Basinight  (1910),  153  N.  Car. 
293,  69  S.  E.  222. 

Ohio.— Moove  v.  Central  Nat.  Bk.  of  Cleveland  (1910),  31  Ohio  C. 
614;  Starr  Piano  Co.  v.  Edgar  (1909),  31  Ohio  C.  295. 

Pennsylvania. — Nat.  Bk.  of  Phocnixville  v.  Bonsor  (1909),  38  Pa. 
Super.  Ct.  275 ;  Oleon  v.  Roscnbloom,  247  Pa.  250,  93  Atl.  473,  Ann.  Cas. 
1916B,  233,  L.  R.  A.  1915F,  968. 

Rhode  Island.— WUhour  v.  Hawkins  (1915),  38  R.  I.  116,  94  Atl.  856. 

Tennessee.— Farmers  &  Merchants  Bk.  v.  Bk.  of  Rutherford  (1905), 
115  Tenn.  64,  88  S.  W.  939,  112  Am.  St.  Rep.  817. 

Utah.— Utah  Nat.  Bk.  of  Salt  Lake  City  v.  Nelson  (1910),  38  Utah 
169,  111  Pac.  907. 

IVashington.—mWman  v.  Stanley   (1909),  56  Wash.  320,  105  Pac.  816. 

Wisconsin.—Schuhz  v.  Kosbab  (1905),  125  Wis.  157;  Swanby  v. 
Northern  State  Bk.  (1912),  150  Wis.  572,  137  N.  W.  763;  Westberg  v. 
Chicago  Lumber  Co.   (1903),  117  Wis.  589,  94  N.  W.  572. 

Wyoming.— Acme  Coal  Co.  v.  Northrup  Nat.  Bk.  of  lola  (1915).  146 
Pac.  593:  Capitol  Hill  St.  Bk.  v.  Rawlins  Nat.  Bk.  (1916),  160  Pac.  1171. 

United  States.—Smiih  v.  Nelson  Land  &  Cattle  Co.,  212  Fed.  Rep.  56, 
128  C.  C.  A.  512. 

§  192.  Person  primarily  liable  on  instrument.  The  person 
"primarily"  liable  on  an  instrument  is  the  person  who  by  the 
terms  of  the  instrument  is  absolutely  required  to  pay  the  same. 
All  other  parties  are  "secondarily''  liable.*"  ■** 

See  text,  §  119. 

Cross   sections :    18,    127,    189. 

Kansas  omits  the  last  sentence. 

South  Dakota  apparently  has  no  section  192,  but  has  the  following 
sections  between  section  191  and  193 : 

"Section  192.\.  The  apparent  maturity  of  a  bill  of  exchange,  pay- 
able at  sight,  or  on  demand,  is : 

1.  If  it  bears  interest,  one  year  after  date ;  or, 

2.  If  it  does  not  bear  interest,  ten  days  after  its  date,  in  addition  to 
the  time  which  would  suffice,  with  ordinary  diligence,  to  forward  it  for 
acceptance. 

Section  192B.  The  apparent  maturity  of  a  promissory  note,  payable 
at  sight,  or  on  demand,  is : 

2.  If  it  bears  interest,  one  year  after  its  date;  or, 

2.  If  it   does  not  bear   interest,   six  months  after   its   date." 


698  NEGOTIABLE    INSTRUMENTS.  §  192 

■'Digest  of  some  of  the  decisions,  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

What  statements  as  to  transaction  will  not  affect  tlie  negotiability  of 
note.     Page  v.  Wooster,  213  111.  App.  239. 

Persons  primarily  and  secondarily  liable.  Fox  v.  Terre  Haute  Nat. 
Bank,  —  Ind.  App.  — ,  129  N.  E.  33. 

Indorser  not  primarily  liable  on  note  given  in  substitution  for  one 
on  which  he  was  maker.  Devoy  &  Kuhn  Coal  Co.  v.  Huttig,  174  Iowa 
357,  156  N.  W.  413. 

Persons  primarily  liable.  National  Bank  of  Webb  City,  Mo.  v.  Dick- 
inson, 102  Kan.  564. 

Indorser  is  primarily  liable  to  payee  if  note  recites  that  signers, 
indorsers,  gruarantors  and  sureties  are  liable  in  solido.  Bonart  v.  Rabito, 
141  La.  970,  76  So.  166. 

Accommodation  maker  is  primarily  liable.  First  State  Bank  of  Hil- 
ger  V.  Lang,  —  Mont.  — ,  174  Pac.  597. 

Accommodation  maker  a  party  primarily  liable.  Merchants  Nat.  Bank 
of  Billings  v.  Smith,  —  Mont.  — ,  196  Pac.  523. 

Principal  and  surety  (co-maker)  are  primarily  liable.  Robertson- 
Rufifin  Co.  V.  Spain   (N.  C),  91  S.  E.  361. 

Accommodation  guarantor  only  secondarily  liable  without  special 
contract.  Noble  v.  Beeman-Spaulding  Co.,  65  Ore.  93,  131  Pac.  1006,  46 
L.  R.  A.  (N.  S.)  162. 

Makers  and  indorsers  severally  liable.     Petri  v.  Manny,  99  Wash.  601. 

Co-makers  primarily  liable  although  one  designated  as  surety.  In 
re  Nashville  Laundry  Co.,  240  Fed.  Rep.  795. 

**  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed. 

Alahama.—Rudson  Tr.  Co.  v.  Elliott   (1915),  69  So.  631. 

Arizona.— Co\v?Ln  v.  Ramsay   (1914),   140  Pac.  501. 

Arkansas.— 'Rmkt  v.  Jefiferson  Bk.   (1915),  180  S.  W.  500. 

Illinois.— Page  v.  Wooster,  213  111.  App.  239. 

Itidiana.—Fox  v.  Terre  Haute  Nat.  Bank,  129  N.  E.  33. 

Iowa.— Devoy  &  Kuhn  Coal  Co.  v.  Huttig,  174  Iowa  357,  156  N.  W. 
413. 

Kansas.— Farmers  &  Drovers  Bk.  v.  Bashor  (1916),  160  Pac.  208; 
Nat.  Bk.  of  Webb  City  v.  Dickinson  (1918),  171  Pac.  636,  102  Kan.  564. 

Louisiana.— Lev/y  v.  Wilkinson  (1914),  64  So.  1003;  Bonart  v.  Rabito, 
141  La.  970,  76  So.  166. 

j1/ar3'/aj?c?.— Vanderford  v.  Farmers  &  Mech's  Nat.  Bk.  of  Westmin- 
ster (1907),  105  Md.  164,  66  Atf.  47. 

Massachusetts.— Union  Tr.  Co.  v.  McGinty  (1912),  212  Mass.  205,  98 
N.  E.  679. 

Michigan.— Lsimloerson  v.  Love  (1911),  165  Mich.  460, 


§  193  GENERAL    PROVISIONS.  699 

Minnesota.— Baxter  v.  Brandenburg  (1917),  163  N.  W.  516. 

Missouri. — Citizens  Bk.  of  Scnath  v.  Douglass  (1913),  161  S.  W. 
601;  Lane  v.  Hyder  (1912),  163  Mo.  App.  688,  147  S.  W.  514;  Night  & 
Day  Bk.  v.  Rosenbaum  (1915),  177  S.  W.  693. 

Montana.— First  State  Bank  of  Hilger  v.  Lang,  174  Pac.  597;  Mer- 
chants Nat.  Bank  of  Billings  v.  Smith,  196  Pac.  523. 

New  York. — Building  &  Engineering  Co.  v.  Northern  Bk.  of  N.  Y. 
(1912),  206  N.  Y.  400,  99  N.   E.   1044;  Graham  v.  York    (1910),   140  A. 

D.  639;  Nat.  Citizens  Bk.  v.  Toplitz  (1903),  81  N.  Y.  Supp.  422,  Schwartz- 
man  V.  Post   (1903),  84  N.  Y.  Supp.  922,  94  A.  D.  474. 

North   Carolina.— Rouse   v.    Wooten    (1906),    140   N.    Car.    557,    53    S. 

E.  430,    111    Am.    St.    875;    Robertson-Ruffin    Co.    v.    Spain    (N.    C),    91 
S.  E.  361. 

North  Dakota.— Northern  State  Bk.  v.  Bellany  (1910),  125  N.  W.  888. 

Ohio.— Dollar  Sys.  Bk.  v.  Barberton  Pottery  Co.  (1907),  17  Ohio 
Dec.  539;  Richards  v.  Market  Ex.  Bk.  (1910),  81  Ohio  St.  348,  55  Ohio 
Law  Bull.  20. 

Or^^o;j.— Cellers  v.  Meachem  (1907),  49  Oreg.  186,  10  L.  R.  A.  (N. 
S.),  133;  Everding  &  Farrell  v.  Taft  (1916).  160  Pac.  1160;  Hunter  v. 
Harris  (1912),  63  Oreg.  505,  127  Pac.  786;  Lumberman's  Nat.  Bk.  of 
Portland  v.  Campbell  (1912),  61  Oreg.  123,  121  Pac.  427;  Murphy  v. 
Panter  (1912),  62  Oreg.  522,  125  Pac.  292;  Noble  v.  Beeman-Spaulding- 
Woodwar  Co.  (1913).  65  Oreg.  93,  131  Pac.  1006,  46  L.  R.  A.  (N.  S.), 
162. 

Rhode  Island.— Deahy  v.  Choquet  (1907),  28  R.  L  338,  67  Atl.  421, 
14  L.  R.  A.  (N.  S.)  847. 

re:ra,y.— Hackney  Mfg.  Co.  v.  Celum   (1916),  189  S.  W.  988. 

t/to/i.— Wostenholme  v.  Smith   (1908),  34  Utah  300,  97  Pac.  329. 

Washington. — Bradley  Engineering  &  Mfg.  Co.  v.  Heyburn  (1910), 
56  Wash.  629,  106  Pac.  170;  Pease  v.  Syler  (1914),  138  Pac.  310;  Petri 
V.  Manny,  99  Wash.  601. 

United  States.— In  re  Nashville  Laundry   Co.,  240  Fed.   Rep.   795. 

§  193.  Reasonable  time,  what  constitutes.  In  determining 
what  is  a  "reasonable  time"  or  an  "unreasonable  time"  regard 
is  to  be  had  to  the  nature  of  the  instrument,  the  usage  of  trade 
or  business  (if  any)  with  respect  to  such  instrument,  and  the 
facts  of  the  particular  case.**  ** 

See  text,  §  291. 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act:.  Sec. 

40  (3),  45  (2)  73,  74  (2).  86  (2),  89  (1),  74. 

*  Digest  of  some  of  the  decisions,  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states- 


700  NEGOTIABLE    INSTRUMENTS.  §  193 

"Reasonable  time"  is  question  for  jury,  if  facts  in  dispute.  Sheffield 
V.  Cleland,  19  Idaho,  612,  115  Pac.  20. 

Demand  one  year  after  date  unreasonable  time.  Greer  v.  Downing, 
176  111.  App.  355. 

"Reasonable  time"  held  question  for  jury  on  undisputed  facts.  Citi- 
zens' Bank  V.  First  Nat.  Bank,  135  Iowa  605,  113  N.  W.  481,  13  L.  R.  A. 
(N.  S.)  303. 

Demand  must  be  made  within  four  months  in  Kentucky  account  of 
local  custom.     Frazee  v.  Phoenix  Nat.  Bank,  161  Ky.  175,  170  S.  W.  532. 

What  is  reasonable  time.  American  Nat.  Bank  v.  Patterson,  —  La. 
— ,  83  So.  218. 

Demand  must  be  made  in  sixty  days  on  demand  note  in  accordance 
with  prior  state  law  if  evidence  shows  it  not  within  this  section.  Mer- 
ritt  V.  Jackson,  181  Mass.  69,  62  N.  E.  987. 

Demand  must  be  made  in  compliance  with  prior  state  law  if  not  con- 
trolled by  this  section.  Plymouth  County  Trust  Co.  v.  Scanlon,  227 
Mass.  71,  116  N.  E.  468. 

Disputed  facts  make  "reasonable  time"  a  jury  question.  First  Nat. 
Bank  v.  Korn  (Mo.  App.),  179  S.  W.  721. 

When  demand  after  seven  m.onth.s  not  unreasonable  time.  Becker  v. 
Horowitz,  114  N.  Y.  Supp.  161. 

When  facts  not  disputed  "reasonable  time"  is  question  for  court.  Za- 
loom  V.  Ganin,  72  Misc.  Rep.  36,  129  N.  Y.  Supp.  85. 

Delay  of  two  years  in  presenting  demand  not  held  question  for  jury 
as  to  reasonable  time.  Hussey  v.  Sutton,  96  Misc.  Rep.  552,  160  N.  Y. 
Supp.  934. 

Negotiation  of  demand  note  more  than  three  months  after  date  was 
within  reasonable  time,  in  absence  of  contrary  showing.  Weber  v. 
Hirsch,  163  N.  Y.  Supp.  1036. 

Four  years  as  reasonable  time  on  demand  note.  Van  Buren  v. 
Wensley,  169  N.  Y.  S.  789. 

When  "reasonable  time"  is  question  for  court  or  jury.  Commercial 
Bank  v.  Zimmerman,  185  N.  Y.  210,  11  N.  E.  1020. 

^*  The  following  is  a  complete  list  of  the  cases,  arranged 
alphahetically  by  states,  where  this  section  has  been  construed. 

Arkansas.— T\\oxw'iow  v.  Bowie   (1916),  185  S.  W.  793. 

/aa/jo.— Sheffield  v.  Cleland    (1911),  19  Ida.  612,   115  Pac.  20. 

lU'moxs. — Greer  v.  Downing  C1912).  176  III.  App.  355;  SimonofJ  v. 
Granite  City  Nat.  Bk.   (1917),  116  N.  E.  636. 

Iowa. — Citizens'  Bank  v.  First  Nat.  Bank,  135  Iowa  605,  113  N.  W. 
481,  13  L.  R.  A.  (N.  S.)  303;  Anderson  v.  First  Nat.  Bk.  of  Chariton 
(1909),  144  Iowa  251,  122  N.  MsI .  918;  LeClere  v.  Philpott  (1915),  151  N. 
W.  825;  Plover  Sav.  Bk.  v.  Moodie  (1906),  135  Iowa  685,  110  N.  W.  29; 
^.ri  re  Estate  of  Phi'pott,  169  Iowa  555,  151  N.  W.  825. 

Kentucky.— FvRzte  v.  Phoenix  Nat.  Bank.  161  Ky.  175,  170  S.  W.  532. 

Louisiana. — American  Kat.  Bank  v.  Patterson,  83  So.  218. 

Massachusetts.— Gordon  v.  Levine  (1907),  194  Mass.  418,  80  N.  E.  505; 
Gordon  v.  Levine  (1908),  197  Mass.  267,  83  N.  E.  861,  15  L.  R.  A.  (N. 


§  194  GENERAL    PROVISIONS.  701 

S.)   243;  Merritt  v.  Jackson    (1902),   181   Mass.  69,  62  N.  E.  987;   Ply- 
mouth County  Trust  Co.  v.  Scanlon  (1917),  227  Mass.  71,  116  N.  E.  468. 

Missouri.— First  Nat.  Bank  v.  Korn,  —  Mo.  App.  — ,  179  S.  W.  721. 

New  Jersey. — Hills  Sav.  &  Drawing  Club  v.  Baronowitz  (1916),  97 
Atl.  28. 

Nczi'  York.— Hussey  v.  Sutton,  160  N.  Y.  Supp.  934,  96  Misc.  Rep.  552 ; 
Commercial  Nat.  Bk.  v.  Zimmerman  (1906),  185  N.  Y.  210,  77  N.  E. 
1020;  Van  Buren  v.  Wensley,  102  Misc.  Rep.  248,  169  N.  Y.  Supp.  789; 
Weber  v.  Hirsch  (1917),  163  N.  Y.  Supp.  1086;  Zaloom  v.  Ganim  (1911), 
129  N.  Y.  Supp.  85 ;  Van  Buren  v.  Wensley,  169  N.  Y.  S.  789. 

North  Carolina. — Singer  Manufacturing  Co.  v.  Summers  (1906),  143 
N.  Car.  102,  55  S.  E.  522. 

Pennsylvania. — Hannon  v.  Allegheny  Bellevue  Land  Co.  (1910),  44 
Pa.  Super.  Ct.  266;  Murray  v.  Real  Est.  Title  Ins.  &  Tr.  Co.  (1909),  39 
Pa.   Super.  Ct.  438. 

Rhode  Island.— McLean  v.  Bryer   (1903),  24  R.  I.  599,  54  Atl.  273. 

Virginia.— Bro\vn  v.  Thomas  (1917),  92  S.  E.  977;  Colona  v.  Parlfsley 
Bk.  (1917),  92  S.  E.  979. 

West  VirgHnia.— Thompson  v.  Curry  (1917),  91  S.  E.  801. 

§  194.  Time,  how  computed;  when  last  day  falls  on  holi- 
day. Where  the  day,  or  the  last  day,  for  doing  any  act  herein 
required  or  permitted  to  be  done  falls  on  Sunday  or  on  a  holiday, 
the  act  may  be  done  on  the  next  succeeding  secular  or  business 
day.i'  1" 

See  text,  §  291. 

See  the  New  York  Statutory  Construction  Law  as  to  computing  of 
time  (§§  26,  27). 

This  provision  changes  the  rule  of  the  law  merchant,  but  affirms  the 
previous   statutory  rule  in  many  jurisdictions. 

Corresponding  provisions  of  the  English  Bills  of  Exchange  Act :  Sec. 
14   (1)    (a)    (b),  92;   14    (1). 

North  Carolina  Act  omits  this  section,  but  it  is  found  in  a  chapter 
entitled  "Sunday  and  Holidays"  as  section  2839. 

*  Digest  of  some  of  the  decisions,  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

Accommodation  maker  is  liable.  Farmers'  State  Bank  of  North 
Powder  v.  Forsstrom,  —  Oreg.  — ,  173  Pac.  935. 

^*  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed. 


702  NEGOTIABLE   INSTRUMENTS.  §  195 

Colorado. — Babcock  v.  The  City  of  Rocky  Ford  (1914),  25  Colo.  App. 
312. 

District  of  Columbia. — Ambrose  v.  Brown  (1914),  42  App.  D.  C.  25. 

Oregon.— Uur^hy  v.  Panter  (1912),  125  Pac.  292;  Farmers'  State 
Bank  of  North  Powder  v.  Forsstrom,  173  Pac.  935. 

§  195.  Application  of  chapter.  The  provisions  of  this  act 
do  not  apply  to  negotiable  instruments  made  and  delivered  prior 
to  the  passage  hereof.-^ 

See  text,  §  299. 

Arizona  act  omits  this  section. 

Florida  General  Statutes  omits  this  section. 

Minnesota  Statute  adds  the  following  at  the  end  of  the  section: 
"Nor  shall  they  be  construed  as  modifying,  repealing  or  superseding 
any  of  the  terms  and  provisions  of  section  2747  Revised  Laws  1905  (sec- 
tion 6015,   General  Statutes   1913)." 

South  Dakota  Act  adds  the  following  provision  at  the  end:  "Noth- 
ing in  this  act  contained  shall  be  construed  in  any  manner  repealing 
chapters  128,  140  and  141  of  the  Laws  of  1905  and  chapter  74  of  the 
Laws  of  1907." 

■*  Digest  of  some  of  the  decisions  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states : 

What  law  governs  in  novation  discharge  defense.  Gorin  v.  Wiley, 
215  III.  App.  541. 

Act  does  not  apply  to  indorsement  of  note  executed  before  act  was 
in  efiFect.  Gate  Citv  Nat.  Bank  v.  Schmidt,  168  Mo.  App.  153,  152  S. 
W.  101. 

N.  L  L.  not  applicable  to  actions  on  instruments  delivered  prior  to 
its  becoming  effective.     Dorsey  v.  Wellman,  85  Neb.  262,  122  N.  W.  989. 

N.  I.  L.  controls  actions  on  instruments  delivered  after  statute  be- 
came eective.     Fassler  v.   Streit,  92  Neb.  786,  139  N.  W.  628. 

Indorsement  after  act  of  a  note  made  prior  to  act  is  not  controlled 
by  act.  Mcintosh  v.  Gibbs,  81  N.  J.  L.  27,  80  Atl.  554,  Ann.  Cas.  1912D, 
163. 

Act  not  intended  to  make  prior  non-negotiable  instruments  negotiable 
or  to  impair  the  obligation  of  contracts.  Adams  v.  Thurmond  (Okla.), 
149  Pac.  1141. 

Actions  to  which  N.  I.  L.  apply.  Voris  v.  Birdsall  (Okla.),  153 
Pac.  673. 

What  instruments  are  controlled  by  N.  I.  L.  Cox  v.  Kirkwood 
(Okla.),  158  Pac.  930. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed. 

^rA'OM.yo.f —Parish  v.  Smith  (1918).  204  S.  W.  415. 


§  196  GENERAL    PROVISIONS.  703 

Co/oro Jo.— Louisville  Coal  &  Mining  Co.  v.  Int.  Trust  Co.  (1903),  18 
Colo.  App.  45,  71  Pac.  898. 

Illinois.— Gor'm  v.  Wiley,  215  111.  App.  541. 

MmoMri.— Gate  City  Nat.  Bk.  v.  Schmidt  (1912),  152  S.  W.  101. 

Nebraska.— Dorsey  v.  Wellman  (1909),  85  Neb.  262,  122  N.  W.  989; 
Fassler  v.  Street  (1913),  92  Neb.  786,  139  N.  W.  628. 

New  Jersey.— Mcintosh  v.  Gibbs,  81  N.  J.  Law,  37,  80  Atl.  554,  Ann. 
Cas.  1912D,  163. 

North  Carolina.— Meyers  v.  McRimmon  (1906),  140  N.  Car.  640  53 
S.  E.  447,  111  Am.  St.  879. 

0^/a/:o)Mo.— Adams  v.  Thurmond  (Okla.),  149  Pac.  1141;  Voris  v. 
Birdsall   (Okla.),  153  Pac.  673. 

§  196.  Law  merchant;  when  governs.  In  any  case  not 
provided  for  in  this  act  the  rules  of  the  law  merchant  shall 
govern.*'  *■ 

See  text,  §  299. 

Kentucky  omits  this  section. 

Iowa  adds  the  following:  "Sec.  198.  Days  of  grace— demand  made 
on.  A  demand  made  on  any  one  of  the  three  following  days  following 
the  day  of  maturity  of  the  instrument,  except  on  Sunday  or  a  holiday, 
shall  be  as  effectual  as  though  made  on  the  day  on  which  demand  may 
be  made  under  the  provisions  of  this  act,  and  the  provisions  of  this 
act  as  to  notice  of  non-payment,  non-acceptance,  and  as  to  protest  shall 
be  applicable  with  reference  to  such  demand  as  though  the  demand 
were  made  in  accordance  with  the  terms  of  this  act;  but  the  provisions 
of  this  section  shall  not  be  construed  as  authorizing  demand  on  any  day 
after  the  third  day,  from  that  on  which  the  instrument  falls  due  ac- 
cording to  its  face." 

Corresponding  provision  of  the  English  Bills  of  Exchange  Act-  See 
97  (2). 

In  some  of  the  states  the  section  reads :  "The  rules  of  law  and  equity 
including  the  law  merchant." 

*  Digest  of  some  of  the  decisions,  in  which  this  section  is  con- 
strued, arranged  alphabetically  by  states: 

One  who  holds  note  indorsed  in  blank  transferred  to  him  for  value 
is  holder  in  due  course.  Allen-Wright  Furniture  Co.  v.  Spoor  —  Ida 
— ,  195  Pac.  632. 

Note  negotiable  although  containing  provision  for  collection  of  all 
upon  failure  to  pay  interest  for  30  days.  Commercial  Sav.  Bank  v 
Schaffer.  —  la.  — ,  181  N.  W.  492. 

Unknowingly  making  draft  payable  to  fictitious  payee  does  not  ren- 
der it  payable  to  bearer  under  code.  Am.  Exp.  Co.  v.  Peoples  Sav  Bk 
—  la.  — .  181  N.  W.  801. 


704  NEGOTIABLE    INSTRUMENTS.  §  196 

Law  Merchant  or  common  law  governs  where  N.  I.  L.  is  silent. 
Mechanics'  &  Farmers'  Savings  Bank  v.  Katterjohn,  137  Ky.  427,  125 
S.  W.  1071,  Ann.  Cas.  1912A,  439. 

Foreign  drawer  has  right  to  re-exchange  against  English  acceptor. 
In  re  Gillespie,  16  Q.  B.  D.  702,  affirmed  18  Q.  B.  D.  286. 

*'  The  following  is  a  complete  list  of  the  cases,  arranged 
alphabetically  by  states,  where  this  section  has  been  construed. 

Idaho. — Wright  Furn.  Co.  v.  Spoor,  195  Pac.  632. 

Iowa. — Commercial  Sav.  Bank  v.  Schaffer,  181  N.  W.  492;  American 
Exp.  Co.  V.  Peoples  Sav.  Bank,  181  N.  W.  701. 

Kentucky. — Mechanics  &  Farmer's  Sav.  Bk.  v.  Katterjohn  (1910), 
137  Ky.  427,  125  S.  W.  1071,  Ann.  Cas.  1912A,  439. 

Louisiana. — J.  I.  Case  Threshing  Machine  Co.  v.  Bridger  (1913),  133 
La.  754,  63  So.  319. 

Missouri.— Rousion  v.  Day  (1909),  145  Mo.  App.  410. 

New  For)^.— Pavestedt  v.  N.  Y.  Life  Ins.  Co.  (1911),  203  N.  Y.  91; 
Van  Orden  v.  Simpson  (1915),  153  N.  Y.  Supp.  134. 

OM*o.— Richards  v.  Market  Ex.  Bk.  (1910),  81  Ohio  St.  348,  55  Ohio 
Law  Bull.  20. 

Oregon. — First  Nat.  Bk.  of  Cottage  Grove  v.  Bk.  of  Cottage  Grove 
(1911),  59  Oreg.  388,  117  Pac.  293. 

Pennsylvania. — Harvey  v.  Dimon   (1908),  36  Pa.  Super.  Ct.  82. 

Rhode  /j/aH(f.— Oakdale  Mfg.  Co.  v.  Clarke,  29  R.  I.  192,  69  Atl.  681. 

United  States. — Nichols  v.  Waukesha  Canning  Co.  (1912),  195  Fed. 
807. 


ARTICLE  XVIII. 

NOTES  GIVEN  FOR  A  PATENT  RIGHT  AND  FOR  A 
SPECULATIVE   CONSIDERATION. 


§  330.  Negotiable    instruments    giv- 
en for  patent  rights.* 
331.  Negotiable    instruments    giv- 


en   for    a   speculative   con- 
sideration. 
332.  How    negotiable    bonds    are 
made   non-negotiable. 


1  Ohio  and  New  York  have  these  provisions. 

§330.  Negotiable  instruments  given  for  patent  rights.  A 
promissory  'note  or  other  negotiable  instrument,  the  considera- 
tion of  which  consists  wholly  or  partly  of  the  right  to  make,  use 
or  sell  any  invention  claimed  or  represented  by  the  vendor  at  the 
time  of  sale  to  be  patented,  must  contain  the  words  "given  for 
a  patent  right"  prominently  and  legibly  written  or  printed  on 
the  face  of  such  note  or  instrument  above  the  signature  thereto ; 
and  such  note  or  instrument  in  the  hands  of  any  purchaser  or 
holder  is  subject  to  the  same  defenses  as  in  the  hands  of  the 
original  holder ;  but  this  section  does  not  apply  to  a  negotiable 
instrument  given  solely  for  the  purchase  price  or  the  use  of  a 
patented  article. 

See  text,  §  51. 

§331.  Negotiable  instruments  for  a  speculative  considera- 
tion. If  the  consideration  of  a  promissory  note  or  other  nego- 
tiable instrument  consists  in  whole  or  in  part  of  the  purchase 
price  of  any  farm  product,  at  a  price  greater  by  at  least  four 
times  than  the  fair  market  value  of  the  same  product  at  the 
time,  in  the  locality,  or  of  the  membership  and  rights  in  an  asso- 
ciation, company  or  combination  to  produce  or  sell  any  farm 
product  at  a  fictitious  rate,  or  of  a  contract  or  bond  to  purchase 
or  sell  any  farm  product  at  a  price  greater  by  four  times  than 
the  market  value  of  the  same  product  at  the  time  in  the  locality, 
the  words,  "given  for  a  speculative  consideration,"  or  other 
words  clearly  showing  the  nature  of  the  consideration,  must  be 
prominently  and  legibly  written  or  printed  on  the  face  of  such 
note  or  instrument  above  the  signature  thereof;  and  such  note 


705 


706  NEGOTIABLE    INSTRUMENTS.  §332 

or  instrument,  in  the  hands  of  any  purchaser  or  holder,  is  sub- 
ject to  the  same  defenses  as  in  the  hands  of  the  original  owner 
or  holder. 

See  text,  §  136. 

Coss  section  :     Sec.  57. 

§  332.     How   negotiable   bonds    are   made    non-negotiable. 

The  owner  or  holder  of  any  corporate  or  municipal  bond  or 
obligation  (except  such  as  are  designated  to  circulate  as  money, 
payable  to  bearer),  heretofore  or  hereafter  issued  in  and  pay- 
able in  this  state,  but  not  registered  in  pursuance  of  any  state 
law,  may  make  such  bond  or  obligation,  or  the  interest  coupon 
accompanying  the  same,  non-negotiable,  by  subscribing  his  name 
to  a  statement  indorsed  thereon,  that  such  bond,  obligation  or 
coupon  is  his  property ;  and  thereon  the  principal  sum  therein 
mentioned  is  payable  only  to  such  owner  or  holder,  or  his  legal 
representatives  or  assigns,  unless  such  bond,  obligation  or  cou- 
pon be  transferred  by  indorsement  in  blank,  or  payable  to  bearer, 
or  to  order,  with  the  addition  of  the  assignor's  place  of  residence. 

See  text,  §  214. 

The  Kansas,  New  York  and  Ohio  acts  contain  this  section. 

Nebraska  has  the  following  section :  "Sec.  196.  Note  given  for  patent 
right,  how  to  be  written,  et  cetera : 

"A  promissory  note  or  other  negotiable  instrument,  the  considera- 
tion for  which  consists,  in  whole  or  in  part,  of  the  right  to  make,  use 
or  vend  a  patented  invention,  or  an  invention  claimed  to  be  patented, 
shall  have  written  or  printed  prominently  and  legibly  across  the  face 
thereof,  and  above  the  signature  thereto,  the  words  'Given  for  a  patent 
right',  such  instrument  in  the  hands  of  any  purchaser,  or  holder,  shall 
be  subject  to  the  same  defenses  as  it  would  be  in  the  hands  of  the 
original  owner  or  holder;  any  person  who  purchases  or  becomes  the 
holder  of  a  promissory  note,  or  other  negotiable  instrument,  knowing  it 
to  have  been  given  for  the  consideration  aforesaid,  shall  hold  the  same 
subject  to  such  defenses  although  the  words  'given  for  a  patent  right' 
are  not  written  or  printed  upon  its  face." 


APPENDIX  A. 


Tabulated  Laws  of  the  States  and  Territories  of  the  United 
States  as  to  some  features  of  the  laws  of  Negotiable  Instru- 
ments. 


TABLE  I. 


Table  showing  in  what  states  and  territories  the  Uniform  Ne- 
gotiable Instruments  Law  has  been  adopted  and  in  what  it  has 
not ;  showing  by  states  and  territories  whether  or  not  Days  of 
Grace  are  allowed  on  sight,  on  demand  and  on  time  paper ; 
showing  the  law  as  to  Presentment  when  instrument  matures 
or  falls  due  on  Sunday  or  a  Holiday ;  and  setting  out  the  legal 
Rate  of  Interest,  the  Limit  of  Interest  under  Contract  and  the 
Penalty  for  Usury  in  the  various  jurisdictions  of  the  United 
States, 


707 


708 


NEGOTIABLE    INSTRUMENTS. 


SUM. 


r)ay3  nf 
G  race. 


■J-  a 


If    instrument 
fall3    dua    or 
matures    on 
Sunday   or    a 
Holiday  l3  pre- 
sentment to  be 
made   on   pre- 
ceding   or 
succeeding 
business    day. 


3§g 


Penalty  for  usury. 


1.  Alabama 

2.  Alask^ 

3.  Arizona 

4.  Arkansas 

5.  California 

6.  Colorado 

7.  Connecticut 

8.  Delaware 

9.  Dlst.   of  Col. 

10.  Florida 

11.  Georgia 

12.  Idaho 

13.  IlUnol* 

14.  Indiana 

15.  Iowa 

16.  Kansas 

17.  Kentucky 

18.  Louisiana 

19.  Maine 

20.  Maryland 

21.  MassachuiettB 

22.  Michigan 

23.  Minnesota 

24.  Mississippi 

25.  Missouri 


Yes  No  No  No 

Yes  No  No  Yes 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  Np 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

No  No  No  No 

Yes  No  No  No 

Ye»  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  Yes  No  No 

Yes  No  No  No 

Yes  Yes  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 

Yes  No  No  No 


Next     sueceedins 
day 


Preceding     day 


Next     succeeding 
day 


Next   succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Preceding    day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Vext     succeeding 
day 


Next   succeeding 
day 


Next     succeeding 
day 


Next    succeeding 
day 


Next     succeeding 
day 


Next     succeeding 
day 


Preceding    day 


Next     succeeding 
day 


6  10 

6  10 

7  12 

8  12 
6  12 

6  6 

8  8 

8  10 

7  8 
7  10 
6  7 
6  8 

6  8 

6  10 


No 
6      limit 


No 
6      limit 


Forfeiture    of    all    Interest 

Forfeiture       of      debt       to 
school   fund 

Forfeiture  of  all  interest 
Forfeiture    of   contract 
No  penalty 


No  penalty 

Forfeiture  of  principal  and 
Interest.  Fine  and  Im- 
prisonment 

Forfeiture  of  excessive  In- 
terest 

Forfeiture  of  all  Interest 


Forfeiture  of  all  Interest 

Forfeiture  of  excessive  In- 
terest 

Forfeiture  of  10%  annually 
of  principal 

Forfeiture  of  all  Interest 

Forfeiture  of  all  Interest 
over   6% 

Forfeiture  of  Interest  and 
costs  of  suit 

Forfeiture  of  double  the 
usury 

Forfeiture  of  excessive  In- 
terest 

Forfeiture  of  all  interest 

No  usury  law  except  as  to 
loans  for  less  than  J200 
secured  by  cliattel  mort- 
gage 

Forfeiture  of  excessive  In- 
terest 

On  loans  of  less  than 
$l,non  only  18%  is  recov- 
erable .  Not  more  than 
$5.00   costs 

Forfeiture   of  all  Interest 

Forfeiture  of  debt  and  in- 
terest 


Forfeiture   of   interest 


Forfeiture   of   excessive   In- 
terest 


APPENDIX    A. 


709 


State. 

li 

£►-) 
S  c 

T 

Days  of 
Grace. 

If    Instrument 
falls  due  or 
matures    on 
Sunday    or    a 
Holiday   is  pre- 
sentment to  be 
made    on    pre- 
ceding  or 
succeedini; 
business    day. 

Interest. 

Penaty   for  usury. 

C  vl 
IS 

li 

■a 

26. 

Montana 

Yes 

No 

No 

No 

Next     succeeding 
day 

8 

10 

Forfeiture  of  all  Interest 

27. 

Nebraska 

Yes 

No 

No 

No 

NPxt     succeeding 
day 

7 

10 

Forfeiture   of   all  Intereit 

28. 

Nevada 

Yea 

No 

No 

No 

Next     succeeding 
day 

7 

12 

No  penalty 

29. 

N.    Hampshire 

Yes 

No 

No 

No 

Next    succeeding 
day 

0 

6 

Forfeiture    of    three    times 
excess  of  Interest 

30. 

New    Jersey 

Yes 

No 

No 

No 

Next     succeeding 
day 

6 

6 

Forfeiture  of  all  Interest 

31. 

New    Mexico 

Yes 

No 

No 

No 

Next     succeeding 
day 

6 

12 

Forfeiture  double  the  usury 
line 

32. 

New    York 

Yei 

No 

No 

No 

Next     succeeding 
day 

Next     succeeding 
day 

6 

6 

Forfeiture  of  debt  and  In- 
terest.    Misdemeanor 

33. 

N.    Carolina 

Yes 

• 

No 

No 

6 

6 

Forfeiture    of    all    Interest. 
Double  amount  paid  may 
be  recovered 

34. 

N.    Dakota 

Yes 

No 

No 

No 

Next     succeeding 
day 

6 

10 

Forfeltvire  of  all  interest 

35. 

OWo 

Yes 

No 

No 

No 

Next     succeeding 
day 

6 

8 

Forfeiture  of  excess  over  695> 

36. 

Oklahoma 

Yes 

No 

No 

No 

Next     succeeding 
day                        6 

10 

Forfeiture  of  double  Inter- 
est 

37. 

Oregon 

Yes 

No 

No 

No 

Next     succeeding 
day                          6 

10 

Forfeiture  of  principal  »nd 
Interest 

38. 

PennB.vlvanla 

Yes 

No 

No 

No 

Next     succeeding 
day                          6 

6 

Forfeiture  of  excess  Interest 

39. 
40. 

Rhode    Island 
S.    Carolina 

Yes 

Yes 

Yes    No 
No      No 

No 

No 

Next   succeeding 
day                          6 

Next     succeeding 
day                          7 

No 
limit 

8 

Forfeiture  of  contract 
Forfeiture  of  Interest.  Twice 
amount    of    interest    paid 
may      ba     recovered      by 
debtor 

41. 

S.    Dakota 

Yes 

No 

No 

No 

Next     succeeding 
day                           7 

12 

Forfeiture  of  Interest  Mis- 
demeanor 

42. 

43. 

Tennessee 
Texas 

Yes 
Yes 

No 
No 

No 
No 

No 
No 

Next     succeeding 
day                          6 

Preceding  day           6 

6 
10 

Forfeiture  of  exceBS  Inter- 
est 

Forfeiture  of  all  interest 
Double  amount  of  inter- 
est   paid    recoverable 

11 

Utah 

Yes 

No 

No 

No 

Next     succeeding 
day                        8 

12 

Forfeiture  of  principle  and 
interest 

"-. 

Vermont 

Yes 

No 

No 

No 

Next     succeeding 
day                          6 

6 

Forfeiture  of  eoccess  interest 

,.,- 

Virginia 

Yes 

No 

No 

No 

Next     succeeding 
day                      6 

6 

Forfeiture  of  all  Interest 

17 

Washington 

Yes 

No 

No 

No 

Next     succeeding 
day                           6 

12 

Forfeiture  of  accrued  In- 
terest. Twice  amount 
paid  recoverable 

•13 

West    Virginia 

Yes 

No 

No 

No 

Next     succeeding 
day                        6 

6 

Forfeiture  of  excess  inter- 
est 

43 

Wisconsin 

Yes 

No 

No 

No 

Next     succeeding 
day                        6 

10 

Forfeiture  of  all  Interest. 
Treble  paid  recoverable. 

jO 

.  Wyoming 

Yes 

No 

Nc 

No 

Nest     succeeding 
day                        8 

12 

Forfeiture  of  all  Interest 

•Yes  If   stipulated,    but  no   If   not. 


710  NEGOTIABLE    INSTRUMENTS. 


TABLE  II. 


Table  showing  by  states  and  territories  the  period  of  the 
Statute  of  Limitations  on  Notes  and  also  on  Judgments  in 
Courts  of  Record;  showing  whether  or  not  Agreements  to  Pay 
Attorney's  Fees  in  case  of  Default  are  Enforcible  and  whether 
or  not  such  agreements  render  notes  non-negotiable ;  showing 
also  whether  or  not  Judgment  Notes  are  used;  setting  out 
whether  the  Contracts  of  a  Married  Woman  in  business  are 
enforcible  at  law  as  they  would  be  if  she  were  unmarried ;  and 
also  setting  out  the  Jurisdiction  of  Justices  of  the  Peace  as  to 
Amount  on  Negotiable  Instruments. 


I 


APPENDIX    A. 


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713 


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APPENDIX  B. 


Digest   of    Law   in   Georgia    where    Negotiable    Instruments 
Law  not  adopted. 


Below  is  given  a  brief  digest  of  some  of  the  requirements  as 
to  negotiable  instruments  in  the  State  of  Georgia  which  is  the 
only  state  where  the  Negotiable  Instruments  Law  has  not  been 
adopted.  The  citations  to  statutes  are  to  sections  of  Park's 
Annotated  Code  of  1914. 


A  promissory  note  is  a  written  promise  made  by  one  or  more 
to  pay  to  another,  or  order,  or  bearer,  a  specified  amount  of 
money,  or  other  article  of  value.  If  the  payment  is  in  articles 
other  than  money,  and  is  not  punctually  made,  the  holder  may 
recover  to  value  of  such  articles  at  the  time  the  note  was  due, 
at  the  place  where  it  was  payable,  if  a  specified  place  is  men- 
tioned, or  at  the  place  where  it  was  made,  with  lawful  interest. 
Sec.  4270. 

Days  of  grace  are  abolished  as  to  all  notes  dated  on  or  after 
October  1,  1913.    Sec.  4272. 

Promissory  notes  are  negotiable  by  indorsement  if  payable 
to  order,  or  by  transfer  if  payable  to  bearer,  but  the  maker 
may  restrain  negotiability.     Sec.  4273. 

No  indorsement  need  be  under  seal.  ^  Sec.  4274. 

Indorser's  liability  may  be  limited  by  express  provision. 
Sec.  4275. 

Transfer,  of  notes  secured  by  mortgage  transfers  mortgage 
benefit.     Sec.  4276. 

Transferrer  warrants  that  he  is  lawful  holder,  and  has  a  right 
to  sell  and  that  instrument  is  genuine  and  that  he  has  no  knowl- 
edge that  instrument  is  worthless.     Sec.  4277. 

Acceptances  may  be  conditioned  or  payable  from  designated 
funds,  and  the  acceptor  has  lien  on  drawer's  funds  or  property 
held  by  him.     Sec.  4278. 

714 


APPENDIX    B. 


715 


Indorsers  are  liable  if  original  parties  do  not  pay.  Sec. 
4279. 

Notice  of  non-payment  and  protest  must  be  given  to  indorsers 
within  reasonable  time  but  it  shall  not  be  necessary  to  protest 
in  order  to  bind  indorsers,  except  in  the  following  cases :  1.  When 
a  paper  is  made  payable  on  its  face  at  a  bank  or  banker's  ofifice. 
2.  When  it  is  discounted  at  a  bank  or  banker's  office.  3.  When 
it  is  left  at  a  bank  or  banker's  offiice  for  collection.     Sec.  4280. 

Five  per  cent  on  principal  may  be  collected  as  damages  on 
protested  note  payable  out  of  the  state  and  within  United 
States  and  ten  per  cent  if  without  the  limits  of  United  States. 
Sec.  4281-2. 

Indorsers  may  be  sued  in  same  action  with  the  maker,  drawer 
or  acceptor.     Sec.  4283. 

All  bills,  checks,  notes  and  other  evidences  of  debt  maturing 
or  by  their  terms  presentable  for  acceptance  or  payment  on  Sun- 
day or  a  public  holiday,  shall  be  due  or  presented  on  the  next 
business  day  thereafter.     Sec.  4285. 

Bona  fide  holder  for  value  of  negotiable  instrument  who  re- 
ceives same  before  due  and  without  notice  of  defect  or  defense 
is  protected  from  all  defenses  by  maker  except,  non  est  factum, 
gambling,  immoral  and  illegal  consideration  or  fraud  in  its  pro- 
curement.   Sec.  4286. 

Holder  receiving  negotiable  instrument  after  due  is  charged 
with  notice  of  dishonor  and  takes  subject  to  equities  of  original 
parties.    Sec.  4287. 

Holder  is  presumed  to  be  bona  fide  and  for  value,  but  if 
either  fact  is  negatived  by  proof  all  defenses  are  opened.  Sec. 
4288. 

Note  held  as  collateral  for  debt  is  held  as  by  purchaser.  Sec. 
4289. 

Holder's  title  cannot  be  inquired  into  unless  for  defendant's 
protection.     Sec.  4290. 

Circumstances  which  would  place  a  prudent  man  upon  his 
guard  in  purchasing  negotiable  paper  are  sufficient  notice  before 
due.    Dec.  4291. 

Negotiable  instruments  payable  upon  demand  are  due  im- 
mediately, but  where  time  for  payment  not  fixed  they  are  due 
as  soon  as  presented  and  accepted.     Sec.  4292 


716  NEGOTIABLE    INSTRUMENTS. 

All  promissory  notes,  contracts  or  other  evidences  of  debt, 
taken  by  any  person,  agent  company  or  corporation,  for  the 
purchase  price  of  any  patent,  copy,  or  property,  right  or  terri- 
tory for  the  sale  of  any  such  right,  or  for  the  sale  of  any  patented 
or  copyrighted  article  or  thing,  or  where  there  is  a  proprietary 
ownership  or  right,  sold  through  or  by  any  peddler,  agent  or 
traveling  salesman,  traveling  for  the  purpose  of  making  such 
sales,  shall  have  expressed  on  the  face  of  such  note,  contract 
or  other  evidence  of  debt  the  consideration  of  the  same,  stating 
the  thing  or  article  for  which  given,  and  such  consideration  so 
expressed  shall  entitle  maker  to  all  equities  between  original 
parties  as  against  any  holder.  This  does  not  apply  to  merchants 
or  manufacturers  selling  and  delivering  directly  from  their 
stores.     Sees.  4293  and  4294. 

All  promissory  notes,  contracts,  or  other  evidences  of  debt, 
taken  by  any  person,  company  or  corporation,  agent  or  pro- 
moter for  the  purchase  price  of  any  gold  or  silver  mining,  oil 
well  or  insurance  stock,  or  any  other  stock  in  any  incorporated 
company,  domestic  or  foreign  and  sold  by  any  peddler,  agent  or 
traveling  salesman  or  promoter,  traveling  for  the  purpose  of 
making  sales,  shall  have  expressed  on  the  face  of  same  the  con- 
sideration, stating  for  what  same  was  given,  and  such  consid- 
eration so  expressed  shall  be  notice  to  all  holders  and  entitle 
maker  to  all  defenses.  This  does  not  apply  to  sales  after  the 
original  purchase  price  has  been  paid  and  certificates  of  stcok 
have  been  issued.     Sees.  4294a  and  4294b. 

Obligations  to  pay  attorney's  fees  are  void  and  not  enforce- 
able unless  the  debtor  shall  fail  to  pay  such  debt  on  or  before  the 
return  day  of  the  court  to  which  suit  is  brought  for  collection 
of  same ;  provided  the  holder  of  the  obligation  sued  upon,  his 
agent  or  attorney  notifies  the  defendant  in  writing  ten  days  be- 
fore suit  of  his  intention  to  sue  and  the  term  of  court  to  which  it 
will  be  brought.     Sec.  4252. 

Certification  of  any  check,  draft,  or  order  upon  the  bank  is 
made  a  misdemeanor  unless  the  drawer  has  the  funds  in  bank 
and  renders  the  check,  draft  or  order  a  valid  obligation  against 
the  bank.    Sec.  2301. 

All  liquidated  demands,  where  by  agreement  or  otherwise, 
the  sum  to  be  paid  is  fixed  or  certain,  bear  interest  from  the  time 
the  party  is  liable  and  bound  to  pay  them ;  if  payable  on  demand, 
from  the  time  of  the  demand.  In  case  of  promissory  notes  pay- 
able on  demand  the  law  presumes  a  demand  instantly  and  gives 
interest  from  date.    Sec.  3434. 


APPENDIX   B.  717 

The  reserving,  charging  or  taking  of  a  rate  of  interest  greater 
than  eight  per  centum  per  annum,  either  directly  or  indirectly,  by 
way  of  commission  for  advances,  discount,  exchange  or  by  any 
contract,  contrivance  or  device  w^hatever  is  unlawful  anci  the  ex- 
ce,ss  is  forfeited.    Sees.  3436,  3438. 

All  actions  upon  promissory  notes,  bills  of  exchange  or  other 
simple  contracts  in  writing  shall  be  brought  within  six  years 
after  the  same  become  due  and  payable.     Sec.  4361. 

All  notarial  acts  may  be  proved  by  notary's  certificate  under 
hand  and  seal  providing  it  is  filed  in  the  court  at  its  first  term, 
and  permitted  there  to  remain  until  the  trial.     Sec.  5822. 

Written  acceptance  of  draft  will  be  treated  as  an  assign- 
ment pro  tanto  of  funds  of  the  drawer  in  the  hands  of  acceptor. 

Sec.  3654. 

An  accommodation  indorser  is  considered  merely  as  a  surety. 

Sec.  3541. 

A  guaranty  or  an  accommodation  indorsement  is  not  within 
legitimate  business  of  ordinary  partnerships.     Sec.  3541. 

In  Georgia  there  are  decisions  holding  an  irregular  or  anomal- 
ous indorser  to  be  an  indorser  ;*  prima  facie  a  second  indorser  ;^ 
maker  ;^  and  surety.^  The  reason  for  this  conflict  is  that  the 
intent  governs  and  parol  evidence  is  admissible  to  show  the  in- 
tent of  the  parties  in  the  irregular  indorsement.® 

Blank  indorsements  of  negotiable  paper  may  always  be  ex- 
plained between  the  parties  themselves,  or  those  taking,  with 
notice  of  dishonor,  or  of  the  actual  facts  of  such  indorsements.* 

Signing  by  the  drawee  across  the  face  of  a  draft  without  the 
word  "accepted"  is  a  good  acceptance.^ 

1  Collins  V.  Everett,  4  Ga.  266. 

aNeal  v.  Wilson,  79  Ga.  736,  5  S.  E.  54. 

3  Hardy  v.  White,  60  Ga.  454;  Quinn  v.  Sterne,  26  Ga.  223;  71  Am. 
Dec.  204. 

4Rixley  V.  Hightower,  112  Ga.  476,  37  S.  E.  12,?, ;  Eppens  v.  Forbes,  82 
Ga.  748,  9  S.  E.  72Z;  Camp  v.  Simmons,  62  Ga.  7Z  (unless  indorsed  by 
payee). 

SNeal  v.  Wilson,  79  Ga.  726,  5  S.  E.  54;  Hardy  v.  White,  60  Ga. 
454. 

®  Lynch  v.  Goldsmith,  64  Ga.  62;  can  be  explained. 


718  NEGOTIABLE    INSTRUMENTS. 

In  case  a  blank  has  been  filled  in  with  an  amount  greater  than 
that  authorized  by  the  maker,  a  holder  who  knew  that  the 
authorized  limit  had  been  exceeded  may  recover  from  the  maker 
the  amount  actually  authorized,  the  note  being  void  as  to  the 
excess  only7 

''Cower  V.  Wynn,  59  Ga.  246;  Moody  v.  Threlkeld,  13  Ga.  55,  bona 
fide  purchaser  protected. 

8  Such  complied  with  the  statute.  Fowler  v.  Gate  City  Natl.  Bank, 
88  Ga.  29,  13  S.  E.  831. 


INDEX 


[references  are  to  pages.] 

ABBREVIATIONS— 

use  of  52,  660. 

ABSCONDING— 

as  excuse  for  presentment,  100,  660. 

of  drawee,  effect  on  presentment  for  acceptance,  100,  660. 
ABSENCE— 

effect  on  notice  of  dishonor,  199,  604. 

from  home  of  maker  or  acceptor,  as  excuse  for  non-presentment,  etc., 
189. 

of  consideration,  81,  179,  444,  446. 

of  words   implying  power  to   negotiate,    119. 

ABSOLUTE  INDORSEMENT,  117. 

ACCELERATION  PROVISIONS,  purchaser  after  event  which  acceler- 
ates, 386,  489.  (See  Chattel  Note;  Collateral  Securities;  Install- 
ments; Time,   Certainty  of.) 

ACCEPTANCE,  see  also  Acceptance  for  Honor;  Acceptance  Supra 
Protest;  Acceptor;  Acceptor  Supra  Protest;  Bills  gf  Exchange; 
Presentment  for  Acceptance;  Trade  Acceptances. 

absolute  and  conditional  acceptances,  92,  654. 

after  maturity  or  dishonor,  101. 

antecedent  promise  of,  90,  94. 

applies   only   to   bills   of    exchange,   86. 

before  completion  of  bill,  88. 

by  destruction  or  detention  of  bill,  96. 

by  one  of  a  partnership,  98. 

by  part  of  drawees,  92,  98. 

by  refusal  to  return  bill,  96. 

by  separate  instrument,  93,  649. 

by  stranger  to  instrument,   101. 

by  telegram,  89,  94. 

by  what  law  governed,  88. 

certification  check  equals,  239,  684,  687. 

certification  equivalent  to,  239,  684,  687. 

classification  of  acceptances,  92. 

collateral  or  virtual,  649,  650.- 

completed  by  delivery,  91. 

conditional,  654,  655. 

conformity  with  terms  of  bill,  90. 

consideration,  427,  428. 

719 


720  INDEX. 

[references  are  to  pages.] 
ACCEPTANCE— continued- 
conditional  promise  to  accept,  93,  650. 
date  of,  100. 

dates  from  delivery,  and  until  then  is  revocable,  91. 
defined,  85,  86,  87,  646,  695. 
definition  and  effect,  85,  646. 
delivery  necessary,  63,  91. 

delivery  to  notary  for  protest  does  not  negative,  653. 
destruction  of  bill,  96,  652. 
detention  of  bill,  96,  652. 
dishonor  by  refusal,  91,  660. 
dravi^ee    has    twenty-four    hours    within    which    to    accept   or    refuse, 

96,  100,  651. 
drawee  not  bound  until,  86. 
drawee  not  liable  before,  86. 
drawee  or  his  authorized  agent  may,  99. 
duty  and  rights  of  holder,   186,  661. 
effect  of  delay  of  mail  on  presentment,  99, 
effect  of,  oral  promise  to  accept  or  pay,  86. 
entry  in  pass-book,  646. 
express,  87. 

express,  what  amouts  to,  87. 
facts  which  acceptor  admits,  or  warranties,  141. 

for  honor,  see  Acceptance  for  Honor;  Acceptance  Supra  Protest. 
form  and   requisites,  87. 
form  of,  parol,  95. 
forms  of  qualified,  654,  655. 
form ;  words  indicating,  93. 
form  of,  written,  88,  93. 

forms  and  varieties  of,  as  verbal,  written  and  implied,  88,  92. 
general  or  qualified,  92,  654. 
holder  entitled  to,  on  face  of  bill,  87,  649. 
how  made,  on  bill,  writing  required,  87,  649. 
immaterial  departures   from   tenor  of  bill,  90. 
implied  by  retention,  96. 
from  conduct,  96. 
what  will  amount  to,  96. 
in  what  name,  87. 
is  new  contract,  90. 
kinds  of,  92,  654. 
law  governing,  95. 

liability  for  retention  or  destruction,  96,  652. 
liability  of  acceptor,  89. 
liability  of  drawer  before  and  after,  89. 
local,  92,  655. 
may  be  by  telegram,  89. 
may  be  matie  after  dishonor,  91. 
may  be  on  separate  paper,  93,  649. 
may  be  required  in  writing,  to  be  on  bill,  87,  649. 
may  be  revoked  before  delivery,  97. 
meaning  of  term,  85,  646. 
rnust  be  in  accordance  with  tenor  of  bill,  87. 


INDEX. 


721 


[references  are  to  pages.] 
ACCEPTANCE— continued- 
must  be  in  writing,  87,  646. 
must  be  pleaded  to  be  in  writing,  87. 
must  be  signed,  87,  646. 
must  be  for  payment  in  money,  87,  646. 
nature  and  effect  of,  89. 
necessity  for  delivery  of  acceptance,  91. 
new  contract,  90. 

notice  on  nonpaj^ment  by  acceptor  supra  protest,  103. 
off  bill  of  exchange  on  paper,  other  than  the  bill  itself,  93,  649. 
of  bills  drawn  in  set,  97. 
of  check,  by  banker,  234. 
of  foreign  bills  drawn  in  sets,  76,  674. 
of  incomplete  bill,  91,  653. 

of  incomplete  or  dishonored  or  overdue  bill,  91,  654. 
on  paper,  other  than  the  bill  itself,  93,  649. 
only  by  drawee,  85. 

only  necessary  with  bills  of  exchange,  86. 
oral,  good  at  common  law,  86. 
parol,  86,  92,  95. 
parol  promise  to  accept,  87,  95. 
partial,  92,  654. 

place  of  presentment  for,   100. 
presentment  for,  see  Presentment  for  Acceptance. 

by  whom  made,  98,   184,  658. 

of  bill  of  exchange,  how  made,  98,  658. 

of  bill  of  exchange,  when  excused,  lOO,  660. 

of  bills  in  a  set,  70,  674. 

of  non-existing  bill,  93,  94. 

on  part  holiday  of  bill  of  exchange,  99,  186,  658,  659. 

on  Saturday  of  bill  of  exchange,  99,   186,  658,  659. 

time  when  made,  99,  651,  658. 

to  dead  drawee  of  bill  of  exchange,  how  made,  98,  658. 

to  insolvent  or  bankrupt  drawee,  98,  658. 

to  partners,  of  bill  of  exchange,  98. 

to  whom  made,  98. 

when  must  be  made,  97,  185,  657. 

when  may  be  made,  97,  185,  657. 

when  time  is  sufficient.  99. 

when  excused,  100,  660. 
presumption  that  acceptor  has  funds  of  drawer,  87. 
promise  to  accept  must  be  unconditional.  93,  650. 
promise  to  accept,  94,  650. 
promise  to  accept  equivalent  to,  94,  650. 
qualified,  91,  92,  654. 

qualified,  bill  of  exchange,  when  holder  may  refuse,  90,  655. 
qualified,  of  bill  of  exchange,  effect  of,  91,  655. 
qualified,   releases  drawers  and   indorsers  unless   they  assent   to,   91, 

655. 
qualified,  rights  of  parties,  91. 
qualified,  what  constitutes,  654. 
refusal  of,  duty  of  holder,  186,  661. 


722  INDEX. 

[references  are  to  pages.] 
ACCEPTANCE— continued- 
refusal  of,   rights  of  holder,   186,  661. 
refused,  notice  of  nonpayment  not   required,  203. 
relation  of  drawee  to  bill  1>efore  and  after,  86. 
rights  of  drawer  and  drawee  after,  87, 
rights  of  parties  as  to,  87. 
signature  of  drawee  sufficient,  88. 
terms  of,  general  acceptance,  87. 
terms  of  qualified,  90,  92. 
time  allowed  for,  96,  651. 
time  in  which  it  may  be  matle,  99,  651. 
time  of  acceptance,  presumption  as  to,  651. 
to  pay  at  a  particular  place,  92. 

undertaking  by  drawer,  that  drawee  has  capacity  to  accept,  140. 
varieties  of,  91. 
verbal,  88. 

what  acceptance   admits,   141. 
what  acceptance  does  not  admit,  141. 
what  bills  do  and  do  not  require,  86. 
what  bills  must  be  protested  for  nonacceptance,  210,  662. 
what  bills  presented  for,  97,  185,  657. 
when  acceptance  may  be  made,  91,  653. 
when  acceptance  on  separate  instrument  binds  acceptor,  93. 
when  date  may  be  inserted,  402. 
when  implied,  96,  652. 
when  overdue,  52.  654. 

when  retention  of  bill  amounts  to  acceptance,  96,  652. 
when  presentment  for,  must  be  made,  97,  185,  657. 
where  drawees  are  joint  parties  or  partners,  92,  98. 
whether  delivery  necessary  to  complete,  63,  91. 
whether  bound  without  presentment,   193. 
while  bill  is  incomplete,  91. 

while  incomplete,  overdue,  or  dishonored,  91,  654. 
who  may  accept,  98,  101,  658. 
writing  and  signature,  87,  649. 
written  acceptance,  must  be  pleaded,  87. 

ACCEPTANCE   FOR   HONOR,    see   Acceptance;    Acceptance    Supra 
Protest — • 

agreement  of  acceptor  for  honor,   102,  668. 
delay  in  presentment,  when  excused,  103,  669. 
for  whom  made,  100,  667. 
for  part  of  sum,  100,  667. 
for  different  parties,  100,  (i^l. 
how  made,  100,  103,  667. 

how  presentment  for  payment  made  to  acceptor  for  honor,  102,  669. 
in  general,  100,  667. 

liability  of  acceptor  for  honor,   100,  668. 

maturity  of  bill  payable  after  sight,  accepted  for  honor,  103,  669. 
presentment   for  payment,   102. 
protest  of  bill,  accepted  for  honor,  103,  669. 
protest  of  bill,  dishonored  by  acceptor,  100,  670. 
when  deemed  to  be  for  drawer,  100,  668. 


INDEX.  723 

[references  are  to  pages.] 
ACCEPTANCE  FOR  HONOR— continued— 

when  may  be  made, — when,  by  whom  and  for  what  sum  may  be  made, 
100.  667. 
when  acceptance  does  not  state  for  whose  honor,  100. 

ACCEPTANCE  SUPRA  PROTEST,  see  Acceptance  for  Honor— 
when  overdue,  101. 

ACCEPTED— 

written  across  face  of  bill,  87,  649. 

ACCEPTOR— 

admits  authority  to  draw,  141,  541. 

admits  drawee's  capacity  to  draw,  141,  541. 

admits  genuineness  of  drawee's  signature,  141,  541. 

admits  capacity  of  corporation  to  draw  bill,  141,  541. 

admits  capacity  of  payee  to  endorse,  141,  541. 

by  acceptance  become  principal  debtor,  89,  90. 

charged  without  presentment,  563,  564. 

contract  of,  141,  541. 

estopped  to  deny  insane  payee's  capacity,  30,  31. 

failure  of  consideration  between  him  and  drawer  no  defense  against 

holder,  446. 
liable  to  indorsee  of  insane  payee,  31. 
liability  of,  541-543. 
liability  if  drunk,  31,  32. 
liability  on  bills  drawn  in  set.  141,  541. 
may  not  set  up  forgery,  169. 
may  not  show  that  drawer  is  a  lunatic,  31. 
nature  of  contract  entered  into  by,  141,  541. 
negligence  in  facilitating  alteration,  178. 
of  bills  in  a  set,  141,  541. 
possession  by,  presumption  of  payment,  224. 
subject  to  law  of  the  place  of  acceptance,  230. 
supra  protest,  liability  of,  101,  102,  103. 
must  be  made  in  writing,  101,  102. 
presentment  to  drawee  at  maturity,  101,  102. 
when  bankrupt,  protest  matle  for  better  security,  211,  212. 

ACCEPTOR  FOR  HONOR,   see  also   Acceptor  and  Acceptor   Supra 
Protest. 

agreement  of,  efifect,  102. 

how  made,  103. 

liability  of,  100. 

nature  of  his  agreement,  102. 

notice  on  nonpayment  by  acceptor  supra  protest,  103. 

presentment  to  acceptor  supra  protest,  103. 

presentment  to  drawee  at  maturity,  103. 

presentment  to,  for  payment,  how  made,  103. 

protest  on  nopayment  by  drawee,   103. 

steps  necessary  to  consummate  liability  of,  103. 

steps  necessary  to   rentier   liable,    103. 

who  may  be,  101. 

ACCEPTOR  SUPRA  PROTEST,  see  Acceptance  for  Honor. 


724  INDEX. 

[references  are  to  pages.] 

ACCIDENT— 

as  excuse  for  nonprcsentment,  etc.,  202,  203. 

effect  of,  202,  203. 

parol  evidence  as  to,  45. 

persons  accommodated,  83,  84,  145. 

presentment  for  payment  to,  189,  190. 

revocable  until  negotiated,  83,  84. 

successive,  order  in  which  liable,   147. 

to  agent,  202,  203. 

unauthorized  diversion,  145,  146. 

when  credit  given  for  a  special  purpose,  145. 

ACCOMMODATION,  see  also  Accommodation  Pajity;  Accommodation 

Paper. 
burden  of  proof,  448,  449,  450. 

payment  by  an  accommodation  party  a  discharge,  216,  217. 
signature    to    satisfy   demand    for   additional    collateral   consideration 

for,  433. 
what  is  parol  evidence  admissable  to  show,  450. 

ACCOMMODATION     INDORSEMENT,     see     also     Accommodation; 
Accommodated   Party;   Accommodation   Paper — 
by  bank,  145  note, 
irregular  accommodation,  123,  124. 
liability   of,   145,  448. 
lunatic,  31. 
presentment  for  payment,  to,  189,  190. 

ACCOMMODATION  INDORSER— 

entitled  to  notice  of  dishonor,  587. 

liability  if  irregular  or  anomalous,  544,  545. 

negligence  in  facilitating  alterations,  633. 

remedies  against  accommodated  maker,  448,  449,  450. 

when  may  retract  indorsement,  84. 

whether   personally    liable,   83. 

ACCOMMODATION  INDORSERS— 
discharge  of  618,  619. 
notice  of  dishonor  inter  se,  603. 
notice  of  dishonor  necessary,  587. 

ACCOMMODATIVE  MAKER,  see  Accommodation  Party. 
ACCOMMODATION  PAPER,  see  also  Accommodation;  Accommoda- 
tion   Party. 

concealed  sureties,  272,  273. 

consi'deration  for,  83,  146. 

corporation  can  not  make  or  indorse,   147. 

definition  of,  83. 

discounted  at  a  different  bank,  146. 

effect  of,  S3. 

effect  of  extension  of  time,  on  parties,  146,  147. 

effect  of  payment  by  a  co-maker,  216. 

executeti  by  member  of  firm,  147. 

indorser  of,  entitled  to  notice  of  dishonor,  147. 

issued  by  corporations,  147. 


INDEX. 


725 


[references  are  to  pages.] 
ACCOMMODATION   PAPER— continued- 
issued  by  one  partner  without  consent  of  all,  39,  147. 

liabilities  and  rights  of  parties,  to,  145. 

liability  of,  83,  145,  146,  147. 

making  by  partner,  39,  147. 

matters  as  to,  433,  435. 

notice  of  accommodation  character,  effect  of,  83,  145,  146. 

nature  and  object,  83,  146. 

notes  mutually  exchanged  are  not,  84. 

notice  of,  effect  of,  83,  145. 

of  corporation,  147. 

overdue  accommodation  papers,  83,  146,  147. 

partners,  147. 

power  of  corporation  to  issue,  147. 

parties  to,  who  are,  83,  145. 

partnership  liability,  39,  147. 

release  of,  146. 

what  constitutes,  83. 

when    accommodation    paper   has    inception,    as    against    defense    of 
usury,  83. 
ACCOMMODATION   PARTY,  see  also  Accommodation;  Accommoda- 
tion Indorsement;  Accommodation  Paper — 

accommodation  maker  is  primarily  liable,  145. 

corporation  has  no  power  to  become,  147. 

defined,  145,  448. 

discharge  of,  618,  619. 

discharge  of  by  diversion  of  instrument,  146. 

knowledge  of,  no  defense,   145. 

lends  his  credit  only  for  time  specified,  146. 

liability  of,  145,  448,  451. 

may  rescind  bill  before  negotiation,  145. 

not  entitled  to  notice,  201. 

not  entitled  to  presentment,  188,  189. 

partner  indorsing  for  accommodation,  147. 

payment  by  accommodated  party  a  discharge,  145,  215,  615. 

payment  by  accommodation  party,  216,  217. 

payment  by  accommodation  acceptor  or  maker  a  discharge,  216,  217. 

ACCORD  AND  SATISFACTION,  221,    222. 
ACCRUAL  OF  ACTION,  450,  563. 
ACTION,  see  Actions  on  Negotiable  Instruments. 
ACTIONS  ON  NEGOTIABLE  INSTRUMENTS— 

acceptor  for  honor  may  sue,  295. 

agent  may  sue,  293. 

agent  may  sue  in  own  name  when,  296. 

all  parties  sued  in  one  action,  300. 

anomalous  indorser's  action  not  on  note,  299. 

assignees  may  sue,  293. 

by  executor  of  holder,  293. 

by  restrictive  indorsee,  298. 

corporation  may  sue  on  instrument  made  to  its  officer,  297. 

defined,  345,  695. 


726  INDEX. 

[references  are  to  pages.] 
ACTIONS  ON  NEGOTIABLE  INSTRUMENTS— continued— 
delivery  constitutes  transferee  proper  plaintiff,  295. 
donee  may  sue,  293. 
drawee  may  sue,  295. 
drawer  may  sue  acceptor,  295. 
effect  of  transfer  upon  pending  action,  299. 
form  of  action  governed  by  lex  fori,  227. 
heirs  or  personal  representative  may  sue,  293. 
holder  for  collection  may  sue,  when,  297. 
holder  may  elect  to  sue  one  or  all,  300. 
holder  may  sue  in  own  name,  292. 

holder   may   sue   in   own   name    and    strike   out    subsequent    indorse- 
ments, 294. 
holder  of  as  collateral  may  sue,  293. 
holder   of  legal   title  may  sue,   292. 
joint  indorsers  sued  jointly,  301. 

maker  and  guarantor  not  to  be  joined  in   suit,  300. 
maker  and  surety  may  be  joined  as  defendants,  300. 
maker  sued  in  fictitious  or  real  name,  301. 
not  more  than  one  suit  at  each  term  on  same  instrument,  301. 
on  instruments  indorsed  in  blank,  294. 
on  instruments  payable  to  bearer,  294. 
on  instruments  payable  to  public  officials,  297. 
original  payee  or  indorsee  can  maintain  suit,  294. 
original  holder  or  payee  may  sue  when,  294. 
parties  defendant,  300. 
partners  must  all  join  in  suit,  299. 
party  in  interest  may  sue,  292. 

payee  may  strike  out  his  own  and  subsequent  indorsements,  295. 
payee  may  sue,  295. 
possessor  may  sue,  294. 
public   officers    as   plaintiffs   on   instruments   made   in    representative 

capacities,  297. 
real  party  in  interest,  293. 
receivers  may  sue,  293. 

restrictive  indorsement  gives  right  to  sue,  298. 
right  to  bring,  295. 

right  to  sue  cannot  be  rebutted  except,  295. 
separate  actions  against  each  party  may  be  had,  301. 
suit  against  persons  severally  and  immediately  liable,  301. 
suit  by  holder  for  collection,  293. 
suit  by  payee  who  is  a  trustee,  296. 
suit  on  indorsement  to  fictitious  payee,  295. 
suit  upon  note  payable  to  one  of  several  makers,  299. 
suit  when  instrument  to  party  in  wrong  name,  295. 
suit  where  indorsement  is  special,  299. 
trustees  may  sue,  293. 
who  may  be  joined  as  defendants,  302. 
who  may  be  sued,  300. 
who  may  sue,  in  general,  292,  293. 
when  party  in  neither  actual  or  constructive  possession,  298. 


INDEX.  >  727 

[references  are  to  pages.] 
ACTIONS  ON  NEGOTIABLE  INSTRUMENTS— continued— 
when  prior  party  may  sue  subsequent  one,  299. 
where  instrument  to  officer  without  naming  corporation,  297. 

ADDITIONAL  PROVISIONS— 

address,  notice  as  to  correct,  601. 
not  affecting  negotiability,  56,  57,  388. 

ADMINISTRATORS,  see  also  Executors— 
as  indorser  of  note,  34. 
as  maker  of  note,  34. 
presentment  and  notice  to,  573,  596,  658. 
situs  for  purposes  of  appointing,  227  note. 

ADMISSIBILITY— 

of  contemporaneous  written  agreements,  45. 
verbal  agreements,  45. 

ADMISSIONS— 

as  to  transfer,  340. 

by  acceptance,  see  Acceptance. 

by  drawer,  see  Drawer. 

by  indorser,  see  Indorser. 

by  maker,  see  Maker. 

effect  of,  to  change  burden  of  proof,  331. 

evidence,  331. 

in  general,  331. 

of  acceptor  for  honor,  see  Acceptor. 

AFTER  DATE— 

happening  of   specified   event,   maturity  of   instrument   payable  at   a 

fixed  period,  190,  582. 
maturity  of  instrument  payable  at  a  fixed  period,  190,  582. 

AFTER  SIGHT— 

maturity  of  instrument  payable  at  fixed  period.  190,  582. 
maturity  of,  when  accepted  for  honor,  101,  102,  103,  669. 
meaning  of,  in  bills  and  notes,  52,  392. 

AGENCY— 

how  established,  35,  36,  37,  38,  416. 
how  authority  established,  37,  416. 
revocation   without  notice,  37. 

AGENT,  see  also  Principal  and  Agent. 

acquisition  by  maker  as  agent  for  another,  616. 

agency  must  be  disclosed,  36. 

as  parties  to  negotiable  instruments,  36,  37,  38. 

as  to  filling  blanks,  67,  68, 

authority  "by  procuration,"  37,  421. 

authority  to  certify  post-dated  checks,  684. 

authority  of,  how  created,  37,  38. 

authorized  in  writing  to  sign,  37. 

banks  as  collecting  agents,  120,  121. 

bills  and  notes,  authority  to  make,  36,  37,  38. 

burden  of  proof  as  to  authority,  423. 

by  agents  of  corporations,  38. 

cashier  or  fiscal  officer  as  payee  or  indorsee,  471. 


728  INDEX. 

[references  are  to  pages.] 
AGENT — continued — 
competency,  35,  36. 

creating  by  indorsement,  119,  120,  121. 
delivery  through  fraud,  175. 

disclosure  of  name  of  principal  in  body  of,  36,  Zl. 
draft  by,  on  principal,  effect,  644. 
effect  of  delivery  by,  in  violation  of  instructions,  175. 
effect  of  want  of  authority  on  principals,  liability  rights,  421,  422. 
effect  of  word  "agent"  after  name,  36. 
execution  of  instrument  by  35,  Zd,  2i7,  38,  416. 
express  authority  of,  Z7,  416. 
for  collection  when  able  to  sue,  121. 
for  prior  owner  is  subject  to  same  defenses,  523. 
form  of  agent's  indorsement,  Z6. 
form  of  appointment,  Z7. 
form  of  signature,  35. 
general  rules  as  to,  35,  36,  Z7,  38. 
illustrations  as  to  signatures,  36. 
implied  authority  of,  Z7. 
indorsee  made  agent  of  indorser,  120,  463. 
indorsee  under  restrictive  indorsements  as,  120,  463. 
indorsement  for  collection,  to,  120,  464. 
indorsement  in  representative  capacity,  see  Indorsement. 
knowledge  to  agent  is  knowledge  to  principal,  154. 
liability  of,  Z6,  147,  417.  561. 

liability  of,  on  negotiation  without  endorsement,  144,  561. 
liability  of  party  signing  as,  Z6,  37,  38,  147,  417. 
liability  of  public  officers  as,  38. 
liability  of  where  signature  unauthorized,  148,  422. 
may  draw  on  deposit,  when  authorize'd,  249. 
may  present  for  acceptance,  99. 
mere  description  not  sufficient,  Z7. 
mode  of  signature,  36,  38. 
negotiation  by,  175. 
negotiation  by,  liabilities  of,  144,  561. 
negotiating   instrument,   liable    when,    144,    561. 
notice  of  dishonor  by,  195,  196,  591,  592. 
notice  of  dishonor  given  by,  195,  196,  591,  592. 
notice  of  dishonor  to,  197,  595. 
notice  of  limited  authority,  Z7,  421. 
notice  to  as  affecting  principal,  154. 
of  a  corporation,  40,  41. 
of  undisclosed  principal,  36,  144,  417. 
one  may  be  shown  to  be,  142. 

ownership  of  paper  in  hands  of  collecting  agent,  121. 
payment  by,  see  Payment  and  Discharge. 
power  to  endorse,  Z7. 
presentment,  see  Presentment. 
presumption  as  to  authority,  38. 
principal's  name  on  margin,  36,  Z7. 
public,  negotiable  instruments  by,  38. 
representative  capacity,  how  indicated,  Z6,  Z7. 


INDEX.  729 

[references  are  to  pages.] 
AGENT — continued — 

revocation  of  agency,  38. 

rules  as  to  signature  by,  418. 

signature  by  procuration,  efifect,  36,  Zl ,  48,  421. 

signature  of  party  made  by,  36,  147. 

signing  by,  Tifi,  416. 

signing  by  own  name  alone,  36,  417. 

to  collect  and  apply,  136. 

unauthorized    indorsement   of.    148,   418,    422. 

undisclosed  principal  not  liable,  36,  144,  417. 

want  of  authority,  warranty  of  subsequent  indorser  against,  143,  555. 

when  agent  individually  bound,  Zd,  144,  417. 

when  given  by,  36. 

when  personally  liable,  Zd,  144,  417. 

whether  must  be  competent  to  make  contract,  35. 

who  indorser  agent  of,   119,   120. 

who  may  act  as,  35,  36,  Zl . 

words  added  to  signature  describing  persons  as,    Z6,  Z7,  417. 

words  indicating  representative  capacity,  36,  Z7,  417. 
AGREEMENT— 

between  indorsers,  evidence  admissible  to  show,  143,  559. 

controlling  operation,  kinds,  64. 

for   extension   of   time   of   payment,   effect   of,    on   party    secondarily 
liable,  225,  621. 

to  renew,  65. 

ALIEN  ENEMIES— 

as  parties  to  commercial  paper,  ZZ. 

contract,  void,  ZZ. 

in  times  of  peace,  ZZ. 

in  times  of  war,  ZZ. 

paper  executed  by,  during  hostilities,  ZZ. 

transfers  by,  across  line  of  hostilities,  ZZ. 

who  are,  ZZ. 

ALLONGE— 
defined,  110. 
indorsement  on,  110. 

indorsement  on  paper  attached  to  instrument,  110. 
nature  and  use,  110. 

ALTERATION— 

adding  name  of  witness,  177. 

addition  of  accommodating  party,  636,  637. 

addition  of  indorsee's  residence,  637. 

addition  of,  or  change  in,   words  of  negotiability,  223,  637. 

addition  of  place  of  payment,  223,  6Z'7. 

addition  of  revenue  stamp,  171,  637. 

affecting  negotiability,  223,  631. 

amount,  176. 

apparent,  efifect  of,  6ZZ,  634. 

as  a  defense,  176,  631. 

as  to  interest,  635,  636. 

authority  and  consent  of  parties,  176.  631. 


730  INDEX. 

[references  are  to  pages.] 
ALTERATION— continued- 
bill  in  equity  for  relief  from,  177. 
blanks,  when  may  be  filled,  67,  68,  403,  404. 
burden  of  proof,  631,  632,  633. 
by  agreement  of  parties,  176,  631. 
by  consent  of  prior  parties,  176,631. 
by  consent,   176,  631. 
by  inserting  legal  rate  of  interest,  403. 
change  in  consideration,  177. 
change  in  number  or  relation  of  parties,  176,  636. 
change  of  figures,  236. 

changing  amount  of  principal  or  interest,  176,  636. 
changing  date,     and  time  of  payment,  176,  636. 
changing  medium  of  payment,  176,  637. 

changing  personality,  number,  or  relations  of  the  parties,  176. 
changing  place   of  payment,   176,   636. 
tietaching  a  memorandum,  178. 
detaching  of  note  from  contract,  633. 
discharge  of  instrument,  223,  631. 
effect  of,  178,  223.  631. 
efifect  of  a  material,  177,  223,  631. 
effect  on  original  debt,  632,  633. 
filling  in  blank  space,  178,  637. 
fraudulent,   169. 
immaterial,  177,   178,  637. 

immaterial  alterations,  illustrations,  177,  178,  637. 
indorsement  of  payment,  631. 
in  general,  176,  631,  634,  636. 
in  medium  of  payment,  176,  637. 
innocent,  177,  178,  637. 
innocent,  effect,  177,  178,  631,  636. 
insertion  of  renewal  clause,  176,  631,  636. 
interest,  176,  631. 
made  by  stranger,  177. 
jnaterial,  examples  of,  176,  631,  636. 
material,  what  are,  176.  631,  636. 
material,  what  constitutes,  176,  177,  631,  636. 
medium  of  payment,  176,  637. 
negligence  facilitating,  178. 
not,  unless  rights  are  affected,  178,  223. 
of  amount,  176,  636. 
of  check,  241,  242. 
of  date,  176,  636. 

of  effect  of  instrument,  176,  631,  636. 
of  instrument  written  in  pencil,  178,  631,  636. 
of  overdue  instrument,  176,  631,  636. 
of  parties  to  instrument,  176,  631,  636. 
of  place  of  pa3'ment,  176,  631,  636. 
other  changes,  176,  636. 
pleading,  632.  633,  634. 
prejudicial  to  holder,  632,  633,  634, 
ratification  what  amounts  to,  223, 


INDEX. 


731 


[references  are  to  pages.] 
ALTERATION— continued- 
rights  of  bona  fide  holder  of  altered  instrument,  177,  631. 
rights  of  holder  in  due  course,  176,  631. 
through  negligence  of  maker,  178. 
what  amounts  to  a  material,   176,   177,  631,  636. 
where  paper  payable  to  order  is  made  payable  to  holder,  637. 
when  material,  176. 
when  material,  but  innocently  made,  effect  of,  177,  178,  631,  636. 

ALTERNATIVE  PARTIES,  61,  643. 

AMBIGUOUS  INSTRUMENT,  see  Ambiguity. 
construction  of,  413. 
rules  of  construction,  413. 
where  two  or  more  sign  in  the  singular,  413. 

AMBIGUITY— 

as  to  signature,  419. 

as  to  whether  instrument  is  bill  or  note,  338,  413. 

as  to  writing  and  typewriting,  414. 

evidence  to  explain,  45,  338. 

in  instrument,  45,  413. 

of  negotiable  instruments,  rules  to  govern  option  of  holder  to  treat 

as  note  or  bill,  45,  338,  413. 
parol  evidence  to  explain  latent,  45. 

AMOUNT,  see  also  Certain  As  to  Amount. 
alteration  of,  176,  636. 
abbreviations,  52,  660. 
blanks  for,  52,  403. 
by  installments,  53,  54. 
certainty,  52,  376. 
character,  52. 

discrepancy  between  words  and  figures,  52. 
effect  of  attorney's  fees  on,  53,  54,  Zll . 
effect  of  words  "with  exchange,"  52,  54,  Z']!. 

effect  of  words  "with   current   exchange   on   another   place,"   52,   Zll. 
interest  added,  53,  54,  Zll . 

of  recovery  when  less  than  full  value  paid,  153,  442. 
to  be  paid  must  be  certain,  52,  376. 
uncertainty  as  to,  370,  Zll . 
with  costs  of  collection  added,  54.  ZT] . 
written   in  margin,   52. 

AMOUNT  OF  RECOVERY,  153,  442. 

ANNE,  STATUTE  OF,  see  Statutue  of  Anne. 

ANOMALOUS  INDORSEMENT,  see  also  Irregular  Indorsement. 

in  general,  109,  124,  137,  548. 

parol  evidence  as  to,  125,  549. 
ANTECEDENT  DEBT— constitutes  value,  12,  IZ,  432. 

as  a  consideration,  72,  IZ,  4Z2. 

is  valuable  consideration,  72,  7Z,  432. 

whether  value  if  worthless,  72,  7Z. 
ANTECEDENT  PARTIES— 

time  allowed  to  give  notice  of  dishonor  to,  199,  603. 


732  INDEX. 

[references  are  to  pages.] 
ANTECEDENT  PROMISE,  see  also  Promissory  Note  and  Purchase 
FOR  Value  Without  Notice. 
to  accept  bill  of  exchange,  90,  94,  650. 
■whether  value,  72,  11,  432. 

ANTE-DATED— 

ante-dated,  if  for  illegal  purpose,  47.  401. 

instrument  not  valid  because,  47,  401. 

instrument  title  acquired  on  delivery,  47,  401. 

provisions  as  to,  47,  401. 
ANTE-DATING  INSTRUMENT,  46,  47,  401. 
APPENDIX  A,  707,  708,  709,  710,  711,  712,  713. 
APPENDIX  B,  714,  715,  716,  717,  718. 
APPLICATION  OF  PAYMENTS- 

rights  of  parties  as  to,  224,  225,  626,  627. 
APPRAISEMENT  LAWS,  3. 
ARGUMENT,  352. 

ASSIGNABILITY— 

distinguished  from  negotiability,  18,  19. 
notice  necessary,  19. 
rules  as  to,  19. 
ASSIGNEE— 

right  of,  134. 
ASSIGNMENT— 

action  by  assignee,  134. 

as  indorsement  without  lecourse,  467. 

assignability  distinguished  from  negotiability,  18,  19,  131. 

assignee  takes  subject  to  all  equities,  131,  132. 

bill  of  exchange  not  an  assignment  of  funds,  87. 

by  corporation,  29,  421. 

by  corporation  or  infant,  29,  421. 

by  one  joint  payee  to  another,  112,  470. 

check  does  not  constitute,  248,  687. 

check  is  not,  248,  687. 

equitable,  109,  115,  130. 

effect,  18,  19,  131,  132. 

how  accomplished,  132,  133. 

in  general,  131. 

indorsement  by,  131,  132. 

indorsement  without  recourse  equal  to  an,  134,  467. 

liability  of  assignor,  133,  137. 

non-negotiable  instruments,  19,  131. 

notice  of  assignment,  19. 

notice  to  debtor,  19. 

of  commercial  paper,  in  general,  19,  131. 

of  funds,  bill  is  not,  86. 

of  guaranties,  133. 

of  non-negotiable  instruments,   131. 

on  separate  instrument,  not  an  indorsement,  132. 

of  mortgage,  effect  on  note,  132, 

oral,  133. 


INDEX. 


733 


[references  are  to  pages.] 
ASSIGNMENT— continued- 
right  of  assignee  to  sue,  19,  134. 

rights  of  parties,  134. 

subject  to  equities  between  prior  parties,  134. 

transfer  without  indorsement,  18,  19,  131. 

what  transferred  by,  131,  132. 

whether  writing  an  indorsement  or  assignment,  131. 

words  of,  as  indorsement,  459. 
ASSIGNMENT  FOR  CREDITORS,  598,  658. 

ASSIGNOR— 

differs  from  indorser,  133,  134. 

of  instrument,  liability  of,  133,  134. 

warrants  genuineness  of  signatures,  133,  134. 

warrants  his  title  to  instrument,  133,  134. 
ASSUMED  NAME— person  signing  in,  48,  415. 

liability  under,  48,  415. 

signature  by,  48,  415. 

AT  SIGHT— 

means  payable  on  demand,  52,  392. 

ATTACHMENT— 

transfer  by,   135,  136. 

ATTORNEY'S  FEES— 
amount  of,  53,  54,  Zll. 
conflicting  authority,  53,  711,  712,  713. 
effect  on  negotiability,  of  stipulation  to  pay,  53. 
indorsers  liability,  211,  378. 
endorsers  right  to  recover,  Zll ,  378. 
in  general,  3,  Zll . 
parol  evidence  as  to,  334. 
proof  of  in  general,  334. 

provision  for  does  not  render  sum  uncertain,  53,  54,  Zll . 
stipulation  does  not  effect  negotiability,  53,  54,  'm . 
stipulation  in  bill  or  note  for  payment  of,  effect,  53,  54,  111,  378. 
validity  of  provision  for,  53,  54,  Zll ,  378. 
when  no  suit  is  brought,  Zll ,  378. 
whether   agreement    renders    note   non-negotiable,    laws   tabulated   by 

states,  711,  712,  713. 
whether  enforcible,  laws  tabulated  by  states,  711,  712,  713. 

AUTHORITY— 
how  shown,  416. 

of  one  partner  to  bind  firm,  38,  39. 
signature  affixed  without,  39,  49,  422,  423. 
to  sign,  to  be  in  in  writing  when.  Zl. 

B 

BAD  FAITH,  154,  340,  341. 

BANK.  695. 

after  Certification,  239. 

allowed  reasonable  time  to  make  credit,  250. 


734  INDEX. 

[references  are  to  pages.] 
BAN  K— continued— < 

as  to  giving  notice  by,  588. 

as  to  knowledge  of  signature,  241. 

authority  to  pay,  when  payable  at,  66. 

bill  or  note  payable  at,  583. 

cashier  as  payee  or  indorsee,  112,  113,  471, 

certificate  of  deposit  by,  260. 

contract  with  depositor,  249. 

credit  by,  in  books,  250. 

custom  as  to  demand  note,  187  note. 

defined,  345,  695. 

depositor's  right  to  draw  on  bank,  249,  250. 

draft  by,  264. 

duty  of  care  owed  it  by  depositor,  633. 

duty  of  collecting  bank  as  to  notices  of  dishonor,  209. 

hours  for  making  presentment,  192. 

indorsement  to,  for  collection,   121. 

indorsement  to,  for  deposit,  120,  121. 

instrument  payable  at,  583. 

issue  bills  of  credit,  265. 

knowledge  of  the  instrument,  242. 

liable  after  acceptance  of  check,  248,  687. 

liable  in  tort,  250. 

liable  on  certified  check,  248,  687. 

liable  only  to  depositor  for  failure  to  honor  check,  250. 

liability  as  to  forged  instruments,  423. 

liability  on  failure  to  honor  check,  250. 

liability  on  certified  check,  248,  687. 

liability  on  payment  of  forged  check,  241,  242,  244. 

liability  for  notary's  negligence,  210  note. 

liability  to  agent  of  undisclosetd  principal,  250. 

may  give  notice,  196. 

not  liable  on  check  unless  accepted  or  certified,  248,  687. 

not  required  to  make  part  payment  of  check,  250. 

note  payable  at,  effect  if  no  funds,  192. 

notice  by,  before  maturity,   191. 

payable  at,  66,  191. 

paying  altered  check,  241,  242,  244. 

paying  stale  check,  243. 

presentment  for  payment  at,  237,  572. 

refusing  to  pay  certified  check,  239. 

suit  by  on  collection  paper,  121. 

when  instrument  is  made  payable  at,  583. 

what  will  be  considered  a  bank,  345,  695. 

BANK  BILLS,  see  Bank  Note. 

BANK  CHECKS,  see  Check. 

BANK  DRAFT,  264. 

BANK  MESSENGER,  350. 

BANK  NOTE— 

description  and  characteristics  of,  265,  266. 
how  differs  from  treasury  note,  265,  266. 


INDEX. 


735 


[references  are  to  pages.] 
BANK  NOTE— continued- 
how  secured,  265,  266. 
meaning  of,  265,  266. 
presumption  as  to  possession,  265,  266. 
rights  of  bona  fide  holder,  265,  266. 
stolen,  265,  266. 

BANKER'S  LIEN,  153. 

on  instrument,  constitutes  bank  holder  for  value,  153. 

BANKRUPT— 
as  payee,   33. 

discharged    from    liability    on    instrument,    224. 
drawee,  presentment  for  acceptance  to,  101,  658,  659. 
notice  of  dishonor  to,  198,  598. 
notice  of  dishonor  in  case  of,  198,  598. 
of  party  to  be  notified  of  dishonor,  notice  to  whom,  198,  598. 

BANKRUPTCY— 

discharged  from  liability  on   instrument,  224. 

effect  on  presentment  and  notice,  101,  198,  598,  658,  659. 

how  transfer  when,  33. 

indorsement  after,  33. 

of  holder,  transfer  by  operation  of  law,  130. 

of  primary  party,  effect  on  secondary  parties,  623. 

paper  sold  before,  33. 

BEARER— 

bill  or  note  payable  to,  SO,  395. 

defined,  50,  395. 

indorsement  in  blank  makes  instrument  payable  to,  51,  128,  395,  462. 

instrument  payable  to  person  named  or  bearer,   51,  395. 

instrument  payable  to  cash    is   payable   to,    51,   395,   396. 

instrument  payable  to  sundries  is  payable,  51,  395,  396. 

instrument  payable  to  estate,  51. 

instrument  payable  to,  transferable  by   delivery,   51,   128,  395,  462. 

instrument  when  last  indorsement  is  in  blank,  51,  395. 

payable  to,  negotiation  by  delivery,   128,  462. 

payable  to,  no   indorsement,   128,  462. 

payable  to  order  of  fictitious  person,  51,  395. 

special  indorsement  on  instrument  made  payable  to,   128,  462. 

to  payee  who  is  not  a  person,  51,  395. 

when  is  instrument  made  payable  to,  51,  395. 

words  indicating,  51,  395. 

BILL,  see  Bills  of  Exchange;   Complaint. 

BILL  OF  LADING— 
assignment  of,  259. 
attached  to  bill  of  exchange,  260. 
contents,  258. 
defined,  258,  427. 
draft  attached  to,  260. 
how  differs  from  bill  or  note,  259. 
how  used,  258,  259. 
lost,  259. 


736  INDEX. 

[references   are  to  PAGES.l 

BILL  OF  LADING— continued- 
right  to  stop  goods  in  transitu,  259. 
sets  of,  258. 

when  issued  in  sets,  258. 
whether  negotiable,  259. 

BILL  OR  NOTE— 

doubt  as  to  whether  instrument  is,  43,  676,  680, 
meaning  of  term,  43,  640,  676,  680. 

BILLS  IN  A  SET— 

acceptance  by  drawer,  70. 

acceptance  of,  70,  674. 

acceptor  of,  70. 

acceptor  paying  one  part,  70,  673. 

constitute  one  bill,  70,  673. 

copies  distinguished,  70. 

different  parts  negotiated  rights  of  holder,  70,  673. 

discharge,  70,  674. 

effect  when  one  accepted  and  paid,  71,  673,  674. 

form,  69. 

liability  of  drawee  for  accepting  more  than  one  copy,  70,  674. 

liability  of  indorsers,  70,  673. 

object  of,  70. 

payment  of  one  part,  70,  674. 

payment  of,  without  surrender  of  bill,  70,  674. 

rights  of  different  holders,  70,  674. 

when  drawee  accepts  more  than  one  part,  70,  674. 

when  holder  indorses  parts  to  different  persons,  70,  673, 

when  parts  held  by  different  persons,  70,  673. 

when  treated  as  one  bill,  70,  673. 

where  acceptance  written,  70,  674. 

which  copy  negotiated,  70. 

BILLS  OF  CREDIT,  see  Letters  of  Credit. 

BILLS  OF  EXCHANGE— 

acceptance  defined,  85,  86,  87,  646,  695. 

may  be  required  to  be  written  on,  87,  649. 

to  pay  at  a  particular  place,  92. 

while  incomplete,  overdue  or  dishonored,  88,  91,  652. 

on  paper  other  than  the  bill  itself,  89,  93,  649. 
accepted  for  honor,  protest  or  non-payment,  100,  103,  667. 
acceptor,  90. 

accommodation  parties,  see  "Accommodation." 
ambiguous  instrument  treated  as  bill  or  note,  413. 
antecedent  promise  to  accept,  90,  94,  650. 
"bill"  means  bill  of  exchange,  43,  640,  676,  680, 
damages  for  non-payment,  250. 
defined,  43,  91,  640. 

destruction  or  retention  by  drawee,  96,  652. 
development  of  uses  of,  11,  12,  15. 
difference  between,  and  promissory  notes,  11. 
difference  between,  and  checks,  234,  680. 
difference  between  foreign  and  inland,  643. 


INDEX. 


737 


[references  are  to  pages.] 
BILLS   OF  EXCHANGE— continued- 
drawee,  11,  85. 
drawer,  11,  85. 

duty  of  holder  on  non-acceptance,  186,  661. 
earliest  form  of  negotiable  instrument,  11,  12,  15. 
effect  of  non-presentment  for  acceptance  of,  97,  98,  186,  187,  657,  660. 
effect  of  qualified  acceptance  of,  90. 
essentials  of,  44. 
first  use  of,  15. 
foreign  defined,  44,  643. 
form  of,  11,  87. 
general  acceptance  of,  88,  92. 
general  characteristics,  11. 
how  accepted,  88.  90,  93,  649. 
how  drawee  becomes  acceptor,  11. 
indorsed  in  blank,  to  whom  payable,   51,  217,  395. 
inland,  defined,  44,  643. 

insertion   of  referee  in  case  of  need,  61,  644. 
is  not  an  assignment,  86. 
kinds  of,  44,  ^90,  92. 
laws  codified,  15. 
may  be  addressed  to  two  or  more  drawees — but  not  to  two  or  more 

in  the  alternative,  60,  643. 
not  an  assignment  of  funds,  86,  642. 
origin  and  history  of,  15. 
origin  in  England,  15. 
origin  under  law  merchant,  15. 
payee,  11. 

parties  to,  11,  60,  643. 
presentment  for  acceptance,  see  also  Acceptance;  Presentment. 

how  made.  98.  658. 

on  part   holiday,   99,    186,   658,   659. 

on  Saturday,  99,   186.  658,  659. 

to  bankrupt  or  insolvent  drawee,  98,  658. 

to  partners,  98. 

when  drawee  dead,  98,  658. 

when  to  be  made,  97,  185,  657. 

where  time  is  insufficient,  99,  658,  659. 
qualified  acceptance  of,  90,  92. 
referee  in  case  of  neetl,  61,  644. 
rights  of  holder  on  non-acceptance,  103.  669. 
right  of  holder  to  refuse  qualified  acceptance,  91. 
three  parties,   11. 

time  allowed  tirawee  to  accept,  96,  651. 
to  whom  may  be  addressed,  61,  644. 
trade  transactions  in  origin,  15. 
use  by  merchants  of  Florence  and  Venice,  15. 
use  by  English  merchant,  15. 

when  bill  may  be  treated  as  promissory  note,  61,  644. 
when  dishonored  by  non-acceptance,   186,  661. 
when  drawer  and  drawee  are  same  person,  61,  644. 
when  may  be  presented  for  acceptance,  97.  185,  657. 


738  INDEX. 

[references  are  to  pages.] 
BILLS   OF  EXCHANGE— continued— 

when  payable  to  bearer,  holder  entitled  to  receive  payment,  217,  218. 
when  presentment  for  acceptance  is  excused,   100,  660. 
where  drawee  has   not   capacity  to  contract,  61,  644. 
where  drawee  is   fictitious,  61,   644. 

BLANK— 

alterations,  178,  637. 

agent  to  fill,  67,  68,  403. 

as  to  rate  of  interest,  403,  414. 

as  to  payee's  name,  236. 

authority  to  fill  in,  67,  68,  403,  404,  405. 

before — "after  date,"  404. 

burden  of  proof  on  authority  to  fill,  403,  404. 

delivery  in,  405. 

filled  in  by  holder,  403,  404. 

filled  without   authority,   67,  403,  407. 

filling  in  amount,  68,  403,   404. 

filling  in  by  cashier,  405. 

for  name  of  payee,  68,  403,  404,  405. 

for  name  of  indorsee  and  drawer,  68,  403,  404,  405. 

indorsement  in,  117. 

indorsement,  when  may  be   negotiated   by,    117,   462. 

insertion  of  wrong  date,  47. 

in  place  of  payment,  67,  403,  404. 

in  provision  for  interest,  67,  403,  404. 

in  provision  for  attorney's  fees,  67,  403,  404. 

in  provision  for  extension  of  time,  67,  403,  404. 

in  date,  67,  403,  404. 

in  date  of  acceptance,  67,  403,  404. 

in  time  of  payment,  dl ,  403,  404. 

inserting  attorney's  fees,  403. 

knowledge  of,  by  purchaser,  67,  403,  404. 

liability  to  holder  in  due  course,  68,  403,  404. 

presumption  as  to  authority,  403. 

right  to  fill  in,  405. 

rights  of  bona  fide  holder,  68,  403,  404. 

time  for  filling,  67,  403. 

when  may  be  filled,  68.  403. 

when  improperly  filled,  67,  -^03,  404. 

whether  a  new  delivery  necessary  when   filled  by  another,  67. 

whether  payee  is  protected  as  holder  in  due  course,  67. 
BLANK  INDORSEMENT— 

converted   into   special,    117,   463,   469. 

effect,  when  afterward  indorsed  in  full,  117,  463. 

how  converted  into  special,  117,  463,  469. 

in  general,  117. 

negotiable  by  delivery,   117. 

BLANK  SPACE— 

effect  of  filling  in.  67,  177.  178,  403. 
fraud  in  filling,  67,  177,  178,  403. 


INDEX. 

[references  are  to  pages.] 
BOARD  OF  DIRECTORS— 

power  to  issue  negotiable  paper,  40. 
BOARD  OF  TRADE  NOTES— 164. 

BOHEMIAN  OATS— Notes 

exorbitant  price  for,  181. 

sale  of  notes  for,  when  illegal,  181. 
BONA  FIDE  HOLDER,  see  also  Holder  in  Due  Course— 

can  recover  on  accommodation  paper  issued  by  corporation,  147. 

cannot  recover  when  consideration  void  by  statute,  81. 

consideration,   w-ant   of,   no  defense  against,  81,  82. 

defenses  against,   ISO. 

defenses  available  against,   151. 

elements  of,   149,  484. 

equities,  23,   ISO. 

explained,   22. 

good   faith  defined,   150. 

illegal  consideration  not  a  defense  against,  180,  181. 

instrument  declared  void  by  law,   180,   181. 

intoxication  as  a  defense  against,   163n. 

lien  on  instrument  makes  one  a,   153. 

must  acquire  instrument  for  valuable  consideration,  149. 

must  be  holder  for   value,    150. 

must  be  holder  without  notice,  ISO,  153. 

must  be  holder  in   due   course,   ISO. 

partial  failure  of  consideration  not  a  defense  against,  180,  181. 

rights  of,  149. 

total  failure  of  consideration  not  a  defense  against,   180,  181. 

want  of  consideration  not  a  defense  against,  179,  180,  181. 

when  protected  against  material  alteration,  176,  177,  178. 

when  statute   declares   instrument  voiti  cannot   recover,    180,    181. 

where  there  is  want  or  failure  of  consideration,  179,  180,  181. 

who  is,  22,  150. 

BONDS,  see  also  Coupon  Bonds  ;  Municipal  Bonds — 
and   coupons,   characteristics,   negotiability,   262,    'il2. 
how  made  non-negotiable,  263. 
indorsement,  263. 
negotiable,  262,  263. 

negotiable,  how  made  non-negotiable,  262,  263. 
non-negotiable,  262,  263. 
public  or  corporate,  262,  263. 
when  negotiable,  262,  263. 

BRANCH  POSTOFFICE— 

effect  of  deposit  of  notice  of  dishonor  in,  200,  601,  602. 

BREACH  OF  FAITH— 

negotiation  in,  150,  501,  502. 

BROKER— 

liability  of,  on  negotiation,  without  indorsement,   144,   561,   562. 

BURDEN  OF  PROOF— 

accommodation,  448,  449,  450. 
absence  of  consideration,  444,  445. 


739 


740  INDEX. 

[references  are  to  pages.] 
BURDEN  OF  PROOF^ontinued— 

alteration,  631,  632,  633. 

as  to  consideration,  11 ,  527,  528. 

as  to  filling  blanks,  404. 

as  to  fraud  and  duress,  342,  527,  528,  531. 

as  to  holding  in  due  course  when  title  of  transferor  defective,  342,  342, 
527,  528. 

as  to  mistake,  342,  527,  528. 

as  to  payment,    343. 

as  to  presentment,  344. 

as  to  promptness  in  presentment  for  payment  or  excuse  for  delay,  344. 

as  to  transfer,  340. 

as  to  usury,  343.     . 

as  to  validity  of  contracts  of  married  women,  32. 

authority  to  fill  blanks,  403,  404. 

changed  by  evidence,  329. 

conditional  delivery,  63,  339. 

faifure  of  consideration,  444,  445. 

fraud,  342,  527,  528. 

in  general,  330. 

is  on  person  alleging  payment,  343. 

material  allegations  to  be  proved  by  plaintiff,  330. 

of  diligence,  as  excuse   for  non-presentment,  etc.,  344. 

of  showing  payment,  224. 

on  party  alleging  unintentional  cancellation,  221,  630. 

payment,  343. 

presentment,  notice  and  waiver,  343,  344. 

release,  343. 

to  show  mistake  in  cancellation,  221,  630. 

unintentional  cancellation,  221,  630. 

where  title  of  prior  party  was  defective,  527,  528,  529,  530. 

whether  it  means  going  forward  with  evidence  or  establishing  by  pre- 
ponderance of  evidence,  330. 
BURNING  OF  INSTRUMENT  OR  PARTS— 630. 

BUSINESS— 

bona  fide  holder  must  acquire  paper  in  usual  course  of,   149. 
presentment  at  place  of,  187,  570. 


CALAMITY— 

as  excuse   for  non-presentment,  etc.,   192,  576. 

CALENDAR  MONTH,  see  Month. 

CALIFORNIA  CIVIL  CODE,  15. 

CANADA  CURRENCY,  60. 

CANADA  MONEY,  60— 

instruments  payable  in,  60. 

CANCELLATION— 

burden  of  proof,  221,  630. 
consideration  unnecessary,   220. 
discharges  instrument  214,  220,  615. 


INDEX.  741 

[references  are  to  pages.] 
CANCELLATION— continued- 
discharge  of  indorsement  by,  214,  220,  615. 
effect  of,  220,  221,  615. 
how  accomplished,  220,  221,  615. 
intentional,  220,  221,  615. 
must  be  intentional,  220,  221,  615,  630. 
of  negotiable  instruments,  214,  215,  220,  221,  615. 
of  signature  of  person  secondarily  liable,  225,  621. 
unintentional,  221.  615,  630. 
unintentional,  effect  of,  221,  615,  630. 
when  payee  tears  up  intentionally,  217. 
without   authority,   221,   615,  630. 

CANCELLED  CHECKS,  244. 
CAPACITY— 

acceptance  admits  capacity  of  drawer  to  draw  bill,  141. 

admission  of,  139,  140,  141. 

in  general,  27. 

incapacity  as  a  defense,  160. 

lack  of  mental  capacity,  30,  163. 

law  governing,  229. 

of  administrators,  34. 

of  agents,  35. 

of  committees,  33. 

of  drunkards  and   spendthrifts,  31,   163. 

of  executors,  34. 

of  guardians,  35. 

of  infant,  disaffirmance  by.  29,  160. 

of  infant,  indorsement,  29,  160. 

of  infants,  28,   160. 

of  infants,  on  instrument  given  for  necessaries,  28,  160,  161. 

of  infants,  ratification,  28. 

of  lunatics,   30,    163. 

of  married  women,  32,  162. 

of  municipal  corporations,  41,  162. 

of  partners,  38. 

of  payee  to  indorse  warranted  by  drawer,  acceptor,  and  maker,  139. 
140,  141. 

of  private  corporations,  40,  162. 

of  public  corporations,  41,  162. 

of  public  officers,  42. 

of  spendthrifts,  32. 

of  trustees,  35. 

parties  not  incapacitated,  33. 

rules  governing  contracts  apply,  27. 

to  indorse,  139,  140,  141. 

warranty  of  where  negotiation  by  delivery,   143,  555, 

warranty  of  by  indorser,  142,  143,  555. 

CARBON  PAPER— 
forgery  by,  424. 

CASE  OF  NEED,  61,  644, 


742  INDEX. 

[references  are  to  pages.] 
CASH— 

checks  payable  to,  396. 
instrument  payable  to,  396. 

CASHIER— 

as  payee  or  indorser,  40,  471. 

authority  of  to  certify  checks,  240. 

authority  to  extend  time  of  payment,  40. 

authority  to  issue  negotiable  paper,  40. 

tlrawn  payable  to,  40. 

indorsed  payable  to,  40. 

or  other  fiscal  officer,  instrument  drawn  or  indorsed  to,  471. 

presumed  to  be  at  bank,  344. 

when  so  indorsed,  to  whom  payable,  40. 

CASHIER'S  CHECK,  236,  243. 

CAUSE  OF  ACTION— 
cannot  be  split  up,  115. 

CERTAIN  AS  TO  AMOUNT,  see  also  Amount— 
effect  of  words  "with   exchange,"  52,   54,   ZIT. 
effect  of  words  "attorney's  fees,"  53,  54,  Zll . 

effect  of  words  "with  current  exchange  on  another  place,"  52,  Zll. 
failure  to  pay  an  installment,  54,  Zll. 
interest  added,  53,  54,  Zll . 
principal  and  interest,  370. 

CERTAIN  AS  TO  PLACE  OF  PAYMENT— 

purpose  of,  55,  391. 

whether  or  not  necessary,  56,  391. 

CERTAIN  AS  TO  TIME— 

effect  of  payable  "on  or  before,"  55,  385. 

illustrations,  where  uncertain,  54. 

indication  of   fund   for  reimbursement,  55,  381. 

must  be  payable  without  contlitions,  54,  385. 

must  not  be  payable  on  contingency,  54,  385. 

payable  after  death,  54. 

payable  at  a  determinable   future  time,  54,  385. 

payable  out  of  a  particulai    fund,  55,  381,  385. 

wlien  considered  so  payable,  54,  381,  385. 

CERTAINTY— 

as  to  amount  to  be  paid,  52,  54,  ill. 

as  to  engagement  to  pay,  49,  51. 

as  to  fact  of  payment,  51. 

as  to  medium  of  payment,  57,  381. 

of  sum  payable  not  affected  by  certain  provisions,  55,  57,  381,  385. 

where  event  is  certain   to  happen,  54,  385. 

CERTIFICATE— 

of  notary  as  evidence,  208. 

CERTIFICATE  OF  DEPOSIT— 
conditional  payment,  261. 
definition  of,  260. 
in  general,  676,  678. 


INDEX. 


743 


[references  are  to  pages.] 
CERTIFICATE  OF   DEPOSIT— continued- 
issue  of,  as  value,  485. 
meaning  of,  260,  400,  Z12. 
negotiability,  260,  370,  371. 

payable  on  demand  must  be  presented  within  reasonable  time,  260. 
when  a  note  in  efifect,  260. 

when  must  be  presented   for  payment  to   charge   indorsers,  260. 
whether  a  check,  680. 
whether  or  not  payment,  261. 

CERTIFICATE  OF  PROTEST— see  Protest. 

seal,  204. 
CERTIFICATE  OF  STOCK— 

defined,  261. 

description  and  nature,  261. 

found,  261. 

how  signed,  261. 

how  transferred,  261. 

meaning  of,  261. 

not  stock,  261. 

stolen,  261.  * 

title  of  purchaser,  261. 

CERTIFICATION  OF  CHECK— 
advantages  of,  238. 
by  mistake,  689. 
by  telegram,  240. 

efifect  of,  when  procured  by  holder,  239,  686. 
efifect  of   retention,   651,  652. 
equivalent  to  acceptance,  239,  684,  687. 
form  of,  238. 

holder's  right  to  sue  bank,  248. 
in  general,  238. 
liability  of  bank,  239,  684. 
not  by  parol,  240. 
not  by  telephone,  240. 
raised,  240. 

rights  of  bank  if  raised  before  certification,  240. 
set-ofif,  239. 

where  drawer  has  check  certified,  239. 
where  holder  has  check  certified,  239,  686. 
who  may  make,  240. 

CHARGE,  352. 
CHATTEL  NOTE,  383. 

CHECK— 

acceptance  of,  if  stated  to  be  in  full  payment,  686. 

advantage  of  certification,  238. 

amount  must  be  certain,  236. 

ante-dated,  236. 

as  payment,  235,  246. 


744  INDEX. 

[references  are  to  pages.] 

CHECK — continued — 
as  payment,  246. 

in  compromise,  246. 
memorandum  on,  246. 
when  full  payment,  246. 
bank  cashier's  failure  to  present,  566. 
bank's  liability  on  failure  to  honor,  250. 
bank's  refusal  to  pay  certified  check,  239. 
by  corporation,  249. 
by  partnership,  249. 
by  trustees,  249. 
cancelled,  244,  see  Paid  also, 
cannot  be  certified  before  payable,  240. 
cashier's,  243. 
defined,  243. 

payable  on  demand.  243. 
certification  of,  238,  684. 
certification  of,  effect,  238,  684. 
contract  to  pay  at  a  future  day,  235. 
crossed,  244. 

defined,  244. 
direction  of,  244. 
negotiability  not  destroyed,  244. 
object,  244. 
defined,  234,  680. 
delivered  to  an  imposter,  244. 
depositor's  right  to  draw  on  bank,  249. 
distinguished  from  bill  of  exchange,  234. 
drawee,  11. 
drawer  or  maker,  11. 
drawer  when  discharged,  239,  686. 
drawn  by  partnership,  249. 
duty  of  depositor  as  to  forged  check,  241, 
effect  of  death  of  drawer,  688. 
effect  of  no  funds  in  bank,  237,  250. 
effect  of  retention  by  bank,  85,  652. 
effect  of  payment  after   countermand,    246,  247. 
effect  of  ordering  payment  subsequent  to  date,  234,  235. 
failure  of  bank  cashier  to  present,  566. 
figures  changed,  236. 
forgery  and  alteration  of,  241. 
form  of,  11,  236. 
fraudulent  check,  244. 

delivered  to  imposter,  244. 
issuance  when  criminal,  244. 
liability  of  bank  for  paying,  244. 
when  drawer  must  suffer  loss,  244. 
general  characteristics,    11,  236. 
holder  of  certified  may  sue  bank,  248. 
holder  of  forged,  242. 
is  not  assignment,  249. 
maker  or  drawer,  11. 


INDEX.  745 

[references  are  to  pages.] 

CHECK— continued- 
may  be  transferred  by  indorsement,  235. 
memorandum  in  general,  242. 
need  not  be  presented  for  acceptance,  234. 
not  an  assignment,  248,  687. 
not  an  assignment  of  drawer's  funds,  248,  687. 
oral  representation   as  to   funds,  240. 
overdraft   payments,  250. 
paid  or  cancelled  check,  244. 

bank  has  right  to  keep  until  account  balanced,  244. 
bank  holds  as  agent,  244. 
presumed  a  receipt,  244. 
receipt  for  tlebt,  244. 
payable  on  demand,  235,  243. 
payable  only  in  money,  236. 
payee,  11. 

payee  collecting  after  death  of  drawer,  238. 
payment  of  forged,  241. 

payment  by  charging  drawer's  account,  651,  652. 
payment  by  bank  after  death  of  drawer,  238. 
past-dated,  nature,  236. 

person  to  whom  payable  must  be  certain,  236. 
presentment,  protest  and  notice  of  dishonor,  237. 
presumption  as  to  payment,  330. 
reasonable  time  as  to,  237. 
reasonable  time  of  presentment,  566,  682. 
right  to  stop  payment  of  note,  246. 
stale,  in  general,  243. 

stolen  checks  or  negotiable  instruments,  245. 
blank  check,  245. 
holder's  burden,  246. 
no  .title  acquired,  245. 

when  bona  fide  holder  for  value  without  notice  may  retain,  245. 
stopping  payment  of,  246. 
before   certification,  247. 
form  of,  in  writing,  247. 
may  be  oral,  246. 
must  be  before  payment,  246. 
notice  of  dishonor  not  necessary  after,  247. 
sufficient  allegation  ot,  247. 
teller's  or  cashier,  243. 
time  must  be  certain,  236. 
time  allowed  bank  to  accept,  96,  237. 
traveler's,  in  general,  251. 
traveler's   forged,  counter-signature,  252. 
when  delay  in  presenting  discharges  drawer,  237. 
when  due,  236. 

when  failure  to  give  notice  of  dishonor,  682,  683. 
when  must  be  presented,  237,  682. 

when  statute  of  limitations  begins  to  run  against,  236. 
whether  accepted  as  payment,  236. 
whether  negligence  to  send  to  drawer  for  collection,  682,  683. 


746  INDKX. 

[references  are  to  pages.] 
CHECK — continued — 
who  may  certify,  240. 

within  what  time  must  be  presented,  237,  566,  682. 
words  of  negotiability  in,  236. 

CIRCUITY  OF  ACTION,  115. 

CIRCULATION— 

when  parties  not  immediate,  25. 

CIRCUMSTANCES,   see   Excuse  for  Non-Presentment— 
may  amount  to  notice,  etc.,  202,  609. 

CIRCUMSTANTIAL  EVIDENCE— 
as  to  fraud  and  duress,  342,  343. 
as  to  usury,  343. 
proof  of  execution,  339. 

CITIES— 

power  to  execute  negotiable  paper,  41,  42. 

CLEARING  HOUSE  ASSOCIATION,  682. 

CLEARING  HOUSE  BALANCE— 
effect  of  payment,  249. 

CLERK— 

notice  may  be  given  to,  595. 
presentment   to,    193,   595. 

CODE  PROCEDURE,  347. 

CODES— 

American,  15. 
continental,  15. 
English,  15. 

CODIFICATION,  15 

COERCION.  175. 

COINS— 

instruments  payable  in,  59. 

COLLATERAL  ACCEPTANCE,  65,  649. 

COLLATERAL  AGREEMENT— 
as  to  effect  of  delivery,  408,  409. 
as  to  use  of  instrument  by  payee,  408,  409. 
authorizing  sale  of,  does  not  affect  negotiability,  57    388. 
consideration,  65. 
effect  on  negotiability,  65. 

for  consideration  in  addition  to  that  specified,  65. 
for  delay  of  payment  until  contingent  event,  65. 
for  payment  by  installments,  410. 
for  renewal  on  extention,  65. 
in  case    of   depreciation    more   added,    390. 
in  general,  65. 
in  writing,  65. 
not  notice,  64,  65. 
oral,  410. 
renewal  of  bill  or  note,  65. 


INDEX. 


747 


[references  are  to  pages.] 
COLLATERAL  AGREEMENT— continued— 

that  endorsement  is   without   recourse,   467. 

to  vary  liability  of  endorser,  467. 
COLLATERAL  FACTS— 

proof   in  certificate  of  protest,  208. 

COLLATERAL  INSTRUMENT,  278,  281,  283. 

COLLATERAL  SECURITIES— 

application  of,  to  debt,  effect  on  party  secondarily  liable,  289. 

deposit  of,  which  may  be  sold,  285. 

holder  receiving  collaterals  not  required  to  proceeti  upon  before  suing 

indorser,  286. 
instruments   taken   as,    for    contemporaneous    and   pre-existing   debts, 

281. 
must  be  tendered  with  instrument,  279. 
parting  with,  effect  of,  on  surety's  liability,  286. 
promise  to  furnish    additional,   285. 
promise  to  keep  free  from  incumbrance,  389. 
provision  for  sale  of,  65. 

provision  for  sale  of,  see  also  Value,  285,  432,  433,  434. 
possession  of  by  holder  as  defense  to  indorser,  286. 
rights  when  principal  obligation  due  after  collateral,  11 . 
sale  of,  authorized,  285. 
surrender  of,  waiver  of  effect,  286. 
surrender  of  discharges  mtiorser,  286. 
surrender  to  principal  or  impairment  or  failure  to  use  as  defense  for 

surety,  286. 
that  holder  has  is  no  defense  to  maker,  286. 
that  indorser  has  deposited  is  no  defense  to  maker,  286. 
to  surrender  as  defense,  542. 

COLLECTION— 
as  to  notice,  209. 

bill  or  note  pa3'-able  with  costs  of,  54,  2>11 . 
costs  of  provision  for,  54,  Zll . 

holder  for,  suing  as  real  party  in  interest,  340,  48L 
indorsement  for,  120,  340. 
liability  of  indorser,  120. 
v/hether  indorser  for,   entitled  to  notice,    196,   197. 

COLLECTING  BANK— 

duty  as  to  notice  of  dishonor,  209. 

COLLECTION  AGENTS— 

banks  as,  121. 
COMMERCIAL  PAPER,  see  also  Negotiable  Instruments — < 

common   forms,   1,   11. 

metiium  for  commercial  transactions,  1,  11. 

other  kinds,   258. 
COMMITTEE,  see  Executors  and  Administrators. 
COMMON  LAW— 

prohibitions,    180. 

whether  married  woman  make  negotiable  instruments  at,  162. 

whether  promissory  notes  negotiable  at,  15. 


748  INDEX. 

[references  are  to  pages.] 
COMMON  LAW  PROCEDURE,  346. 

COMPENSATION— 

for  trouble  and  expense,  not  usury,   167. 

COMPETENCY  OF  PARTIES  AS  WITNESSES— 

drawer,  330. 

in  general,  330. 

indorscr,  330. 

maker,  330. 

payee,  330. 
COMPLAINT,  see  Eorms  of  Common  Law  and  Code  Pleading — 

caption  of,  304. 

meaning  of,  304. 

what  is,  304. 

what  it  contains,  304. 

COMPLETION— 

of  negotiable  instruments,  63,  108. 

COMPLIANCE— 

strict,  with  terms  of  act  necessary,  45,  399. 

COMPOUND  INTEREST,  167. 

COMPROMISE— 

as  a  consideration,  73. 

COMPUTATION— 

of  time,  332,  333,  701. 

CONCEALED  SURETIES— 
American  rule.  272,  273. 
English  common  law  rule,  272,  273. 
English    equitable   rule,   272,   273. 

CONDITION— 

conflict  of  laws  as  to,  341. 

illustration  of,  in  note,  54,  56. 

in  collateral  contract,  holder  in   due  course  not  affected,  64.  65. 

instrument  payable  on,  not   negotiable,   54,   385. 

memorandum   that   instrument   is   given   as   collateral    security,   284. 

negotiable  instrument  must  not  be  payable  upon,  54,  385. 

CONDITIONAL  ACCEPTANCES,  654,  655. 

CONDITIONAL   DELIVERY-^ 
when  in  writing,  64,  409. 

CONDITIONAL  INDORSEMENT— 

condition  in.  docs  not  affect  negotiability,  118. 

def^netl,   117,  118. 

examples  of,  118. 

indorsee  holds   subject  to   rights   of   indorser,  469. 

in  general,  116,  117,  469. 

party  paying  may  disregard  condition,  469. 

right  of  parties  liable,  117,  469. 

CONDITIONAL  PAYMENT— 
effect  of,  219. 
whether  payment  by  negotiable   instrument   is.  20,  21. 


INDEX.  749 

[references  are  to  pages.] 
CONFESSION   OF  JUDGMENT— 
affidavit  required,  58. 
effect  of  provision.  57,  388,  389. 
power  of  attorney,  57,  58. 
provision  for.  7,  388. 

provision  authorizing,  does  not  affect  negotiability,  57,  388. 
when  recognized,  58. 

CONFLICT— 

between  words  and  figures,  338,  339,  413. 

between  written  and  printed  provisions,  338,  339,  413. 

CONFLICT  OF  LAWS— 

acceptor  governed  by  laws  of  place  and  acceptance,  230. 
accommodation  indorsement  by  married  woman,  32. 
as  to  capacity  of  parties.  229,  230. 
bill  payable  in  foreign  country,  233. 
bills  tirawn  in  one  country  and  paid  in  another,  233. 
by  what  laws  demand  of  payment  determined,  232. 
capacity,  229. 
conditions,   341. 
damages,  233. 
drawer's  contract,  230. 
grace.  581,  582. 

indorser,  liability  of,  controlled  by  law  of  place  where  made,  231. 
interest   rate,   231. 
interpretation,  meaning  of,  228. 

interpretation  and  obligation,  what  law  controls,  228. 
in  general,  227. 
lex  forum  governs  name,  231. 

lex  loci  contractus  governs  as  to  validity,  interpretation,  nature,  obli- 
gation,  etc.,  228. 
maker  governed  by  law  of  place,  230. 
negotiability.   230. 
notice  of  dishonor,  232. 
oral  acceptance,  86. 

parties  may  agree  as  to  law  to  govern,  228. 
place  of  performance,  229. 

presentment,  what  law  controls  formalities  of,  232. 
protest,  232. 

rule  in   federal  courts,  232. 
rule   in  U.   S.  courts,  232. 
taxation,  227n. 
usurious  interest,  231. 

validity  of  instrument,   what  law   determines,  228. 
when  an  agreement,  228. 

CONSIDERATION,  see  also  Valuable  CoNSiDERAxroN ;  Value — 
anomalous  intlorsement  after  delivery  to  payee,  124,  125. 
antecedent   debt   is,   72,   432. 
absence  of,   failure  of,  81.   1/9,  444,  446. 
accommodation  parties.  74. 
agreement  to  marry,  75. 
between   immediate  parties.  77. 


750  INDEX. 

[references  are  to  pages.] 
CONSIDERATION— continued- 
burden  of  proof,  n,  428,  429. 
collateral  agreements,  65. 
collateral  security  amount  recoverable,  11. 
cross-notes,  75. 
defined,  72,  432. 
examples  of  valuable,  72,  IZ. 
expenditures  based  on  gift  note,  75. 
failure  of,  81,  179,  444,  446. 

failure  of  as  against  one  not  a  bona  fide  holder,  82. 
failure  of,  burden  of  proof,  11,  111,  528. 
for  patent  right  notes,  80. 
fraudulent,  efl'ect  of,  80,  81. 
gift,  74. 
gift  notes,  75. 
illegal,  80,  180. 

illegal,  immoral  and  fraudulent,  81. 
illegal  and  void  by  statute  distinguished,  81,   181. 
illegal,  obtaining  for,  80,  180. 
illegal,  what  amounts  to,  81,  180. 
illegality  of,  81,   180. 
illustrations  of,  81. 
inadequacy  of,  19. 

instruments  taken  as  collateral  security  for  contemporaneous  and  pre- 
existing debts,  151,  152. 
lack  of,  when  a  defense,  82. 
Hen,  16. 

love  and  affection,  74. 
meaning  of,  12,  432. 
must  be  valuable,  432. 
necessity  of,  11. 

not  necessary  for  cancellation,  220. 
note  taken  as  collateral  security,  76. 
partial  failure  of,  81,  180,  444. 

partial  failure  of,  a  defense  pro  ianto,  82,   180,  444. 
patent  right,  80. 

pledge  for  establishing  church,  75. 
pledge  for  hospital,  75. 
pre-existing  debt  as,  72,  432. 
presumed,  11,  78,  427. 
presumed  for  acceptance  for  honor,  102. 
presumption  of,  11 ,  427. 
prohibited  by  common  law,  180. 
questions  of,  against  whom  raised,  82. 
seal  imports,  11,  78. 
speculative,  705. 

speculative  instrument  given  for,  705. 
subscription  for  school,  75. 
sufficiency  of,  IZ. 
total  failure  of,  81,  179. 
value  of,  not  considere'il  IZ. 
void  by  statute,  169. 


INDEX.  751 

[references  are  to  pages.] 
CONSIDERATION— continued- 
want  of,  79,  81,  179,  444. 
want  of,  as  a  defense,  79,  81,  179,  444. 
what  is,  432,  436. 
when  must  be  proved,  336,  337. 
whether  necessary  to  support  guaranty,  269,  270. 
whether  necessary  to  support  intentional   cancellation,   220. 

CONSTRUCTION— 

of  ambiguous  instruments,  45,  338,  413. 

of  power  of  attorney  to  confess  judgment,  57,  58,  338. 

rules  of,  45,  57,  58,  338,  413. 

where  language  ambiguous,  45,  338,  413. 

where  omissions,  45,  338,  413. 

CONSTRUCTIVE  NOTICE,  see  Notice. 

CONTAGIOUS  DISEASE— 

existence  of,  as  excuse  for  non-presentment,  etc.,  202. 

CONTEMPORANEOUS  DEBT— 

collateral  security  taken  for,  151,  281. 

CONTEMPORANEOUS  WRITINGS,  65. 

CONTINGENCIES— 

as  to  time  of  payment,  54,  386. 

indication  of  particular  funds,  is  not,  55,  382. 

instruments  payable  on,  not  negotiable,  54,  386. 

note  given  as  collateral,  151. 

statement  of  transaction,  57,  381. 

CONTINUATION— 
of  negotiability,   127. 

CONTRACT— 

act  discharging  simply  as  discharge  of  instrument,  615. 
incorporation  of  in  instrument,  382,  383. 
note  attached  to,  382,  383,  632. 
notice  of,  632. 
of  indorser,  4. 

of  married  woman,  whether  enforcible,  laws  tabulated  by  states,  711, 
712,  713. 

CONTRACTOR'S  ORDER,  640. 

CONTRIBUTION— 

equal  indorsers- entitled  to,  147,  148. 

none  between  successive  indorsers,  147,  148. 

COPARTNERSHIP,  see  Partners. 

CO-PROMISORS— 

presentment   for  payment  to,   193,   574. 

use  in  protest,  212,  665. 

when  used  on  which  to  make  protest,  212,  665. 

CORPORATE  SECURITIES,  144. 

CORPORATION— 

acceptor  admits  capacity  of  to  draw,  141,  541. 
check  by,  249. 


752  INDEX. 

[references  are  to  pages.] 
CORPORATION— continued— 

form  of  corporate  signature,  41. 

foreign   statute   invalidating  contracts,   169. 

fiscal  officer  of,  as  payee  or  indorsee.  112,  471. 

has  no  power  to  become  accommodation  party,  147. 

included  in   word    "person,"  695. 

indorsement  or  assignment  by,  142,  421. 

negotiation  of  instrument,  142,  421. 

officers   signing  for  accommodation,   147. 

officer  of,  indorsing,  112,  471. 

power  to  issue  note,  162. 

power  to  issue  accommodation  paper,   147. 

proof  of  authority  to  act  as  agent  of,  38. 

seal  of,  dispensed  with,  41. 

securities  of,  not  warranted  upon  negotiation,  552,  553. 

want  of  capacity,  162. 

COSTS— 

of  collection,  stipulations  as  to,  54,  1)11 . 

CO-SURETIES,  148. 

COUNTER-CLAIM— 
in  general,  18,  20. 

COUPON  BONDS,  see  also  Bonds— 
as  to  form,  262. 
defined,  262. 
how  issued,  263. 
how  made  non-negotiable,  263. 
meaning  of,  262. 

must  holder  of  coupon  ovin  bontl,  262. 
negotiability,  262. 
who  issues,  262. 

COURSE  OF  BUSINESS— 

bona  fide  holder  must  acquire  instrument  in  usual  course  of  business, 
149,  484. 
COVERTURES,  see  Defenses;  Married  Women. 

COVENANT  NOT  TO  SUE— 
effect  of,  221. 

when  instrument   discharged   by,  221. 
when  sureties  released  by,  221. 

CREDIT,   see   Value. 

CREDIT,  BILLS  OF,  sec   Letters  of  Credit. 

CURRENCY— 

instrument  payable  in,  59.  60. 

what  term  includes,  59,  60 
CURRENT  FUNDS,  59. 
CURRENT   LEGAL  TENDER.   59.  60. 

CURRENT  MONEY— 

designation  of  particular  kind  of  does  not  affect  negotiability,  59,  391 
effect  of  designating  a  particular  kind,  59,  391. 


INDEX.  753 

[references  are  to  pages.] 
CURRENT  MONEY— continued- 
instrument  payable   in,   59,  391. 
particular  kind  may  be  specified,  59.  391. 
what  constitutes,  59,  391. 

CUSTOM,  187n,  212. 

D 

DAMAGES— 

for  non-payment,  of  bills  of  exchange,   141. 

on  failure  of  bank,  236,  237,  250. 

pa3'able  by  secondary  parties,  141. 

recovery  of,  what  law  governs,  236,  237,  238. 
DATE— 

absence  of  does  not  affect  validity  of  jnstrument,  46,   391. 

alteration  of,  176,  636. 

ante-dated,   47,   401. 

construction  when  instrument  not  dated.  338,  413. 

evidence  to  show  mistake  as  to  date,  46.  47. 

from  what  date  law  takes  effect,  400,  413. 

from  which  interest  runs,  413. 

msertion  of.  in  undated  instrument,  47,  402. 

in  instrument  prima  facie  true  date,  46,  400. 

insertion  of  wrong  date,  47,  402. 

instrument  not  effective  at,  but  at  delivery,  47. 

mistake  shown  by  parol,  46. 

mistake  in.  47. 

not  necessar}'.  46,  391. 

of  acceptance  may  be  inserted  in  draft.  47.  402. 

of  indorsement,  presumption  as  to,  46,  473. 

of  negotiable  instruments.  46.  391. 

omission  of  does  not  affect  negotiability,  46,  391. 

omission  of,  presumption  as  to,  46.  400.  413. 

omission  of,  when  interest  runs,  413. 

place  for  writing,  46. 

post-date,  instrument  may  be  antedated  or  post-dated,  47,  401. 

presumption  as  to,  46,  400,  473. 

presumption  as  to  execution.  46. 

presumption  when  none.  46,  333,  400. 

when  blank  left,  47.  402. 

when  indorsement  obtained   after  transfer,   109. 

when  date  may  be  inserted,  47,  402. 

DAYS— 

computation  of,  66,  332,  333,  701. 
DAYS  OF  GRACE— 

abolished,  66.  580. 

how  computed,  66,  580. 

how  many,  66. 

in  general,  66,  580. 

laws  of  tabulated  by  states,  708,  709. 

meaning  of,  66. 


754  INDEX. 

[references  are  to  pages.] 
DAYS  OF  GRACE— continued— 

not  allowed  except  in  some  states  on  sight  drafts,  66. 

origin  of,  66. 

rule  not  uniform,  66. 

whether  abolished,  66,  580, 

DEAD   DRAWEE— 

presentment  for  acceptance  excused,  98,  658. 
DEATH— 

negotiation  after,  109,  110. 

notice  of  dishonor  in  case  of,  196,  198,  596. 

of  agent,  202. 

of  drawee,  how  bill  of  exchange  presented  for  acceptance,  98,  658. 

of  drawer  of  check.  198. 

of  indorsee  for  collection,  110. 

of  joint  payee,  110.  , 

of  primary  party,  effect  on  presentment  for  payment  or  acceptance, 
98,  658. 

of  person,  primarily  liable,  how  presentment  made,  98,  658. 
DEBT— 

antecedent  or  pre-existinj,  is  valuable  consideration,  72,  Th,  432. 
DEBTOR— 

effect  of  ability  and  willingness  to  pay  at  place  of  maturity,  188,  563. 

primarily  liable,  death  of,  how  presentment  made,  98,  658. 

secondarily  liable,  cancellation  of  signature  of,  225,  621. 
discharge  of,  225,  621. 

efifect  of  agreement  for  extension  of  time  of  payment,  225,  621. 
effect  of  release  of  principal  party,  222,  621. 
payment  by,  effect  of,  217,  626. 
DECISION-. 

should  be  uniform,  692,  694. 

DECLARATION,  see  also  Complaint— 
of  payment  for  honor,  220,  672. 

DECLARATIONS  AND  ADMISSIONS,  331. 

DE  FACTO  HOLDER,  142. 

DEFAULT— 

in  presentment,  etc.,  see  Excuse  for  Non-Presentment,  Protest  and 
Notice. 

of  payment,  371. 
DEFECT— 

in  title,  notice  of  what  constitutes,  153,  508. 

notice  of,  to  holder  before  full  amount  paid,  153,  500. 

of  title,  used  as  a  defense,  79,  501. 

DEFECTIVE  TITLE— 
what  constitutes,  501. 
DEFENDANTS,  see  Actions  on  Negotiable  Instruments. 

DEFENSES,  see  also  Personal  Defenses  ;  Real  Defenses. 
absolute,  159. 
against  bona  fide  holder  for  value,   151,  523. 


INDEX.  755 

[references  are  to  pages.] 

DEFEN  S  ES — continued — 

against  de  facto  holder,  142,  523. 

against  transferee  without  endorsement,  476. 

against  non-negotiable  paper,  131. 

against  public  policy,  180. 

against  whom  available,  150,  523. 

alteration,  159,  176. 

classification  of,  158. 

consideration,  lack  of,  179. 

coverture,  32,  160,  162. 

defined,  159. 

drunkenness,  31,  160,  163. 

duress,  159,  160,  178. 

efifect    on    amount    of    recovery    by   pledgee    or    his    transferee,    442. 

failure  to  stamp,  171. 

failure  to   surrender  collateral  securities  at  maturity,   542. 

forgery,  159,  160,  169. 

fraud,   159,   175. 

gaming  purposes,  160,  164. 

good  against  bona  fide  holder,  160. 

good  against  immediate  parties,    159,    174. 

habitual  drunkards,  163.    . 

illegality  of   contract,   159,   164. 

incapacity  of  party,  see  Parties  to  Negotiable  Instruments,  159. 

incapacity  a  real   defense,   159  et  seq. 

incapacity,  what  amounts  to,  162  et  seq. 

infancy,  29,  160. 

insanity,  31,  160,  163. 

intoxication,   163,   164. 

issue  of  corporation  instruments  ulta  vires,  160,  162. 

kinds,  158. 

material  alteration,  see  Alteration. 

nature  of,  158. 

partial  failure  of  consideration,  180. 

patent  right  note,  58,  705. 

payment,  182. 

personal,  158,  173. 

personal  defined,   158. 

real  or  absolute  defenses,  158. 

real  and  personal,  defined,  158,  173. 

real,  what  are,  158,  160. 

set-off  against  over-due  paper,  157. 

speculative  consideration,  164,  179. 

speculative  consideration  note,  164,  179. 

spendthrift,   163. 

spoliation,  177. 

statute  of  limitations,  159,  160. 

Sunday  contract,   160,   164,  168. 

total  failure  of  consideration,  179. 

ultra  vires,  160. 

usury,  160,  164,  167,  168.  ■ 


756  INDEX. 

[references  are  to  pages.] 
DEFENSES— continued- 
void  by  statute,  160. 
want  of  consideration,  159,  179. 
what   instrument   subject   to   in   hands   of   holder   not   in   due   course, 

149,  523. 
when  statute  declares  note  void,  169. 

whether  the  equities  of  a  subsequent  party  can  l^e  set  up  when  statute 
declares  note  void,  164. 
DEFENSES,  REAL,  158,  160,  see  also  Real  Defenses. 

DEFINITION— 

acceptance,  85,  86,  87,  646,  695. 

accommodation  party,   145,  448. 

accommodation  parties,    145,  448. 

action,  345,  695. 

bank,  345.  695. 

bank  notes,  265,  266. 

bearer,  345,  695. 

bill,  345,  695. 

bill  of  exchange,  43. 

bill  of  lading,  258. 

bona  fides,  150. 

certificate  of  tleposit,  260. 

certificate  of  stock,  261. 

check.  234,  680. 

conditional  indorsement,  117,   118. 

coupon  bonds,  262. 

currency,  59.  60. 

defenses,  159. 

delivery,  62,  695. 

due  bill,  264. 

foreign  bill,  44,  643. 

forgery,  169. 

foreign  bill  of  exchange,  44,  643. 

fraud,  175. 

general  acceptance,  85,  86„  87,  646,  695. 

guaranty,  267. 

holder,  345,  695. 

indorsement,  695. 

mland  bill  of  exchange,  44.  643. 

inland  bill,  44,  643. 

instrument,  3,  45,  695. 

issue,  345,  695. 

legal  tender.  59. 

letters  of  credit,  265. 

material  alteration,  176,  177,  631,  636. 

money,  59. 

negotiable  promissory  note,  44,  676. 

negotiation,  108,  455. 

note,  43,  345,  695. 

notice  of  dishonor,  184,  194. 

paper  money,  265,  266. 


INDEX.  757 

[references  are  to  paces.] 
DEFINITION— continued- 
payment,  215. 

payment  in  due  course,  182,  218,  584. 
person,  345,  695. 
person  primarily  liable.  697. 
person  secondarily  liable,  697. 
personal  defenses,  158. 
pleatlings,  303. 
presentment,  183. 
promissory  note,  43,  676. 
protest,  207. 

qualified  acceptance,  654. 
real  defenses,   158.  160. 
reasonable  time,  333,  699. 
signature,  47. 

special  indorsement,  116,  462. 
sufficient  consideration,  73. 
suretyship,  267. 
usury,  167. 

value,  72,  152,  432,  695. 
warehouse  receipt,  266. 
written,  45,  345,  695. 

DELAY— 

in  giving  notice  when  excused,  202,  609. 

in  presentment  for  payment,  when  excused,  191,  576. 

in  presentment   to    acceptor    for    honor   or   referee    in    case    of   need, 

when  excused,  186,  659. 
in  protest,  when  excused,  205. 

DELIVERY— 

as  between  parent  and  child,  410. 

by  notary  in  person,  205. 

complete  by  deposit  in  mail,  62. 

conditional  delivery,  63. 

defined,  62,  695,  409,  410. 

essential  to  completion,  62,  63,  408. 

estoppel  to  deny,  370. 

how  made,  62,  408. 

in  violation  of  instructions,  62. 

indorsement  not  binding  until,  63. 

instrument  takes  effect  on,  63. 

instrument  revocable  until,  62,  408. 

is  negotiation  of  instrument  payable  to  bearer,  51. 

intent.  62. 

law  of  place  governs,  228. 

liability  of  negotiator  by.  142,  559. 

of  instrument  on  payment,  190,  571. 

may  show  conditional,  63,  408. 

may  show  for  special  purpose,  63,  408. 

meaning  of,  62,  695. 

must  be  authorized,  62,  408. 


758  INDEX. 

[references  are  to  pages.] 

DELIVERY— continued^ 

necessary  to  complete  acceptance,  63,  108. 

necessary  to  complete  indorsement,  63,  108. 

necessary  to  make  indorsement  complete,  63,  108. 

necessary  to  convey  title,  63,  108. 

necessity  of,  63,  408. 

negotiation  by,  63,  108. 

negotiation  by,  warranties  of,  144,  552. 

on  condition,  410. 

place  of  execution  is  where  delivery  made,  228. 

possession  is  prima  facie  proof  of,  63,  408. 

presumptions  as  to  delivery,  63,  408. 

transfer  by,  51. 

transferrer  by,  warranties  of,  144,  552. 

warranty  where  negotiation  by  delivery,  552. 

Avhen  once  in  hands  of  holder  in  due  course,  63. 

when  presumed,  63,  408. 

without  authority,  62. 

DEMAND — instruments  payable  on,  52. 
instrument  expressed  to  be  payable,  52. 

instrument  issued,  etc.,  when  overdue  is  payable  on  demand,  52. 
instruments,  when  presentment  must  be  made,   191,  566. 
note,  negotiation  of,  an  unreasonable  time  after  issue,  149,  484. 
overdue  bill  is  payable,  52. 
payable  on  presentation,  52. 
payable  at  sight,  52. 
when  in  instrument  payable  on,  52. 
when  payable  on  demand,  52. 

when  presentment  for  payment  must  be  made,  191,  566. 
when  no  time  expressed,  52. 

DEMAND  INSTRUMENT— 
demand — unnecessary,  563. 
eflfect  of,  interest,  564. 
given   for  antecedent   debt,  432. 
may  be  presented  on  Saturday,  580. 

when  presentment  of   demand  instrument  must  be  made  to   charge 
secondary  parties,  566. 

DEMAND  OF  PAYMENT— 

See  Presentment  for  Payment. 

DEMAND  PAPER— 

laws  as  to  days  of  grace  tabulated  by  states,  708,  709. 

DEPOSIT — of    negotiable    instrument,    whether    bank    is    purchaser    for 
value,  487. 
check  purports  to  be  drawn  on,  249. 
indorsement  for,  120. 

of  fiduciary  instrument  to  personal  account,  510. 
whether  bank  gets  legal  title,  120. 

DEPOSIT,  CERTIFICATES  OF— 
See  CFJiTiFiCATE  OF  Deposit. 


INDEX.  759 

[reff-re.n'cks  are  to  pages.] 

DEPOSITOR— 
rights  of,  249. 

DESIGNATION-- 

of    particular    kind    of    current    money    does   not    affect   negotiability, 
59,  391. 

DESTROYED  BILL— 
protest  of,  212,  666. 

DESTRUCTION— 

of  bill  as  acceptance,  96,  652. 

of  bill  of  exchange  by  drawee,  96,  652. 

of  bill,  protest,  212,  666. 

of  bill,  whether  amounts  to  implied  acceptance,  96,  652. 

DETACHMENT— of  note  from  contract,  383. 

DETAINED  BILL— 
protest  of,  212,  666. 

DETENTION— 

of  bill,  whether  amounts  to  implied  acceptance,  96,  652. 

DETERMINABLE— instrument  must  be  payable  at,  54,  385. 
fixed  period  after  date  or  sight  is,  54,  385. 
future  time,  what  constitutes,  54,  385. 
on  or  before  fixed  time,  54,  385. 
on  or  after  event  certain  to  happen  is,  54,  385. 

DIGEST  OF  LAWS— 

where  negotiable   instruments  law   not  adopted,   714   et   seq. 

DILIGENCE— 

in  presentment  for  acceptance,  100,  660. 
in  presentment  for  payment,  192,  576. 

DISABILITY— 

See   Incapacity. 

DISAFFIRMANCE— 

by  infant  of  his  indorsement,  29. 

DISCHARGE— 

by  cancellation,  214,  220. 

by  novation,  222. 

by  other  act,  615. 

by  payment,  effect  on  negotiability,  182,  615. 

by  payment  on  behalf  of  principal,  214,  615. 

by  payment  by  party  accommodated,  214,  216,  615. 

by  payment  supposed  to  be  purchase,  224. 

by  payment,  see  also  Payment,  182,  615. 

by  principal  debtor  becoming  holder,  224. 

effect  on  negotiability,  182,  615. 

effect  of  stamping  it  "paid",  216. 

if  held  by  principal  debtor,  214,  615. 

new  notes  do  not  act  as  a,  218. 

of  bills  in  a  set,  142,  674. 

of  debtor  secondarily  liable,  182. 

of  guarantor,  274. 


760  INDEX. 

[references  are  to  pages.] 
DISCHARGE— continued— 

of  guarantor  by  surrender  of  collateral,  274,  275. 

of  one  part  of  a  bill  drawn  in  a  set,  142,  674. 

of  instrument  by  accommodated  party,  216,  615. 

of  instrument  by  accord  and  satisfaction,  221. 

of  instrument  by  alteration,  223,  631. 

of  instrument  by  cancellation,    or    renunciation,    220,    630. 

of  instrument  by  covenant  not  to  sue,  221,  275. 

of  instrument  by  operation  of  law,  224. 

of  instrument  by  payment,  182,  215,  481,  615. 

of  instrument  by  principal  debtor  becoming  hoWer,  222,  615. 

of  instrument  by  renunciation  by  holder,  225,  628. 

of  instrument  by  substitution  of  another  obligation,  222. 

of  instrument  by  surrender,  220. 

of  instrument,  how  made,  216,  615. 

of  negotiable  instruments,  216,  615. 

of  note,  invalid  new  note  not,  218. 

of  prior  party,  effect  of  on  person  secondarily  liable,  216,  225,  621. 

of  surety,  275. 

of  surety  by  surrender  of  collateral,  274,  275. 

payee  tearing  up  paper  intentionally,  217. 

payment  in  due  course,  215,  481,  615. 

what  amounts  to,  of  person  secondarily  liable,  216,  225,  621. 

what  is,  215. 
DISCHARGE  OF  SECONDARY  PARTY,  621. 
DISCHARGE  BY  PAYMENT— 

effect  on  negotiability,   17. 
DISCOUNT,  see  also  Value. 

sale  at  a,  not  usury,  167. 
DISCHARGE  OF  PARTY  SECONDARILY  LIABLE— 

by  cancellation    of    signature,   621. 

by  discharge  of  prior  party,  621. 

by  discharge  of  instrument,  621. 

by  release  of  principal  debtor,  621. 

by  tender  by  prior  party,  621. 

extension  of  time,  when  will  discharge,  621.  ,        . 

DISCREPANCY— 

between  words  and  figures,  338,  413. 

between  written  and  printctl  provisions,  338,  413. 

DISEASE— 

existence  of,  as  excuse  for  non-presentment,  etc.,  202. 

DISHONOR,  see  also  Presentment;   Notice;   Protest. 
acceptance  after,  101. 
as  between  joint  indorsers.  197. 
by  non-acceptance  what  amounts  to,  186,  660. 
by  non-acceptance,  effect  of,   186,  660. 
by  non-payment,  194,  578. 
by  qualified  acceptance,  140. 
effect  of  use  of  word  "dishonored",  195. 
liability  of  drawer,  140,  540. 


INDEX. 


761 


[references  are  to  pages.] 

DISHONOR— continued— 

of  bill  of  exchange  by  non-acceptance,  186,  660. 
notice  after,  194. 
protest  after,  207. 
result  of,  207,  661. 

twenty-four  hours  delay  iii  accepting  causes,  100. 
waiver  of  notice  of,  on  whom  binding,  211.  607. 
when  occurs  through  non-payment,  194,  578. 
when  bj'  non-payment,   194,  578. 

DISHONORED  BILL,  186,  654,  660,  661. 

DISHONOR,  NOTICE  OF,  see  also  Notice  of  Dishonor. 
agent  may  give,  195,  590,  592. 

and  presentment  waived  by  waiver  of  protest,  211,  608. 
by  whom  given,  195,  590,  592. 
contents,  194,  593. 

delay  in  giving  when  excused,  202,  609. 
dispensing  with  notice  of  dishonor,  202,  609. 
dispensing  with  presentment  for  payment,   189,  576. 
dispensing  with  protest  when  allowetl,  211.  608. 
effect  of  deposit  in  branch  postoffice  or  letter  box,  200,  601,  602. 
effect  of  miscarriage  in  mails,  200,  601,  602. 
effect  on  negotiability,  91. 

effect  when  given  by  or  on  behalf  of  holder,  203.  591. 
effect  when  given  by  or  on  behalf  of  party  entitled    to    give    notice, 

203,  591.. 
form  of  notice  of,  194,  594. 
given  by  agent,  194,  590,  592. 
given  by  holder,  195,  590,  592. 
in  case  of  death,  198.  596. 
may  be  sent  through  postoffice,  200,  594,  599. 
may  be  waived,  201,  605. 
meaning  of  term,  196,  197. 
must  be  given,  196,  586. 
place  of  sending,  199,  604. 
time  allowed  to  one  receiving,  199.  598,  603. 
time  when   given,   196.  604. 
timely  receipt  of,  irregularly  sent,  199,  604. 
to  bankrupt  or  insolvent,  198,  598. 
to  joint  parties  not  partners,   197,  597. 
to  whom  given,  595. 
to  whom  must  be  given,  196,  586,  596. 
waived  by  waiver  of  protest,  211,  608. 
what  amounts  to,  194,  594. 
when  dispensed  with,  200,  609. 
when  failure  to  give  excused,  201,  609. 
when  may  be  waived,  201,  605. 
when  must  be  given,  196,  198,  586,  596. 
when  need  not  be  given  to  drawer,  200,  610. 
when  need  not  be  given  to  indorser,  200,  611. 
when  sufficient  in  form,  194,  593,  601. 
when  unnecessary,  200,  201,  605,  609,  611. 


762  INDEX. 

[references  are  to  pages.] 
DISHONOR,   NOTICE   OF— continueV]— 

where  addressed, 199,604. 

where  parties  reside  in  same  place,  199,  598. 

where  parties  reside  in  different  places,  199,  599. 

notice  to  partners,  198,  597. 
DISHONORED  BILL— 

acceptance  of,  91,  654. 
DISSOLUTION  OF  PARTNERSHIP— 

effect  of,  39. 

when  notice  of  necessary,  39. 

DISTURBANCES— 

military  and  political,  an  excuse  for  non-presentment,  etc.,  202. 

DIVERSION— 

accommodation  paper,  146. 
amounts  to,   146. 
effect  of,  146. 
fraudulent,  146. 

DOCK  RECEIPTS— 

See  Warehouse  Receipts. 

DONEE,  see  Gift. 

DOUBTFUL— 

whether  bill  or  note,  338,  339,  413. 
rules  of  construction,  338,  339,  413. 

DRAFT— 

effect  of,  264. 
liability  of,  parties  to,  264. 
rights  of  parties  to,  264. 
use,  264. 

DRAWEE— 

alternative,  61,  643. 

and  drawer  same  person  or  drawee  fictitious  or  incapable  of  con- 
tracting bill  treated  as  note,  61,  644. 

bankrupt  or  insolvent,  presentment   for  acceptance  to,  98. 

bill  may  be  addressed  to  two  or  more,  but  not  in  alternative  or 
succession,  61,  643. 

dead,  absconded  or  fictitious,  presentment  for  acceptance  excused, 
100,  660. 

death  of.  how  bill  of  exchange  presented  for  acceptance,  98,   100. 

destruction  or  retention  of  bill  of  exchange,  96,  652,  660. 

cfifect  of  omission  of  from  bill  of  exchange,  60. 

fictitious,  in  bill  of  exchange,  61,  644. 

fictitious,  or  incapable,  or  absconded,  effect  on  presentment  and 
notice,  100,  576,  610,  611,  660. 

given  twenty-four  hours  in  which  to  accept,  100,  651. 

has  twenty-four  hours  within  which  to  accept  or  refuse,  100,  651. 

joint  drawees,  acceptance  in  case  of,  98,  658. 

may  be  payee,  394. 

not  bound  until  acceptance,  86. 

not  liable  unless  he  accepts  or  certifies,  86,  642,  687. 


INDEX.  763 

[references  are  to  pages,] 
DRAWEE— continued— 
of  bills  in  a  set,  70,  674. 

of  bills     of  exchange,  allowed  twenty-four  hours  to  accept,  100,  651. 
relation  of,  to  bill  before  and  after  acceptance,  86. 
retaining  or  destroying  bill  liable  as  acceptor,  96,  652,  660. 
rights  of,  after  acceptance,  89. 
time  allowed  in  which  to  accept,  100,  651. 
when  name  of,  may  not  appear,  60. 
when  principal  debtor,  87. 
where  incapable  of  contracting,  holder  may  treat  bill  as  dishonored, 

61,  644. 
without  capacity  to  contract  in  bill  of  exchange,  61,  649. 

DRAWEES— acceptance  by  part  of,  92,  98. 
DRAWEE  IN  CASE  OF  NEED— 

See  Referee  in  Case  of  Need. 
DRAWER— may  be  payee,  394. 

admission  of,  140,  540. 

and  drawee  same  person  in  bill  of  exchange,  61,  644. 

blanks  for  name  of,  68,  403,  404,  405. 

contract  of,  140,  184. 

discharged  by  failure  to  present,  194. 

discharged  unless  bill  presented  at  maturity  and  notice   of   dishonor 
given,  184,  194. 

duty  of  care  owed  bank,  633. 

efi'ect  of  qualified  acceptance,  655. 

existence  capacity  and  authority  admitted  by  acceptor,  141,  541. 

liability  if  drunk,  31. 

liability  of,  140,  540,   541. 

liability  of,  before  and  after  acceptance,  140,  540. 

limiting  liability  of,  140,  540. 

may  be  payee,   394. 

may  negative  liability,  140,  540. 

must  be  given  notice  of  non-acceptance,  197,  589. 

must  be  given  notice  of  dishonor,   197,  589. 

nature  of  contract,  140,  184,  540. 

need  not  sign  before  acceptance,  653. 

need  not  record  notice  of  dishonor,  when,  201,  610. 

of  check,  certification  releases,  239,  686. 

of  check  when  discharged,  239,  686. 

of  check,  nature  of  liability,  239,  686. 

or  maker  described,  11. 

presentment  for  payment  who  not  required  to  charge,  189,  574| 

presentment  necessary  to  charge,  188,  563. 

re-issue  by  217,  626. 

rights  of,  after  acceptance,  89,  90. 

secondarily  liable,  89,  90. 

when  acceptance  deemed  to  be  for  honor  of,  101,  668. 

when  discharged,  239,  686. 

when  discharged  by  failure  to  protest,   194,  210. 

when  discharged  by  qualified  acceptance,  140. 

when  discharged  by  failure   to    negotiate   or   present  bill   for    accept- 
ance, 184,  194. 


764  INDEX. 

[references  are  to  pages.] 

DRAWER— continued— 

when  failure  to  present  clicck  discharges,  184,  194,  237. 

when  liability  accrues,  140. 

when  notice  to,  not  required,  200,  201,  610. 

when  prinarj'  debtor,  87. 

when  protest  necessary  to  charge.  662. 

when  unreasonable   delay   discharges,   111,   682. 

DRUNKEN  PERSONS— 
contracts  of,  31. 

degree  of  drunkenness  sufficient  to  constitute  valid  defense,  31,  163. 
ratification  of  contract  matle  while  drunk,  Zl.  163. 

DRUNKENNESS— 

as  a  defense,  31,  163. 

DUE  BILL— 
defined,  264. 
effect  of,  265. 
form  of,  264. 
where  a  note,  264. 
whether  a  note,  264. 

DUE  COURSE— 

holder  in,    rights  of,  149,  481,  518. 

holder  in,  what  constitutes,   149,  484. 

payment  when  made  in,  218. 

presumption  as  to  holding  in,  150. 

rights  of  holder  in,  descend  to  subsequent  holder,  149,  523. 

DURESS— 

instrument  or  signature  obtained  by,  170. 

imprisonment,   179. 

in  general  a  personal  defense,  178. 

obtaining  by.  170,  178,  502. 

when  a  personal  defense,   171. 

when  amounting  to  forgery,  170. 

DWELLING— 

presentation  at.  100. 


EFFECT— 

of  alteration,  178,  223,  631. 

of  instrument  drawn  or  indorsed  to  a  person  as  cashier,  471. 

of  non-presentment    for   acceptance  of  bill   of  exchange,   97.   98.    186, 

187,  657.  660. 
payment  by  party  secondarily  liable,  217. 

ELECTION— 

of  holder  to  require  something  in  lieu  of  money,  57,  388. 

to  treat  instrument  as  bill  or  note,  413,  644. 
ENDORSEE,  see  Indorsee. 
ENDORSEMENT,   see   Indorsement. 
ENDORSER,  see  Indorser. 


INDEX.  765 

[references  are  to  pages,] 
ENTIRE  FAILURE— 

of  consideration,  81,  179,  444. 
parol  evidence  as  to,  81,  179,  444. 

EPIDEMICS— 

existence  of,  as  an  excuse  for  non-presentment,  etc.,  202. 

EQUITABLE  ASSIGNMENT— 

effect  of  bills  and  non-negotiable  orders  as,  134,  135. 

EQUITIES— 

as  a  defense,  173  et  seq. 

assignee  takes  subject  to,  134. 

bona  fide  holder  takes  discharged  of,   150,   152. 

indorsee  of  overdue  paper  takes  subject  to  what  equities,  156,  157. 

EQUITY,  COURT  OF— 

restore  altered  paper,  177. 

ERASURE— 

of  instrument  written  in  pencil,  178. 

ESCROW— 

delivery  in,  174,  339. 

delivery  by  custodian  in  violation  of  instructions,  62,  174. 

ESSENTIAL  REQUISITES  OF  NEGOTIABLE  INSTRUMENTS,  see 
Formal  and  Essential  Requisites  of  Negotiable  Instruments. 
request  not  sufficient,  370. 

ESTATE— 

instrument  payable  to,  35. 

ESTOPPEL-^ 

as  to  delivery,  370. 

in  general,  31,  61,  115,  403,  405,  424,  643,  644. 

of  maker,   drawer  or  acceptor  to   deny   existence   of  payee    and   ca- 
pacity to  endorse,  538,  540,  542. 
when  operates  against  parties,  143. 

EVIDENCE,    see    also    Admission;    Burden   of    Proof;    Declarations; 
Parol  Evidence;  Presumptions. 
admissibility  of  parol  evidence,  45. 
as  to  acceptance  of  bills,  339. 
as  to  ambiguous  or  omitted  stipulations,  338. 
as  to  amount  payable,  334. 
as  to  bills,  344. 
as  to  conditions,  341.  * 
as  to  consideration,  2)26. 
as  to  date,  222. 
as  to  delivery,  339. 
as  to  demand,  343. 
as  to  discharge,  343. 
as  to  duress,  45,  341. 
as  to  execution,  339. 
as  to  frautl  and  duress.  45,  341. 
as  to  interest,  336. 

as  to  interest  where  declaration  does  not  mention  interest,  336. 
as  to  meaning  of  certain  terms,  345. 


7(^  INDEX. 

[references  are  to  pages.] 
EVIDENCE— continued— 
as  to  mistake,  45,  342. 
as  to  mode  of  payment,  335. 
as  to  notes,  344. 
as  to  notice,  344. 
as  to  parties,  ZZl. 

as  to  particular  characteristics,  ZZ2,  345. 
as  to  payment,  343. 
as  to  place  of  payment,  335. 
as  to  presentment,  343. 
as  to  protest,  344. 

as  to  a  qualifying  verbal  agreement,  45. 
as  to  time,  332. 
as  to  transfer,  340. 
as  to  usury,  343. 
bill  as  evidence,  344. 
burden  of  proof,  330. 
burden  of  proof  in  general,  330. 
certificate  of  protest  as,  344. 
competency  of  parties,  330. 
in  general,  329. 

notary's  certificate  as,  207,  208. 
notes  as  evidence,  344. 
of  agreement  to  pay  interest,  stub,  335. 
parol,  45. 
place  of  date  prima  facie  evidence  of  maker's  residence  and  place  of 

business,  339. 
possession  prima  facie  evidence  of  ownership,  266. 
presumptions  in  general,  329. 

protest  exclusive  of  dishonor  of  foreign  bill,  344. 
questions  of,  governed  by  lex  fori,  227. 
rules  as  to  ordinary  contract  apply,  329. 
seal  and  signature  of  notary,  204. 
to  show  agreement  between  intlorsers,  143,  559. 

EXCHANGE— provision  for,  52,  53,  Zll . 

instrument  payable  with,  52,  53. 
EXCHANGE  BILLS  OF— 

See  Bills  of  Exchange. 

EXCHANGE  OF  COMMERCIAL  PAPER— 
as  a  consideration,  75. 

EXCUSE  OF  STEPS,  see  also  Diligence. 

for  delay  in  presentment  for  payment,   191,  576. 

EXCUSES  FOR  NON-PRESENTMENT,  PROTEST  AND  NOTICE— 
epidemics,  202. 

interdiction  of  commerce,  202. 
military  disturbances,  202. 
overwhelming  calamities,  202. 
political  disturbances,  202. 
sudden  death  or  illness  of  holder,  202. 
war,  202. 
when  drawer  has  no  right  to  require,  201. 


INDEX. 


767 


[references  are  to  pages.] 
EXCUSES  FOR  NON-PRESENTMENT,  PROTEST  AND  NOTICE— 
continued — 

when  drawer  or  indorser  has   received   funds  to  pay  instrument  or 

has  received  security  or  indemnity,  203. 
when  presentment,  protest  and  notice  have  been  waived,  189. 

EXECUTION— 

issuing,  as  extinguishment  of  other  rights,  224. 

place  of,  what  constitutes,  339. 

simultaneous,  of  several  instruments,  338,  413. 

transfer  by,  136. 
EXECUTOR— 

as  indorser  of  note,  34. 

as  maker  of  note,  34. 

cannot  bind  estate  by  negotiable  instrument,  34. 

individually  bound,  34. 

indorsement  after  death,  34. 

may  transfer  instrument  payable  to  order  of  deceased,  34. 

notice  of  dishonor  by,  198,  199,  596. 

notice  of  dishonor  to  ,  198,  199,  596. 

presentment  for  acceptance,  99. 

presentment  for  payment  by,  193. 

presentment  for  payment  to,  193. 

presentment  and  notice  to,  573,  596,  660. 

signature  by,  417,  472. 
EXHIBITION — of  instrument,  when  necessary,  571. 

instrument,  when  presented,  190,  571. 
EXPRESS  ACCEPTANCE— 

See  Acceptance. 

EXPRESS  NOTICE— 

See  Notice. 
EXTENSION  OF  TIME— 

as  consideration  or  value,  Ti. 

contract  for,  must  be  enforceable,  275. 

eflfect  to  discharge  surety  if  second  party,  621. 

in  general,  371. 

of  payment,  effect  of,  on  party  secondarily  liable,  225,  621. 

reservation  of  right  of  recourse  against  secondary  parties,  621. 

sufficient  consideration,  12>. 

to  principal  debtor,  discharges  indorser,  etc.,  275. 

EXTINGUISHMENT— 
See  Discharge. 
by  payment  by  accommodation  party,  145. 


FACULTATIVE  INDORSEMENT,  122. 

FAILURE  OF  CONSIDERATION,  444,  446. 
See  also  Consideration. 

FAILURE  TO  PRESENT— 
after  disability  removed,  192. 
effect  on  maker  or  acceptor,  194. 


768  INDEX. 

[references  are  to  pages,] 

FAILURE  TO   PRESENT— continued- 
facts  not  in  dispute,  192. 
where  bank  fails,  192. 
where  facts  disputed,  192. 

FAILURE  TO  STAMP— 
See  Stamp. 

FALSE  REPRESENTATIONS— 
See  Fraud. 

FEAR— 

obtaining  by,  150,  501. 

FEDERAL  COURT— how  far  bound  by  statute,  232,  233. 

rule  in,  232,  233. 

rules  of  decision  of,  in  respect  to  negotiable  instruments,  232,  233. 
FEES  ATTORNEYS',  see  Attorneys'  Fees. 

FELONIES— 

compounding,  illegal,  181. 

FEME  COVERT— 

See  Married  Women. 

FICTITIOUS  DRAWEE— 
in  bill  of  exchange,  61,  644. 
presentment  for  acceptance  excused,  100,  576.  610,  611,  660. 

FICTITIOUS  PAYEE— 
in  general,  396,  397,  398. 
when  drawer  estopped  to  allege  that  payee  is,  61. 

FICTITIOUS  PARTIES— 

drawee,  notice  excused,  100,  660. 
payee,  instrument  payable  to  bearer,  61. 

FICTITIOUS    PERSON— 
as  drawee,  644. 
as  payee,  395. 

instrument  made  payable  to,  51.  395. 
presentment  dispensed  with  where  drawee  is,  100,  660. 

FIDUCIARIES  AS  PARTIES— 

See   Executors  and  Administrators  ;   Guardians  ;   Trustees. 

FIGURES— 

change  marginal,  52. 

conflict  with  writing,  52,  413. 

discrepancy  between  words  and,  52,  413. 

effect  of,  52,  413. 

in  instrument,  413. 

office  of,  413. 

FILLING  BLANKS— 
agent  for,  67,  68. 
in  general,  393,  394. 
in  instrument,  68,  403,  404,  405. 
no  authority  to  insert  special  agreement,  68. 

FINDER— 

of  certificate  of  stock,  261. 


INDEX.  769 

[references  are  to  pages.] 
FINDER— continued — 
payment  to,  218. 
whether  recover,  156. 

FISCAL  OFFICER— 

as  payee  or  endorser,  471. 
instrument  payable  to,  471. 

FORBEARANCE— 

to  sue,  as  a  consideration,  12,  7Z. 

FORCE— 

obtaining  by,  ISO,  501. 

FOREIGN  BILLS,  sec  also  Bills  in  a  Set— 
defined,  44,  643. 
must  be  protested,  210. 
protest  required,  210. 

FOREIGN  BILLS  OF  EXCHANGE— 
See  Bills  of  Exchange. 

FOREIGN  COIN,  60. 

FOREIGN  LAWS— 

courts  will  not  take  judicial  notice  of,  349. 
in  another  state,  349. 
proof  of,  349,  350. 

FOREIGN  MONEY— 

whether  treated  as  money,  58,  59.  60. 

FOREIGN  NOTE— 

when  endorsed  must  be  protested.  210. 

FORGED  CHECK— 

liability  of  savings  bank,  242. 
liability  on,  241. 

FORGER— 

of  check,  241,  242. 

FORGERY— 

acceptance,  no  admission  ol  indorser's  signature.   170. 

as  a  defense,  169. 

as  to  rubber  stamp,  424. 

burden  of  proof.  401. 

by  alteration  of  amount,  169. 

by  bookkeeper,  423. 

by  carbon  paper,  424. 

defined,  169. 

duty  of  depositor  as  to,  241  note. 

estoppel  to  set  up,  169,  422. 

estoppel  as  to  signature,  170. 

failure  to  stamp,  see  Stamp. 

impostor,  424. 

intent  to  defraud,  and  uttering,   essential,   169. 

of  names  of  drawer  and  payee,  170. 

of  indorsement,  liability  of  drawee  to  drawer,   170. 

of  signature,  169,  422. 


770  INDEX. 

[references  are  to  pages.] 

FORGERY— continued-^ 

recovery  of  money  paW  on  forged  instrument,  170. 

signature  confers  no  right,  169,  422. 

warranty  against,  553,  555. 

when  party  estopped  to  allege  forgery,  169,  422. 

wrong  person  but  of  same  name,  424. 
FORM,  see  also   Forms   of  Code   Pleading;   Forms  of   Common   Law 
Pleading. 

acceptance,  88. 

bills  in  a  set,  69. 

bill  of  exchange,  11. 

certification  of  check,  241. 

check,  11. 

common  form  of  promissory  note,  1,  5. 

no  particular  form  required,  45. 

notice  of  protest,  205,  206,  207. 

of  bill  of  exchange  no  particular  form  required,  44. 

of  corporate  signature,  41. 

of  firm  signature,  39. 

of  indorsement,  116. 

of  notice  of  dishonor,  194,  195. 

of  partnership  signature,  39. 

of  signature  by  an  agent,  38. 

promissory  note,  1,  2,  5. 

protest,  205,  206,  207. 

simple  form  of  promissory  note,  1,  5. 
FORMAL  AND  ESSENTIAL  REQUISITES  OF  NEGOTIABLE  IN- 
STRUMENTS— 

as  to  agreement  controlling  the  operation,  64,  65. 

as  to  blanks,  67,  68. 

as  to  instrument  bearing  a  seal,  68,  391. 

as  to  stamps,  67. 

as  to  style  and  material,  46. 

certain  as  to  amount,  stated  in  instrument,  52,  376. 

certainty  of  drawee,  45,  369. 

date,  369. 

enumerated,  44,   45. 

how  written,  ink,  47. 

how  written,  pencil,  47. 

in  general,  43,  44. 

material  on  which  written,  46,  47. 

must  be  certain  as  to  amount,  52,  53,  54,  363,  376. 

must  be  certain  as  to  place  of  payment,  55. 

must  be  certain  as  to  time  of  payment,  54,  55. 

must  be  certainty  as  to  engagement  to  pay,  51,  52. 

must  be  in  writing,  45,  363. 

must  be  necessary  parties,  60,  61,  62. 

must  be  payable  in  money,  56,  59,  363. 

must  be  payable  to  order  or  bearer,  50,  51,  363. 

must  be  promise  or  order  to  pay,  49,  363. 

no  particular  form  required,  46,  47. 

of  bill  and  note,  1.  ■ 


INDEX. 


771 


[references  are  to  pages.] 
FORMAL  AND  ESSENTIAL  REQUISITES  OF  NEGOTIABLE  IN- 
STRUMENTS—continued- 
payable  on  demand  or  at  fixed  time,  45,  363. 
signature.  47,  48,  49,  363. 
stamps,  67. 
the  date,  47,  48. 
the  delivery,  62. 

the  several  parts  of  a  foreign  bill  called  a  set,  69,  70,  71. 
the  signature,  48,  49,  363. 
to  order  or  bearer,  50,  51. 

unconditional  promise  or  order,  50,  51,  363,  381. 
whole  instrument  must  be  in  writing,  46,  363. 
words  of  negotiability,  49,  50,  51. 
FORMS  OF  CODE  PLEADING— 
Answers — 
alteration,  327. 

denial  of  execution  of  instrument,  325. 
failure  of  consideration,  326. 
false  representations,  327. 
general  denial,  325. 
illegal  consideration,  326. 
partial  want  of  consideration,  325. 
payment,  327. 

that  acceptance  was  for  accommodation,  328. 
want  of  consideration,  325. 
without  consideration  as  to  indorsee,  325. 
Complaints  on  Bank  Check — 
drawer  against  drawee,  324. 

indorsee  against  indorser,  324, 
payee  against  drawee,  324. 
payee  against  drawer,  323. 
Complaints  on  Bill  of  Exchange — 

drawer  against  acceptor  on  non-payment,  319. 

indorsee  against  acceptor,  payable  at  particular  place,  320. 

indorsee  against  acceptor  on  non-payment,  320. 

indorsee  against  drawer,    demand   and   notice   waived,   322. 

indorsee  against  drawer,  excuse  for  non-presentment,  no  effects.  322. 

indorsee  against  drawer,   indorsers    and   acceptors    on    inland  >bill    of 
exchange,  320. 

indorsee  against  drawer,  no  funds  in  drawer's  hands,  failure  to  notify 
drawer,  321. 

indorsee  against  drawer  on  non-acceptance,  319. 

indorsee  against  drawer   when   payable   at  a  certain  place,  321. 

indorsee  against  indorser,  non-payment  by  acceptor,  323. 

payee  against  acceptor  on  non-payment,  318. 

payee  against  drawer  on  non-acceptance,  318. 
Complaints  on  Promissory  Note — 

assignee  of  note  by  delivery  against  maker  and  assignor,  316. 

executor  of  payee  on  note  against  maker,  316. 

indorsee  against  maker,  316. 

indorsee  against  indorser,  payable  in  another  state,  317. 

indorsee  against  maker  and  indorsers,  317. 


772  INDEX. 

[references  are  to  pages.] 
FORMS  OF  CODE  PLEADING— continued- 
payee  on  note  against  maker,  313. 
payee  on  note  against  maker,      excuse    for    not    setting   out    copy   of 

note,  315. 
payee  on  note  against  maker,  for  interest  due,  314. 
payee  on  note  against  maker,  lost  note,  315. 

payee  on  note  against  maker,  note  providing  for  attorney's  fee,  314. 
payee  on  note  against  maker,  payable  after  sight,  demand  or  notice, 

315. 
payee  on  note  against  maker,    vvliole   amount   due   on    failure   to  pay, 

314. 

FORMS  OF  COMMON  LAW  PLEADING— 

Answers — 

affidavit  denying  execution  of  instrument,  310. 

averment  of  arbitration  and  award,  311. 

averment  of  set-ofT,  311. 

plea,  309. 

plea  and  affidavit  of  merits,  310. 

plea  of  payment  by  services,  310. 

statute  of  limitations,  311. 

Declarations — ■ 

drawer  of  bill  against  acceptor,  308. 

indorsee  on  bill  against  intiorser  for  non-acceptance,  309. 

indorsee  on  note  against  maker,  307. 

indorsee  on  note  against  payee  or  other  indorsers.  307. 

on  note  by  payee  against  maker,  306. 

payee  on  bill  against  drawer  for  non-acceptance,  308. 

FRAUD— 

a  question  of  negligence,  175. 

as  a  defense,   175. 

as  affected  by  negligence,  176. 

defense  of.  generally  available  only  between  immediate  partie>,  175. 

defined,  175. 

cfifect  of,  175. 

fraudulently  procuring  signature  is  not  forgery,  175. 

immaterial  alteration   fraudulently  made,  effect  of.  175. 

in  general,  502,  503. 

in  negotiation  in  breach  of  faith.   175. 

instrument  or   signature  obtained  by.   175. 

material  alteration  fraudulently  made,  cfifect  of,  178. 

memorandum  easily  tletached,  178. 

negotiating  by,   gives  good   title,   142. 

obtaining  by,   175. 

parol  evidence  as  to,  45. 

when  a  good  defense  against  a  bona  fide  holder,  155. 

wlicn  court    compels    surrender    or    restrains    negotiation    of    paper 

obtained  by,  81. 
when  price  paid  by  purchaser  conveys  notice  of,  153.  154. 

FRAUDS,  STATUTE  OF,  see  St.\tute  of  Frauds. 

FRAUDULENT  ALTERATION,  see  Alteration. 


INDEX. 


m 


[rekekences  are  to  pages.] 
FRAUDULENT  CHECK,  244. 
FRAUDULENT  DIVERSION— 

burden  of  proof,  when  shown.  146,  147. 

FUNDS— 

absence  of,  in  drawee's  hands  as  excuse  for  non-presentment,  189. 

negotiable  instruments  must  not  be  payable  out  of  a  particular,  55. 

particular,  55. 
FURTHER  NEGOTIATION— 

prohibition  of  119,  120,  465. 
FUTURES,  see  Gambling,  Gaming. 

bills  and  notes  as  to,  164. 

FUTURE  TIME— 

determinable,  what  constitutes,  54. 
fixed  period  after  tlate  or  sight,  54,  55. 
to  pay  at  a  particular  place,  55. 


GAMBLING— 

as  a  defense,  164. 

GAMBLING  DEBT— 

instruments  in  payment,  illegal,  164. 
note  given   for,   164. 

GAMING— 

instrument  obtained  through,  164. 
note  given   for,  164. 

GARNISHEE,  401. 

GARNISHMENT— 
transfer  by,  136. 

GENERAL  ACCEPTANCE— 

form  and  effect  of,  92,  654. 
GENERAL  DOCTRINE— 

bona  fide  holder.  22. 

consideration,  22. 

equities,  23. 

essentials,  2Z. 

fraud  set  up  between  immediate  parties,  25. 

holder  for  value  recover,  26. 

holder  without  notice  recover,  24. 

illustration  as  to  negotiable  and  non-negotiable  instrument,  21. 

imports  a  consideration,  22. 

law  of  contracts  controls  as  between  immediate  parties,  24. 

negotiable  instuments  similar  to  money,  22,  25. 

ordinary  contract  binding,  24. 

rule  as  to  forgery,24. 

rule  as  to  non-negotiable  instrument,  25. 

rule  as  to  real  defense,  24. 

GENERAL  INDORSER— 
liability  of,  555,  556. 


774  INDEX. 

[references  are  to  pages.] 

GENUINENESS— 

of  signature  of  drawer,  acceptor  admits,  541,  542. 
warrant  of,  upon  negotiation,   552,  553,   555. 
warranty  of,  by  indorsement,  142. 

GEORGIA— 

Digest  of  Laws  of,  714. 

GIFT— 

of  donee's  obligations,  74,  75. 

of  note  of  third  person,  179. 

promissory  note  as,  74,  75. 

whether  instrument  as,  a  good  consideration,  175. 

GIVING  TIME— 

effect  of,  on  surety's  liability,  275. 

GOLD  CERTIFICATES,  265,  266. 

GOOD  CONSIDERATION,  73. 

GOOD  FAITH,  see  also  Notice;  Holder  in  Due  Course. 

defined,  ISO. 

part  value  paid  in,  effect,  181. 

GOVERNMENT  CHECKS,  398. 

GOVERNMENT  STAMP,  see  Stamp. 

GRACE,  DAYS  OF,  see  also  Days  of  Grace. 
number  of  days  allowed,  708,  709. 
origin  and  nature,  66. 
presentment  for  payment,  when  last  day  of  grace  falls  on  Sunday  or 

holiday,  see  Comparative  Table,  66,  708,  709. 
what  instruments  entitled  to,  66,  708,  709. 
whether  abolishetl,  66,  580. 

GRATUITIES— 

as  consideration,  74. 

GROSS  NEGLIGENCE— 
See  Negligence. 

GUARANTOR— 

amount  of  recovery,  273. 

as  indorser,  272. 

classes  of  remedies  of,  272,  273. 

contract  of.  111,  272,  273. 

difference  between  liability  of,  and  of  indorser  and  surety,  272,  273. 

distinguished  from  surety.   111. 

how  discharged,  274. 

liability  in  case  of  insolvency,  272. 

liability  upon  a  failure  to  give  notice,  272. 

notice  to,  on  default  of  principal,  272. 

obligation  of,  267. 

plea  of  fraud  as  discharge,  274. 

remedy  when  he  pays  the  debt,  273. 

upon  dishonor  must  pay  within  a  reasonable  time,  272. 

when  proceedings  against  principal  are  necessary,  273. 


INDEX.  775 

[RliFliKENCES   ARE  TO  PAGES.] 

GUARANTY— 

afterwards  committed  to  writing,  270. 

alteration  by  addition,  177. 

as  affected  by  statute  of  frauds,  270. 

by  third  party  upon  note  after  delivery,  269. 

by  third  party  upon  note  before  delivery,  270. 

conditional  guaranty,  271. 

consideration,  269. 

contemporaneous,  270. 

defined,  267. 

distinguished  from  suretyship,  267,  268. 

guarantor's  remedies,  273. 

how  tlischarged,  274. 

may  guarantor  be  sued  jointly,  268. 

negotiability,  271. 

notice  to  guarantor  of  default,  272. 

on  note,  consideration  presumed,  269. 

separate  contract,  267. 

when  consideration  continuous,  270. 

whether  assignable,  272. 

whether  consideration  must  be  in  writing,  270. 

whether  in  writing,  270. 

whether  in  writing  w^hen  direct,  270. 

whether  release  or  extension  of  time  to  principal  debtor  discharges 

guarantor,  275. 
whether  signature  must  be  obtained,  268. 
whether  negotiable,  271. 
GUARDIAN— ^mention  of  on  instrument  as  notice,  35. 

GUARDIANS— 

as  parties  to  negotiable  instruments,  35. 
effect  of  words  "as  guardian,"  35. 

H 

HABITUAL  DRUNKARD— instruments  by,  163. 

HOLDER,  see  also  Bona   Fide  Holder;  Holder  in   Due  Course;  and 
Holder  for  Value. 

after  holder,  for  value,  149,  155. 

after  notice,  154. 

by  assignment,  subject  to  equities,  19. 

by  fraud,  150. 

by  indorsement,  19. 

de  facto,  142. 

defined,  345,  695. 

duty  on  non-acceptance  of  bill  of  exchange.  186,  661. 

effect  of  notice  of  dishonor  when  given  by  or  on  behalf  of,  174,  591. 

for  collection,  481. 

indorsee  who  re-acquires  is,  527. 

of  principal  debtor  discharges  instrument,  223,  224,  615. 

may  refuse  to  take  qualified  acceptance,  90,  655. 

not  in  due  course,  what  defenses  instrument  subject  to,  149,  523. 


77  (y  INDEX. 

[references  are  to  pages.] 
HOLDER— continued- 
notice  of  defect  before  full  amount  paid,  153,  500. 
notice  of  dishonor  given,  174,  591. 
of  bills  in  set,  rights  of,  70,  674. 
of  certified  check,  right  to  sue  bank,  248. 
of  uncertified  check  has  no  recourse  against  bank,  248. 
payment  to,  discharges  instrument,  481. 

principal  debtor  becoming,  discharges   instrument,  223,  224,  615. 
tr'nna  facie  a  bona  fide  holder,  149,  481,  527. 
refusing  payment  supra  protest,  220,  672. 
renunciation  of  rights  by,  225,  628. 

rights  of  where  bill  dishonored  by  non-acceptance,  186,  661. 
right  of,  to  sue  in  own  name,  225,  481. 
rights  of,  on  dishonor,  186,  661. 

rights  of,  on  refusal  to  accept  bill  of  exchange,  186,  661. 
striking   out   indorsements,   126,    127,   475. 
upon  dishonor  for  non-acceptance,  186,  661. 
who  is,  345,  695. 

HOLDER  FOR  VALUE,  see  also  Bona  Fide  Holder. 
bank  by  giving  credit  on  deposit  account,  151. 
holder  after,  155. 

liability  of  accommodation  party  to,  145,  448. 
lien  holder  as,  153,  442. 
necessity  of  payment  of  value,  151. 
person  having  lien  is,  153. 
pledgee,  441,  442. 
value,  what  constitutes,  151,  432. 
when  lien  on   instrument  protects  lienor,   153,  442. 
when  paper  transfered  for  antecedent  tlebt,  152. 
when  person  deemed,  151,  440. 
where  value  has  been  given,  83. 

HOLDER  IN  DUE  COURSE,  see  also  Defenses  ;  Good  Faith. 
cannot  take  under  forged  signature,  422. 
corporation  not  to  set  up  defense  of  tiltra  vires,  162. 
delivery  conclusively  presumed,  408. 
drunkenness  as  a  defense,  31.  163. 
explained,   149,  484. 
for  value,  lienor  is,   153. 
for  value  under  certain   circumstances,   151. 
has  title  free  from  defenses  antl  defects  of  title,  149. 
holder  deriving  title  from,  149,  523. 
holds  instrument  free  from  equities,  149. 
in  general,  484,  490. 

instrument  complete  and  regular,  149,  484. 
instrument  not  overdue,  149. 
lien  holder  is,  153. 
may  recover  full  amount,  149. 
not  afifected  by  renunciation.  225,  628. 

not  subject  to  defenses  of  absence  or  failure  of  consideration.  444. 
omission  to  give  notice  of  non-acceptance  does   not   prejudice  rights 
of  subsequent,  203,  613. 


INDEX.  177 

[references  are  to  pages.] 
HOLDER  IN  DUE  COURSE— continued— 
of  instrument  payable  on  demand,  153,  498. 
presumption  as  to,  150. 
requisites  to  constitute,  149. 
right  to  sue,  481. 
rights  of,  481,  518.  519. 

rights  of,  descend  to  subsequent  holder,  149,  523. 
rights  of  one  claiming  under  rights  on  warranties,  552,  555. 
rights  on  an  altered  instrument,  176,  631. 
rights  of  person  claiming  under  holtler  in  due  course,  150. 
rules  to  determine  who  are,  149. 
taken  in  good  faith  and  for  value,  149,  484. 
taken  without  notice  of  infirmity,  149,  484. 
transfer  of  instrument  for  antecedent  debt,  152. 
validity  in  hands  of,  149,  484. 
what  constitutes,  149,  484. 
what  constitutes  notice  of  equities,  154,  508. 
when  burden  of  proof  on  holder,  150,  527. 
when  burden    on    holder    to    prove    that    he    took   instrument    in    due 

course,  150,  527. 
when  paper  deemed  overdue,   155,  498. 
when  transferee  without  indorsement  becomes,  476. 
where  full  payment  is  not  made  before  notice,  153,  500. 
where  interest   is  overdue,   156. 
where  installment  overdue,   156. 
where  title   of   transferor  defective,   153.   501. 
whether  bank  paying  note  of  depositor  is.  151. 
who.is,  484,  527.  531. 
who  not  deemed  a.  149,  498.  527. 

HOLDER  NOT  IN  DUE  COURSE,  149,  498,  527. 

HOLDER  OF  OFFICE  FOR  TIME  BEING— 
instrument  payable  to  order  of,  394. 

HOLDER   WITHOUT   NOTICE— 

not   payable   to   order    of   maker,    153. 
purchaser  when   notice   of   fraud,   155. 

HOLIDAY— 

day  following,  191,  581. 

in  part,  presentment  of  bill  of  exchange  for  acceptance  on,  99,  186, 

658,  659. 
instrument   due   on,    191,   581. 

presentment  for  payment  when  instrument  falls  due  on,  191,  580. 
whtn  day  of  maturity  falls  on.   191,  580. 
■when  last  lay  falls  on  a  holiday,  191,  580. 

when  day  for  doing  act  falls  on,  191,  581. 

HONOR,  see  Acceptance  for  Honor;   Acceptor  for  Honor;   Payment 
FOR  Honor — 
acceptance  for,  100,  667. 

acceptance  for,  delay  in  presentment  when  excused,  103,  669. 
acceptor  for,  liability  of,  100,  668. 
for  nature  of  his  agreement,  103,  668. 


778  INDEX. 

[references  are  to  pages.] 
HONOR— continued— 

how  made,  100,  103,  220,  667. 

presentment  to,  for  payment,  how  made,  103,  669. 

protest  of  bill,  103,  669. 

when  may  be  made,  219,  220,  671. 

HONOR,  PAYMENT  FOR— 

declaration  of  intention,  219,  220,  671. 
effect  of  refusing  to  receive,  219,  220,  671. 
effect  on  subsequent  parties,  219,  220,  671. 
how  made,  219,  220,  671. 
rights  of  payor,  219,  220,  671. 
when  may  be  made,  219,  220,  671. 

HOUR— 

at  what  hour  of  day  presentment  for  payment  should  be  made,  189,  191. 


IDIOT— 

capacity,  30. 

IDIOTS,  see  also  Insane  Persons. 

IDENTIFICATION  OF  HOLDER— 
indorsement  for,  450. 

ILLEGAL  CONSDERATION— 
against  whom  a  defense,  181. 

by  what  law  legality  of  consideration  determined,  166,  181. 
examples  of,  180. 
obtaining  for,  80,   180. 

ILLEGALITY— 

against  public  policy,  165. 

as  a  defense,  166. 

effect  of  tlie  alloption  of  Negotiable  Instruments  Law,  165,  166. 

illustrations  of,   166. 

immorality,  181. 

in  violation  of  statute,  165. 

instrument   obtained   through,    166. 

of  consideration,  what   constitutes,    165,   180. 

of  contract,   164. 

wagers  and  gaming  contracts,  166. 

warranty  against  by  subsequent  indorser,  143. 

when  proven,  burden  of  proof  shifts,  181. 

whether  real  defense,  165. 

ILLEGAL  STIPULATION— 
not  validated,  388. 

ILLNESS— 

of  agent,  201,  202. 

of  holder,  as  excuse  for  non-presentment,  202. 

ILLITERACY— 

as  ground   for  disregarding  waiver,  606. 


INDEX.  779 

[references  are  to  pages,] 
ILLUSTRATIONS,  sec  also  Examples— 
of  equities,  25. 

of  illegal  consideration,  80,  81. 
of  non-negotiable   instrument,   25. 
of  valuable  consideration,  12>,  74,  75. 
of  written  acceptance,  93,  94,  95. 

IMBECILES,  see  also  Insane  Persons — 
capacity,  30. 

IMMATERIAL  ALTERATION,  see  also  Alteration— 
effect  of,  176,  177. 
illustrations  of,  176,  177. 

IMMEDIATE  PARTIES,  see  also  Parties— 
consideration  between,   11,   78. 
defenses  admissible  between,  158,  159. 
delivery  necessary  as  between,  408. 
law  of  contracts  controls,  24,  25. 
who  are,  25. 

IMMORALITY— 

illegality  of  consideration,   181. 

IMPANELING  JURY,  347. 
IMPLIED  ACCEPTANCE— 
what  will  amount  to,  97. 

IMPLIED  AUTHORITY— 
of  agents,   35,   36. 
of  corporations,  40,  41. 
of  one  partner  to  bind  firm,  35,  36,  37. 

IMPLIED  NOTICE,  see  Notice. 

IMPERSONATION— 

fraudulent,  of  a  named   payee,   423,   424. 

fraudulent,  of  agent  of  the  named  payee,  396,  397,  398. 

IMPOSSIBILITY— 

as  excuse  for  steps,  201,  202. 

IMPRISONMENT— 

to  compel  execution  of  paper,  178. 

"IN  HIS  OWN  RIGHT"— 
meaning,  214,  615. 

INCAPACITY,  see  also  Alien  Enemies;  Bankrupt;  Drunkariis  ;   In- 
fants;   Insane    Persons;    Lunatics;    Married    Women;    Spent)- 
thrifts — 
defense  of,  good  against  bona  fide  holder,  29,  31,  158,  159,  160. 
defense  of,  29,  31,  158. 
of  married  women,  32. 
INCAPACITY  TO  CONTRACT,  see  Defenses. 

INCOME— 

instrument  payable   from,  372. 


780  INDEX. 

[references  are  to  pages.] 
INCOMPETENCY— 

good  faith  contractor  protected,  30. 

INCOMPETENT— 

note  of,  for  necessaries,  30. 

INCOMPETENTS— 
spendthrifts,  31,  32. 

INCOMPLETE  BILL— 

acceptance  of,  88,  91,  653,  654, 
INCOMPLETE  INSTRUMENT— 

acceptance  of,  88,  91,  653,  654. 

in  general,  62,  63,  408,  409. 

negligence,  632. 

not  delivereti,  407. 

want  of  delivery  of,  a  defense,  62,  63. 

INCORPORATION— 

of  mortgage  or  other  instrument  by  reference,  372,  373. 

INDORSEE— 

blanks  for  name  of,  462. 

cannot  be  two  or  more  severally,  61. 

cashier,  payable  to  bank.  112. 

for  collection,  197,  341. 

if  two  or  more,  all  must  indorse,  112. 

in  trust,   119,   120. 

right  conferred  on  by  restrictive  indorsement,   119,  120. 

rights  of,   134. 

special,  must   indorse  to  transfer,   116. 

under  conditional   indorsement,   119,   120. 

under  restrictive  indorsement,  119,  120. 

who  agent  of,  119,  120. 

INDORSEES— 

joint,  indorsement  by,  470,  559. 

INDORSEMENT,    see    also    Indorsee;    Indor.semrnt    in    Blank;    In- 
dorser,  etc. — 
absolute  and  conditional  indorsements,  117. 
accommodation,  by  bank,  145n. 
according  to  tenor,   115. 
after  transfer,  effect  of,  476-478. 
after  maturity,    effect,    392-393. 
allonge,  110. 

blank  made  special,  117,  129. 
bonds,  706. 

by  bank,  how  converted  into  special,  129,  469. 
by  bankrupt,  33. 

by  cashier  or  other   fiscal   officer,    112,   471. 
by  corporation  or  infant,  421. 
by  insane,   31. 

by  payee  or  indorsee  where  name  misspelled,   112,  472. 
by  rubber  stamp,  424.  456,  459. 
by  two  or  more  payees  or  indorsers  not  partners,  112,  470. 


INDEX.  781 

[references  are  to  pages.] 
INDORSEMENT— continued— 
by  whom  made,  112,  115. 
by  words  of  assignment,  459. 
by  maker  of  note  payable  to  own  order,  076-679. 
by  one  of  several  executors,  556. 
by  person  of  same  name  as  true  owner,  424. 
collateral  security,  341. 
collection,  120,  197. 

compel  when  failure  by  mistake  or  neglect,  109. 
conditional,  right  of  party  liable,   117,  469. 
contract  made  by,  113. 

contract  of  insane  binding  on  prior  parties,  31,  32. 
date  of,  125,  473. 
defined,  110,  695. 
delivery  necessary,  108. 
detached  paper  not  binding,  114. 
effect  of,  when  negotiable  by  delivery,  144. 
facultative,  122. 
for  collection;  465. 
for  identification,  544. 
forged  passes  no  title,  218. 
forms  of,  116,  137. 
guaranty  as,  111,  122. 
holder  striking  out,   127. 

how  blank  indorsement   converted  to   special   indorsement,   129. 
how  differs   from   surety  and  guaranty,   111. 
how  made,  458,  459. 
if  essential  to  title  nuist  be  proved,  459. 
infant,   29,   421. 
infant's  right  to  disaffirm,  29. 
in  full,  116. 

in  representative  capacity,  472. 
indorsee's  name  wrongfully  designated.  472. 
in  blank  makes  instrument  payable  to  bearer,  117. 
irregular  indorsements,  123. 
joint   indorsement,   122. 
kinds  of,  116,  461. 
liabilities  created  by,   115,   124. 
may  be  on  separate  paper,   110,  114. 
may   insist  on,   130,   476. 
meaning  of  term,  110,  695. 
methods  of,  absolute,  116,  117. 

conditional,   116,  117,  469. 

in  blank,  116,  117. 

in  general,   116,  461. 

irregular,  116,  123. 

joint,  116,  122. 

restrictive,  116,  463,  464. 

special,   116,  462. 

successive.  116,  123. 

without  recourse,  116,  121. 


782  INDEX. 

[references  are  to  pages.] 
INDORSEMENT— continued- 
miscellaneous  matters,  125-127. 
must  be  made  by  payee  or  subsequent  holder,  123. 
must  be  of  entire  instrument,  114,  460. 
must  be  on  instrument  or  allonge,  110,  114. 
must  follow  tenor  of  bill,  115. 
negotiation,  127. 

need  not  contain  words  of  negotiability,  464. 
of  a  half  interest,   115. 

of  instrument  payable  to  two  or  more,  not  partners,  112,  122,  470. 
of  transferer  not  required  after  blank  indorsement,  463. 
partial,  114,  460. 

"pay  to  any  bank  or  banker,"  464. 
place  of  an  instrument  immaterial.  111. 
presentment  necessary  to  charge  indorser,   189,   576,   577. 
presumed  to  have  been  affected  before  paper  overdue,  125,  473. 
presumption  as  to  place  of,   125,  473. 
presumption  as  to  time  of,    125.   473. 
prior  equities,  121. 
qualified,  121,  122,  467. 

qualified  indorsement  does  not  impair  negotiable  character  of  instru- 
ment, 127,  467. 
qualified  indorsement  does  not  throw  suspicion  on  paper,  127,  467. 
required  for  negotiation  of  instrument  payable  to  order,  108. 
requisite  of.  114. 
restrictive,  119. 

restrictive  indorsement  prohibiting   further   negotiation,    119. 
restrictive  indorsement  constituting   indorsee  mere   agent,    119,   463. 
restrictive  indorsement  vesting  title  in  trust,  119,  463,  464. 
restrictive  indorsement  authorizes    indorsee   to   receive   payment.    119. 
restrictive  indorsement  authorizes   indorsee  to  transfer  his   rights  as 

indorsee,  119. 
restrictive  indorsement  authorizes  indorsee  to  bring  action,  119. 
restrictive  rights   conferred   by,    119. 
right  to  strike  out  indorsement,  126,  475. 
rights  of  transferee,  115. 
separate  paper,  110.  114. 
signature   alone   sufhcicnt,    110.  458. 
special.  116.  462. 

special  on  instrument  payable  to  bearer,  469. 
stamping  of  name.  110. 
striking  out,  126,  475. 
striking  out,  effect  of,   127,  475. 
successive  indorsements,  123. 
to   negotiate   instrument  payable  to   order,    108. 
transfer  by,  109. 
transfer  without,   109,   126,   476. 

warranty  of  title  in  case  of  qualified   indorsement,   121. 
warranty  where  negotiation  by  qualifieti  indorsement,  121. 
warranty  by  general  indorsement,   113. 
when  assignment  and  guaranty  of  payment  becomes,  461. 
when  name  misspelled,  112,  472. 


INDEX.  783 


[references  are  to  pages.] 
INDORSEMENT— continued— 

when  obtained  subsequent  to  date,  109. 

when  overdue,  52,  392. 

when  payable  to  bearer,   none  necessary,    110. 

when  sufficient,  110,  458. 

where  payee  or  indorsee  wrongly  designated,  472. 

without  recourse,  467,  468. 

INDORSEMENT— QUALIFIED,   467-468. 

INDORSEMENT  IN  BLANK— 
defined,   117. 
effect  of,  117. 
equals  an  assignment,  130. 
in  general,  117. 
to  whom  payable,  217,  218. 

INDORSEMENT  IN  FULL- 
defined,   116. 
effect  of,  116. 

INDORSEMENT,  RESTRICTIVE— 
defined,  119. 

for  benefit  of  a  third  person,  463-465. 
not  revoked  by  indorser's  death,  465. 
passes  legal  title  and  power  to  sue,  119. 
rights  of  restricted  indorsee,  119, 
warranty  by,  553. 

INDORSEMENT  WITHOUT  RECOURSE— 
effect  of,  121. 
in  general,  121. 
liabilities  created  by,  121. 

INDORSER,  see  also  Indorsement,  etc. — 
accommodation,  liability  of,    145,   448. 
accommodation,  presented  for  payment  to,  189,  575. 
addition  of  place  of  residence  not  alteration,  637. 
admits  capacity  of  prior  party,   142. 
agent  of  indorsee,   120. 
as  guarantor,  272. 
as  to  title,   142. 
by  delivery,  143. 
contract  of,  142. 

difference  between  assignor  and,  133. 
discharged  by  failure  to  present,  194. 
doubt  as  to  whether  signature  is  that  of,  48,  49,  413. 
effect  of   qualified  acceptance,   655,   656. 
estopped  to  deny  validity,  143. 
how  discharged,  475,  476. 
in  blank,   liability  of,   128. 
indorsee  made  agent  of,   120. 
in  representative  capacity,  472. 
irregular  accommodation,  124,  548. 
irregular,  liability  of,   124,  548. 
irregular,  liability  under,  124,  548. 


784  INDEX. 

[references  are  to  pages.] 
INDORSER— continued- 
joint  and  successive   indorsers,   143. 

law  controlling  liability,  231. 

liable  in  order  in  which  he  indorses,  143. 

liability  of  general  indorser,   142. 

liability,  if  drunk,  31,  32. 

liability  of,  142,  555,  556. 

liability  of,  on  bill  drawn  in  set,  70.  673,  674.  • 

liability  of,  where  paper  negotiable  by  delivery,  143,  555. 

liability  for  indorsing  parts  of  bills  in  sets,  673,  674. 

liability  upon  dishonor  by  non-acceptance,  661. 

liability  of  unqualified,  143. 

liability  where  paper  negotiable  by   delivery,   559. 

may  not  set  up  forgery,  170. 

must  be  given  notice  of  dishonor,  184,  196,  197. 

nature  of  contract,   142  et  seq. 

of  check,  certification  releases,  239,  248. 

of  check,  liability,  235. 

of  check,  when  discharged  by  failure  to  present,  236,  237. 

of  overdue  paper,  196,  197. 

order  of  liability  ,evidence  as  to,  559,  560. 

parol  evidence  to  vary  liability  of,   143. 

payment  by  does  not  discharge  instrument,  626-628. 

presumption  as  to  second,  124. 

prima  facie  liable  in  order  of  indorsement,  143,  559. 

qualified,  liability  of,  144,  552. 

time  limit  in  which  to  give  notice  to  antecedent  parties,  203. 

to  whom   warranty  runs,   143. 

unqualified  liability  of,   143,  555. 

warranties  by,  143. 

warrants  that  instrument  is   genuine,    143. 

warrants  that  instrument  will  be  accepteti  or  paid,   143. 

warrants  the  competency  of  parties,  143. 

when  certification  of  check  discharges,  686,  687. 

when  discharged,     225,  621. 

when  discharged  by  failure  to  protest,  178. 

when  discharged  by  qualified  acceptance,  91,  655. 

when  discharged  bv  failure  to  negotiate  or  present  bill  of  acceptance, 
658. 

when  held  primar}-  party,  698. 

when  liability  accrues,   143. 

when  need  not  receive  notice  of  dishonor,  201,  611. 

when  notice   of  dishonor   required    to  charge,    586-589. 

when  notice  to  unnecessary,  201,  611. 

when  person  deemed,  544-546. 

when  liot  necessary,  575,  576. 

when  presentment    for   payment   necessary  to  charge,   563-566. 

when  protest  necessary  to  charge,  662,  663. 

when  signer  deemetl,   110,   111,  544. 

whether  liable  if  holder  has  collateral   securities,  467. 

whether  discharged    by    collateral    acceptance,    or    acceptance    by    de- 
struction, or   refusal   to   return,  652. 


INDEX. 


785 


[references  are  to  pages.] 
INDORSER— continued— 

without  recourse,  liability  of,   143. 
without  recourse,  warranties   of,    144. 

INDORSER,  ANOMALOUS  OR  IRREGULAR— 
liability  of.  548-552. 

INDORSER,  QUALIFIED— 
liability  of,  552-555. 

INFANCY,  see  also  Infant.s — 

as  a  defense,  161. 
INFANTS— 

acceptor  admits   capacity  to  draw,  29. 

acceptor  estopped,   161. 

cannot  bind   themselves   on   negotiable   instrument,   28. 

capacity,  28. 

capacity  to  bind  themselves,  28. 

capacity  to  enforce  instrument,  28. 

caution   advised,   29. 

contracts  of,  generally  voidable,  28. 

defense  of  infancy  good  against  bona  fide  holder,  29. 

indorsement  by,  29. 

indorsement  or  assignment  by,  29,  421. 

indorsement  passes  property,  29. 

indorsement  voidable,  29. 

may  be  payee,  28. 

may  bind  themselves  for  necessaries,  28. 

may  disaffirm.  29,  422. 

may  transfer  by  indorsement,  29. 

negotiation   of  instrument,  29. 

ratification  by  adult  of  negotiable  instrument   executed  when  an   in- 
fant, 28. 

right  to  disaffirm  indorsement,  29. 

staAites  governing  ratification,  29. 

verbal  ratification  by,  29. 

voidability  of  contract,  28. 

when  maker  or  acceptor  estopped  to  deny  capacity,  29. 
INFIRMITY— 

in  instrument,  notice  of  what  constitutes,  154,  508. 

INITIALS— 

sufficient  as  signature,  48. 
INK— 

several  kinds  of,  on  instrument,  404. 

signature  in,  preferable  but  not  necessary,  47,  48. 
INLAND  BILLS  OF  EXCHANGE,  see  also  Bill.s  of  Exchange— 

defined,  44,  643. 

necessity  for  protest,  210,  211. 

what  treated  as,  44,  643. 

INNOCENT  HOLDER  FOR  VALUE,  see  Bona  Fide  Holder;  Holder 
FOR  Value — i 
in  general,  24. 
rights  against  lunatic  accommodation  party,  31,  32. 


7^  INDEX. 

[references  are  to  pages.] 
INSANE  PERSONS,  see  also  Lunatics— 
as  payee  may  compel  payment,  31. 
as  payee  may  compel  return   of   consideration,   31. 
as  payee  may  indorse,  31. 
bill  of,  for  necessaries,  30. 
committee  appointed,  effect  on  contracts,  30. 
contracts  of,  for  necessaries  valid,  30. 
guardian  appointed,  effect  on  contracts,  30. 
ignorance  of  incapacity,  effect  of,  30. 
may  be  payee,  31. 
note  of,  for  necessaries,  30. 
one  contracting  with  in  good  faith,  30. 
sanity  presumed,  31. 
what  degree  of  incapacity  suffices  to  render  contract  void,  30. 

INSANITY,  see  also  Incompetent  Persons;  Insane  Persons — 
effect  of  undue  advantage,  30. 
good  defense  against  bona  fide  hoMer,  31,  163. 
is  a  real  defense,  31,  163. 
when  known,  contract  void,  31. 

INSECURE— 

notes  payable  when  holder  deems  himself,  386. 

INSOLVENCY,  see  Insolvent— 

effect  on  presentment  and  notice  of  dishonor,  598. 
protest  for  better  security,  665,  666. 

INSOLVENT— 
as  payee,  ZZ. 

drawee,  presentment  for  acceptance  to,  98,  658. 
notice  of  dishonor  to,  198,  598. 

INSTALLMENTS— 

effect  of  want  of  notice  of  unpaid  installments  on  liability  for  later, 

587. 
instruments  payable  in,  when  deemed  overdue,  156. 
overdue  renders  the  whole  due,  156. 
payment  in,  does  not  affect  negotiability,  54,  2>77. 

INSTRUMENT,  see  also  Negotiable  Instrument;  Lost  and  Destroyed, 
etc. — 
defined,  695. 

given  for  necessaries,  30. 
indorsed  for  discount,  410. 

made  prior  to  negotiable  instruments  law,  rules  of  construction,  339. 
undated,  date  may  be  inserted,  47,  402. 
when  issued,  61. 
when  negotiated,  17. 

INSURANCE— 

instruments   for  payment  of  losses,  383. 

INSUFFICIENT  TIME— 

when  may  be  pleaded  as  excuse  for  non-presentment,  186,  659. 

INTENT— 

as  to  cancellation,   220,  613. 


INDEX.  787 

[references  are  to  pages.] 

INTENT— continued—  : 

as  to  delivery,  62. 
burden  of  proof,  221,  630. 

INTEREST— 

alteration  as  to,  637-639. 

blanks  in  provision  for,  404. 

compound  not  allowed,  167. 

conflict  of  law^s,  168. 

date  from  which  it  runs,  413,  415. 

default  of  as  dishonor  and  notice  of  equities,  489. 

does  not  make  sum  uncertain,  376-381. 

from  when  does  it  run,  date  being  omitted,  47,  338,  413. 

if  not  paid  entire  sum  due,  54,  157. 

in  advance  not  usury,  167. 

in  general,  370.  • 

laws  of,  tabulated  by  states,  708,  709. 

legal  rate  tabulated  by  states,  708,  709. 

limit  under  contract,  tabulated  by  states,  708,  709. 

paid,  53. 

past  due  does  not  render  the  whole  due,  157. 

penalty  for  usury  tabulated  by  states,  708,  709. 

provision  for  increase  of,  of  instrument  dishonored,  378. 

rate  in  blank,  404. 

rate  recovered  in  pledged  instrument,  442. 

recovery  if  not  yet  accrued  after  default  of  installment,  Zll . 

usurious,  231. 

what  law  governs  payment  of,  231. 

when  begins  to  run,  53. 

when  no  rate  specified,  53. 

whether    paper    deemed    overdue    when    installment    of    remains    un- 

INTERMARRIAGE,  224. 

INTERPRETATION— 

governed  by  lex  loci  coniractus.  227. 
of  Negotiable  Instruments  Law,  692-694. 

INTOXICATION,  see  also  Drunken  Person— 
as  a  defense  against  bona  fide  holder,  163n. 
in  general,  504. 

INURE,   101,   142. 

IRREGULAR  INDORSEMENT— 
conflict  of  decisions  as  to,  124. 
example  of,   123. 
liability  created  by,  123,  124.     . 
liability  of  one  not  payee  writing  his  name  on  paper  before  delivery 

to  payee,  123,  124. 
liability  under,  124,  548. 
meaning  of  term,  123  et  seq. 
parol  evidence  of  intention  admissible  between   intermediate  parties, 

125. 
whether  parol  evidence  of  intention  admissible  between  remote  parties 

125. 


788  INDEX. 

[references  are  to  pages.] 
IRREGULAR  INDORSER,  see  also  Anomalous  Indorser- 
accommodation,  124. 
liability  of,  548,  550. 

IRREGULARITY— 

sent  notice  of  dishonor,  timely  receipt  of,  199,  604. 

ISSUE— 

defined,  695. 

of  bills  of  credit  by  bank,  265. 

of  execution  as  extinguishment  of  other  rights,  224. 

of  overdue  paper,  52,  392. 


JOINT  AND  SEVERAL— 
credit,  249. 
instruments,  61. 
liability,  62. 
two  or  more  signing  "I  promise  to  pay,"  413. 

JOINT  DEBTORS— 

presentment  for  payment  to,  197,  198,  597. 

JOINT  DEPOSIT,  249. 

JOINT  DRAWEES— 
allowed,  643. 
if  drawn  on  firm,  may  l>e  accepted  by  one  partner  in  firm  name, 

658. 
if  not  partners,  all  must  accept,  197,  198,  597. 
in  general,  61. 

JOINT  INDORSEES— 

intiorsement  by,  470,  559. 

JOINT  INDORSEMENT,  122. 

JOINT  INSTRUMENT,  61. 

JOINT  MAKERS— 

whether  defense  of  one  is  available  for  others,  504. 

JOINT  OBLIGORS— 

presentment  to  when  not  partners,  193,  658. 

JOINT  PARTIES— 

consideration    moving   to    one,    428. 

liability  of,  559.  560. 

not  partners,  notice  of  dishonor   to.    197,   198,   597. 

presentment  to,  574. 

suits  by,  268. 

two  or  more  persons  signing  "I  promise  to  pay,"  413. 

JOINT  PAYEES,  470,  559— 

authorizing  confession  of,  does  not  aflfect  negotiability,  57,  388. 
liability  of,  143,  559. 

JUDGE— 

questions  for,  see  Jury. 


INDEX.  789 

[references  are  to  pages.] 

JUDGMENT— 

against  maker,  dispenses  with  presentment  to  charge  indorser  after 
maturity,  610. 

authorizing  confession  of,  does  not  render  instrument  non-negoti- 
able, 57,  388. 

extinguishes  bill  or  note,  224. 

in  general,  352. 

JUDICIAL  NOTICE— 

courts  will  not  take,  of  laws  of  another  state  or  country,  349. 
of  seal  of  notary  public,  351. 
reasonable  business  hours,   569. 

JURISDICTION  OF  JUSTICES— 

amount,  laws  tabulated  by  states,  711   et  seq. 

JURY,  347,  348— 

and  judge,   functions  of,  as  to  reasonable  time,  700. 
interpretation   of  findings  as  to  holder  in   due  course,  486. 


K 

KINDS  OF  COMMERCIAL  PAPER,  258. 

KINDS  OF  INDORSEMENT,  116,  461. 

KNOWLEDGE— 

actual,  of  defect  or  infirmity,  153,  154,  500.  508. 

of  bank  of  general  contents,  241. 

of  signature  by  bank,  241. 

of  solvency  of  prior  parties,  154. 

to  agent  is  knowledge  to  principal,  154. 


LADING,  BILLS  OF,  see  Bills  of  Lading. 

LAW,  see  also  Conflict  of  Law — 
conflict  of,  227  et  seq. 
operation  of,  may  discharge  instrument,  224. 

LAW  IN  GEORGIA,  714,  715,  716,  717,  718. 

LAW  MERCHANT— 
additions  to,  14. 
administered  as  customs,  14. 

administered  by  King's  Court  of  Common  Law,  14. 
as  a  custom,   18. 
code  of  rules,  13. 
codified,  15. 

codified  in  California,   15. 
codified  in  England,  15. 
codified  in  France,  15. 
codifietl  in  United  States,  15. 
court  at  the  fairs,  14. 


790  INDEX. 

[references  are  to  pages.] 
LAW  MERCHANT— continued- 
custom  or  usage,  13. 
declared  law  of  land,  14. 
defined,  13. 

differs  from  common  law,  13. 
differs  from  equity  and  admiralty,  13. 
engrafted  on  common  law,  18. 
governs  cases  not  provided  for,  703. 
meaning  of  term,  13. 
negotiability  in,  defined,  17. 
negotiable  instruments  law,  15,  16. 
not  part  of  law  of  England  at  first,  13. 
object  of,  13. 
origin,  14. 

origin  of  bill  of  exchange  under,  15. 
origin  of  promissory  note  under,   15. 
principles  of,  when  applied  by  Federal  courts,  232,  233. 
rules  of,  to  govern,  339,  703. 
second  stage  of  development,  14. 
stages   of  development,    13. 
system  of  law,  13. 
third  stage  of  development,  14. 
unwritten  law  merchant,  15. 
when  to  govern,  339,  703. 

LAW  OF  FORUM,  see  Lex  Fori. 
LAW  OF  PLACE— 

demand,  notice,  protest,  232. 

governing  validity,  etc.,  228,  229. 

indorsement,  effect  and  enforcement,  231,  232. 

liability  of  acceptor,  230. 

liability  of  indorser    and    drawer,   227-233. 

question  of  negotiability,  228. 

question  of  validity,  228,  229. 

requisites  as  to  form  and  execution,  231. 

validity  of  indorsement,  231,  232. 

LEGAL  HOLIDAYS— 

presentment  for  payment  when  instrument  falls  due  on,  191,  .580. 

LEGAL  TENDER— 
defined,  59. 

instrument  payable  in,  59. 
what  constitutes,  59. 
what  is,  59. 

whether  bank  note  is,  265,  266. 
whether  gold  or  silver  certificates  are,  265,  266. 

LEGAL  TITLE,  see  Title. 

LETTER  BOX— 

effect  of  deposit  of  notice  of  dishonor  in,  200,  601,  602. 

LETTERS  OF  CREDIT— 
defined,  265. 
use  of,  265. 


INDEX. 


791 


[references  are  to  pages.] 
LETTERS  OF  CREDIT-Hcontinued— 

when  addressed  generally,  265. 
when  addressed  to   one   person,   265. 

LEX  FORI— 

determines  in  whose  name  suit  is  to  be  brought,  227  et  seq. 
when  controls,  227  et  seq. 

LEX  LOCI  CONTRACTUS— 
governs  as  to  validity,  230,  231. 
when  is,  230,  231. 

LEX  LOCI   SOLUTIONIS— 

when  governs,  231. 
LIABILITY,  see  also  Acceptor;  Agent;  Drawer,  etc.— 

agent,  36,  417. 

by  delivery,  143,  559. 

limiting  drawer's,  140,  540. 

of  acceptor,   141,  541. 

of  acceptor  for  honor,   100. 

of  acceptor  of  bill  drawn  in  set,  141. 

of  accommodation  party,  145,  448. 

of  administrator,  36. 

of  agent  or  broker,  147,  561. 

of  agent,  when  agency  is  not  disclosed,  see  Agent. 

of  bank  to  agent  of  undisclosed  principal,  250. 

of  bank  for  payment  of  forged  check,  241n. 

of  bank  in  tort,  250. 

of  broker  or  agent  on  negotiation  without  indorsement,  144,  561. 

of  concealed  surety,  272,  273. 

of  dormant  partner,  39. 

of  drawee  retaining  or  destroying  bill,  96,  652. 

of  drawer,  140,  540. 

of  drawer  on  memorandum  check,  242,  243. 

of  executor,  36. 

of  guardian,  36. 

of  indorser,  when  conflict  of  laws,  227,  233. 

of  intlorser,  when  spendthrift,  32. 

of  indorser,  where  paper  negotiable  by  delivery,   143,  559. 

of  indorser's,  on  bill  of  exchange,  drawn  in  set,  70,  673. 

of  indorser's  prima  facie,  that  of  order  of  indorsement,  143,  559. 

of  irregular  indorser,  124,  548. 

of  maker,    139,   538. 

of  negotiator,   by   delivery,   144,   559,   561. 

of  officers  of  government,  38. 

of  officers  of  public  corporations,  38. 

of  parties  generally,  see  Acceptor;  Drawer;   Indorser;  Maker,  etc. 

of  partners  after  dissolution,  39. 

of  partners  on  accommodation  paper,  39. 

of  partnership  on   firm  notes,   see   Partners. 

of  person  whose  name  is  forged,  241n. 

of  principal  for  acts  of  agent,  35-37. 

of  public  officers,  38. 

of  secret  partner,  39. 


792  INDEX. 

[references  are  to  pages.] 
LIABILITY— continued— 
of  secretary,  36. 

'  of  signing  by  trade  or  assumed  name,  49,  416. 
of  silent  partner,  39. 
of  spendthrift,  32. 

of  transferor  by  delivery  only,  552,  553. 
of  trustee,  36. 

order  in  which  indorsers  liable,  143. 
primary,  139,  697. 
qualified  indorser,   144,  552,   553. 
secondary,   139,  697. 
under  assumed  name,  49,  416. 
under  trade  name,  49,  416. 
unqualified  indorser,   143. 
without  recourse,  144. 
where   paper   negotiated    by    delivery    only,    552. 

LIBERTY  BONDS— 

bad  faith  purchase,  263. 
liability  of  bank  for  theft,  264. 
negotiability,  263. 
payable  to  bearer,  263. 
stolen,  263. 

LIEN— 

extent  of  recovery  by  holder,  153,  442. 
on  instrument  constitutes  holder   for  value,   152,  442. 
on  instrument  makes  one  a  bona  fide  holder,  153,  442. 
on  note,  442,  443. 

LIEN   HOLDER— 

amount  of  recovery,  442,  443. 

amount  of  recovery  by  transferee   from,   442,  443. 

is  hoWer  for  value,  153,  442. 

maker   as,   whether   discharged,   616. 

LIENOR— 

having  lien  on   instrument  a  bolder   for  value,   153,  442. 

holder  for  value,  153,  442. 
LIMITATIONS   OF  ACTIONS,  see   St.^tute  of  Limitation.s. 
LIMITATIONS,  STATUTE  OF.  see  Statute  of  Limitations. 
LOST  AND   DESTROYED   NEGOTIABLE   INSTRUMENTS- 

burden  of  proof  as  to  holder  of,  256. 

contents  of,  how  shown,  256. 

copy  as  evidence,  255. 

demand,  protest  and  notice,  257. 

demand,  protest  and  notice  not  excused  by  loss,  257. 

diligence  of  owner  upon  discovery,  253. 

form  of  indemnity  bonti,  254. 

indemnity  bond,  254. 

indemnity  rule,  254. 

in  general,  253. 

owner's  diligence,  253. 

party  liable  not  discharged,  254. 


INDEX. 

[references  are  to  pages.] 
LOST   AND  DESTROYED   NEGOTIABLE  INSTRUMENTS— 
continued- 
protest,  presentment   and   notice,   666. 
replevin   of,  253. 
suit  upon,  256. 
title  to,  253. 

LOST  OR  STOLEN,  173. 

LOVE  AND  AFFECTION— 

as  consideration,  74. 
LUNATIC,  see  also  In.sane;  In-sanity;  Incompetent;  Capacity — 

capacity  of,  30. 

effect  of  undue  advantage,  31. 

M 

MAIL— 

deposit  in  completes   delivery,  62. 

deposit  in  mail  chute,  602. 

miscarriage  in  effect  of,  200,  601,  602. 

notice  of  dishonor  may  be  sent  by,  200,  594.  599,  601. 

MAILING— 

is  delivery,  62,  695. 

MAKER,   see  also  Parties,  etc. — 
admits,  139,  538. 
admits  capacity  to  contract,  139. 
admits  payee  owner,  139. 
bound  without  presentment,  193. 
buying  instrument  when  discharges,  182. 
by  what  law  liability  of,  governed,  230. 
defense  as  surety,  see  Surety. 
estopped  to  deny  capacity  of  payee,  28,  31. 
estopped  to  deny  insane  payee's  capacity,  31. 
if  surety,  rights  against  co-maker,  618. 
if  surety,  not  entitled  to  notice  of  dishonor,  587. 
liable  to  indorsee  of  insane  payee,  30,  31. 
liability.  538,  539. 
liability,   if  drunk.  31,  2)2. 
liability  of,    139.  538. 

liability  of  anomalous   indorser  to.   548.   550. 
liability  and  admissions  of,  139,  538. 
may  be  payee,   394. 

nature  of  contract  entered  into  by,  139.  538.' 
note  to  ortier  of  not  complete  until  indorsed.  676. 
possession  by,  presumption  as  to  payment,  224. 
presentment  for  payment  not  necessary  to  charge,  563,  564. 
subject  to  lex  loci  contractu,  230. 
surrender  of  note  to,  616. 
theft  of  note,  695. 

MAKERS— 

joint  and  several,  413. 


793 


794  INDEX. 

[references  are  to  pages,] 
MAKER  OR  ACCEPTOR— 

estopped  to  deny  capacity  of  infant,  28,  31. 

MAKER  OR  DRAWER— 
described,  5. 

MAKER  OR   INDORSER— 

doubt  as  to  whether  signature  is  that  of,  338,  339,  413. 

MANAGER  OF  CORPORATION— 
power  to  issue  negotiable  paper,  40. 

MARGINAL  FIGURES— 

discrepancy,  words  to  control,  3,  52. 

effect  of,  413. 

when  may  be  changed,  52. 

MARGINAL   NOTATIONS,   386,   400. 

MARK— 

as  a  signature,  48. 

MARRIED  WOMEN,  see  also  Coverture;  Defenses— 
accommodation  contract  by,  451. 
as  surety,  33,  162. 
capacity  of,  32,  162. 
conflict  of  laws,  32. 

coverture,  defense  of  good  against  bona  fide  holder,  162. 
incapacity  of  to  contract  at  common  law,  32,  162. 
indorsement  by,  422. 
marital  rights  as  consideration,  432. 
motlern  statutes  as  to,  32. 

statutory  changes  as  to  contractual  powers  of.  32.     . 
whether   contracts   enforcible,   laws   tabulated   by    states,   711,    et   seq. 

MARRY— 

agreement  to,  as  a  consideration,  75. 

MATERIAL  ALTERATION,  see  also  Alteration. 
examples  of,  176. 
what  constitutes,  637,  638. 

MATERIAL  OF  INSTRUMENT— 
cloth,  46. 
leather,  46. 
parchment,  46. 

MATURITY,  see  also  Overdue  Paper— 
action  may  not  be  l>egun  on  day  of,  582. 
"after  sight"  bill  accepted  for  honor,  103,  669. 
instrument  payable  "on  or  before,"  385. 
instrument  not  overdue  on  day  of,  486. 
mistake  as  to,  606. 

notice  of  dishonor  may  be  given  on  day  of,  598. 
time  of,  580,  582. 
whether  dishonor  to  postpone  payment  till  late  on  day  of,  572. 

MAXIMUM— 

memorandum  as  to  limit  of  amount  of  check,  632. 


INDEX.  795 

[references  are  to  pages.] 
MEDIUM  OF  PAYMENT— 
alteration  of,  636,  637. 
payment  must  be  in  money,  56-60. 

MEMORANDA— 
in  general,  64. 
on  instrument,  64. 

MEMORANDUM— 

constructive   notice,   64. 

limiting  liability  of  drawer,  540. 

of  maximum  amount  of  check,  632. 

on  face  or  back  of  instrument,  64. 

to  show  liability  of  one  who  signs  on  back,  545. 

wliether  part  of  instrument,  65. 

written  contemporaneously,  65,    118. 

MEMORANDUM   CHECK— 
in  general,  242,  243. 
liability  of  drawer,  242,  243. 

AlERCHANDISE— 

not  equivalent  to  money,  56. 

MESSENGER— 
of  bank,  350. 

MILITARY   DISTURBANCES— 

as  excuse  for  non-presentment,  etc.,  202. 

MINOR,  see  Infanc\';  Inf.'Vnts. 
MISCARRIAGE  IN  MAILS— 

effect  of,  200,  601.  - 

MISDESCRIPTION— 

in  notice  of  dishonor,  195. 

when  does  not  vitiate  notice,  195. 

MISREPRESENTATION— 
liability  for,  422. 

MISSPELLING— 

of  payee's  or   indorsee's   name,  472. 

MISTAKE— 

in  certification  of  check,  689. 

in  date  of  maturity,  606. 

when    failure  to  indorse  through,   109. 

where  instrument  executed  under  rights  of  bona  fide  holder,  175,  176. 
MONEY— 

act  in  addition  to  payment  of,  388. 

alteration  of  medium  of  payment,  636,  637. 

current,  designation  of  particular  kind  of,  does  not  affect  negotiabilty, 
59,  391. 

foreign  instrument  payable  in,  59. 

in  alternative,  56. 

instrument  payable  in  particular  kind  of,  59 

meaning  of  money,  current  money,  current  funds,  currency  and  effect, 
on  negotiability,  59. 


796  INDEX. 

[references  are  to  pages.] 

MONEY— continued- 
negotiable  instrument  must  be  payable  in,  56,  369,  391,  646. 
of  foreign  country,  59. 
payment  must  be  paid  in,  56,  218. 
proceeds  of  fraudulent   instrument,  433. 
what  term  includes,  59. 

MORAL  OBLIGATIONS— 

not  sufficient  as  consideration,  75. 

AIORTGAGE   STIPULATION— 
effect  of,  370,  371.  372,  2,72,. 

MUNICIPAL  BONDS— 

statute  applies  to.  see   Coupon   Bonds. 

MUNICIPAL  CORPORATIONS— 

fiscal  officer  of,  as  payee  of  indorsee,  471. 
power  to  execute  negotiable  paper,  41, 
power  to  execute  negotiable  instruments,  41. 
securities  of,  not  warranted  upon  negotiation.  553. 
unauthorized  issue  or  sale  of  securities,  510,  511,  616. 

MUNICIPAL  WARRANTS,  372. 

MUTUAL  AGREEMENT— 
as  to  ante-dating,  47. 
as  to  post-dating,  47. 

N 

NAME— 

how  indorse  when  misspelled.  112,  472^ 
of  holder  misspelled,  indorsement   by,   112,   472. 
of  payee  or  indorsee  wrongly  designated,  472. 
signing  in  assumed  or  trade,  415. 

NECESSARIES— 
bill  for,  30. 
note  for,  30. 
note  given   for  by  infant,   161. 

NECESSARY  PARTIES,  see  also  Parties,  etc.— 
name  of  drawee  must  appear,  60. 
name  of  maker  must  appear,  60. 
should  be  set  out,  60. 

NEED— 

case  of,   61. 

NEGLIGENCE— 

effect  of,  on  bona  fides,  175,  176. 

failure  to  discover  or  report  forgery,  424. 

failure  to  indorse  through,   109. 

fraud,  a  question  of,  175,  176. 

in  collecting   instrument,   423. 

in  custody  of   instrument   signed   in   blank,   633. 

in  facilitating  forgery,  424. 

in  facilitating  detachment  of  note   from   contract,   632. 


INDEX.  797 

[references  are  to  pages.] 
NEGLIGENCE— continued— 
in  getting  intoxicated,  504. 
in  leaving  open   spaces  on   instrument   which   facilitates   raising,  etc., 

6Z2,. 
in  mailing  instrument  to  wrong  person  of  same  name  as  payee,  424. 
in  not  ascertaining  nature  of  instrument  signed,  502. 
in  paying  instrument  without  requiring  its  return,  538. 
in  purchase  as  notice  of  equities,  508-512. 
leaving   room    for   alteration,   by   negligent   execution,    rentiers   party 

liable  to  bona  fide  holder,  178. 
of  drawee    in   disregarding   countermand,   bars    recovery  of   payment 

on   forgetl    indorsement,   424. 
of  holder  whether  liable   to   refund   to  drawee   if  drawer's   signature 

forged,  556. 
sending  check  to   drawee   for  collection,  682. 
when  contributes  to  negotiation,   178. 

NEGOTIABILITY— 

additional  provisions  not  affecting,  56,  57,  388. 

all   instruments    originallj'   non-negotiable,    17. 

conflict  of  laws  as  to,  228,  229. 

continuation  of,   18,  127,  474. 

defined,   17. 

designation   of    particular    kind   of    current    money,    does    not    affect, 

58,  391. 
distinguished  from  assignability,  18. 
effect  on,  of  restrictive  indorsement,  17,  382. 
effect  on,  of  instrument  discharged  by  payment,  17. 
meaning  of  term,  17. 
necessity  of  promise  to  pay  money,  19. 
not  affected  by  contingency  in  mortgage,  371. 
not  necessary  that  terms  follow  statute,  400. 
omission  of  place   where   drawn   or   payable    does   not   affect,    46,    56, 

68,  391. 
omission  of  value,  recital  tloes  not  affect,  44  et  seq. 
origin  of,  18. 
pleading  must  allege,  370. 

provision  authorizing  sale  of  collateral,  does  not  affect,  57,  388. 
provision  for  discount,  Z72). 

provisions  in  instrument  which    impair,    381,   388. 
provisions  in  instrument  which    do   not  impair,   367,   391. 
provisions  of  title   remaining  in   vendor,  383. 
purpose  of,  20. 
requisites  of,  43,  44,  369. 
rules  as  to,  19. 
seal  does  not  affect,  68,  391. 
words  of.  alteration,  637. 
words  of,  necessary,  369. 
words  of,  not  required  in   indorsement,  463. 
words  used   to  denote,   19. 
what  law  determines,  228,  229. 


798  INDEX. 

[references  are  to  pages.] 
NEGOTIABILITY  OF  PROAilSSORY  NOTES,  see  also  Promissory 
Notes — 
development  of  modern  times,  15. 
opposed  by  common  law  judges,  15. 

NEGOTIABLE^ 

distinguished  from  non-negotiable,   19. 

in  origin  continues  until  restricted  or  discharged,  18. 

order  on  or  promise  to  pay  out  of  particular  fund  not,  55,  381. 

paper,  18. 
NEGOTIABLE  BONDS— 

how  made  non-negotiable,  263,   706. 

indorsement,  262,  263,  706. 

made  non-negotiable,  262,  263,  706. 

statement  thereon,  262,  263,  706. 

NEGOTIABLE  BY  LAW  MERCHANT— 
importance  of  knowing  whether,  23. 

NEGOTIABLE  INSTRUMENT— 

continues   negotiable   until    restrictively    indorsed   or    discharged,   474. 
constitutes  value,  433. 
formal  requisites,  369,  395. 
"instrument"  means,  695. 

NEGOTIABLE  INSTRUMENTS,  see  also  Bills  of  Exchange;  Prom- 
issory Notes;  Coupon  Bonds;  Municipal  Bonds;  Bank  Bill  or 
Notes  ;  Certificates  of  Deposit,  etc. 

bearing  seal,  391. 

designation  of  particular  kind  of  current  money,  391. 

earliest  form  of,  15. 

form  of,  1,  11. 

how  discharged,  214  et  seq,  615. 

imports,  consideration,  64,  11 . 

in  hands  of  receiver,  136. 

indication  of  particular  form   does  not  render  non-negotiable,  381. 

instrument  payable   on   contingency  not   negotiable,   385. 

instrument  continues  negotiable  until  discharged  or  restrictively  in- 
dorsed, 474. 

■must  contain   unconditional   promise,   369. 

must  be  for  payment  of  sum    certain,   369. 

must  be  for  payment  of  money  only,  369. 

must  be  in  writing,  369. 

must  be  signed  by  maker  or  drawer,  369. 

must  be  payable  on  demand  or  at  determinable  future  time,  369. 

must  be  payable  to  order  or  bearer,  369. 

not  tiated,  391. 

not  specifying  value  given,  391. 

not  specifying  place  where  drawn,  391. 

not  specifying  place  where  payable.  391. 

option  to  require  something  in  lieu  of  money,  388. 

omissions  not  affecting,  391. 

order  to  pay  out  of  particular  funds  not  negotiable,  58,  391. 

origin  and   development,    11. 

payment  by,  20. 


INDEX.  799 

[references  are  to  pages.] 
NEGOTIABLE  INSTRUMENTS— continued- 
payable  on  contingency,  not,  54,  385. 
provision  for  sale  of  collateral,  57,  388. 
provision  for  confession  of  judgment,  57,  388. 
provisions  as  to  collateral,  57,  388. 
rights  of  parties  to,  134,  135. 

statement  of  transaction  does  not  affect  negotiable  character,  381. 
waiver  of  benefits  of  law,  388. 
when  may  be  attached,  135-136. 

NEGOTIABLE  INSTRUMENTS  LAW— 
adoption  of,  15,  358. 
American  Bar  Association's  work,  354. 
articles  of,  368. 

codification  of  continental  countries,  354. 
confusion  before  its  adoption,  356. 
corresponding  sections  in  the  different  states,  360,  361,  362,  363,  364, 

365,  366,  367. 
history  of,  in  U.   S.,  354. 

judicial  notice  of  enactment  in  another  state,  582. 
not  adopted  in  Georgia,  714. 
object  of,  355. 

origin  and  history  of  English  Act  of,  354. 
plea  for  its  uniform  construction,  692  et  seq. 
purposes.  355. 
short  title,  692. 
table  showing  the  corresponding  sections  of  the  statutes  in  the  dififer- 

ent  jurisdictions,  360.  361,  362,  363,  364,  365,  366,  367. 
takes  effect  when,  358,  702. 
title,  353. 

what  it  codifies,  353. 
what  it  is,  353. 

when  in  effect  in  various  states,  358,  359. 
where  adopted,   358,   359. 
where  failed  to  pass,  356. 
where  first  adopted,  456. 
where  found  in  state  laws,  360  et  seq. 
where  in  force,  356,  358,  359. 
whether  changes  the  law,  353. 
why  not  a  federal  statute,  354. 

NEGOTIABLE  INSTRUMENTS  WITH  COLLATERAL  SECURITY— 
acceptance  of  collateral  security  not  payment,  285. 
accommodation  paper  as  collateral  security,  289. 
agreement  to  rely  on  collateral  security,  when  payment,  285. 
amount  of  debt  controls  recovery  on  collateral,  287. 
collateral  instrument  should  not  be  overdue,  281. 
collateral  note   negotiable,  283. 
collateral  security  must  be  exhibited,  286. 
defenses  between  parties  privy  to  collateral  security,  290. 
delay  on  original  note  to  await  maturity  of  collateral,  284. 
demand  for  payment,  when  sufficient,  286. 
discharge  of  indorser  by  release  of  collateral,  286. 


800  INDEX. 

[references  are  to  pages.] 
NEGOTIABLE  INSTRUMENTS  With  Collateral  Security— continued- 
effect  of  agreement  for  delay,  284. 

form  of  guaranty  of   collateral  note,  291. 

form  of  note  with  collateral   security,  280. 

form  of  note  with  transfer  account,  291. 

guarantee   may   not  surrender   collateral    securities   without    releasing 
guarantor,  289. 

holder  may  proceed  against  indorser  before  collateral,  286. 

holder  of  collateral  a  holder  for  value,  281. 

indorser's  remedy,  290. 

indorsee's  rights  under  stipulations  in  collateral  note,  287. 

meaning  of  collateral  security,  278. 

memorandum  on  collateral  note,  284. 

negotiability  affected  by  option  to  take  possession  of  property,  283. 

negotiability  of  collateral  note,  283. 

negotiability  of  demand   note   not  affected   by  collateral.   282. 

negotiability  of  note  with   collateral,  282. 

negotiability  of  note  providing  for  sale  of  collateral,  282,  285. 

negotiability  not  affected  by  stipulation  as  to  bank's  authority,  282. 

notice  unnecessary  when  collateral  security  taken  by  prior  party,  288. 

ownership  of  collateral  negotiable  instrument,  282. 

pre-exi3ting  debt  not  value,  281. 

presumption  as  to  ownership,  282. 

provision  authorizing  sale  of  collateral.  285. 

provision  for  requiring  additional  security,  285. 

satisfaction   of   debt  through   payment  or   sale  of   security.  290. 

separate   obligations,   279. 

substitution   of   collateral   securities,   290. 

surety  discharged  by  release  or  loss  of  collateral,  289. 

surety  not  released  by   delay  in   enforcing   collateral,  289. 

surrender  of  collateral  as  discharge,    287. 

surrender  of  collateral  as  Tlischarge  of  guarantor,  287. 

surrender  of  collateral  security  when   releases   indorser,  286. 

tender  of  collateral  when  payment  demanded,  286. 

transfer  of  collateral   instrument   for   pre-existing  debt.  281. 

when  accommodation   makers   and   indorsers   not  liable,  289. 

when  collateral  security  excuses  presentment,  protest  and  notice,  288. 

when  holder  of  negotiable  instrument  as  collateral  is  holder  for  value, 
281. 

when  holder  receives  collateral  instrument  free  from  equities,  281. 

when  holder's  possession  of  collateral  not  a  defense  in  maker's  favor, 
286. 

when  provision   for  additional   securities   renders  non-negotiable,  285. 

when  transferer  must  show   damage  by   failure  to  present   collateral 
security   for  payment.  288. 

when  transfer   is   as   collateral    for   debt   not   due,   281. 
NEGOTL^BLE  IN  ORIGIN— 

how  long  negotiable,  17. 
NEGOTIATE— 

power  to,  absence  of  words  implying,  119,  463. 
NEGOTIATED-^ 

whether  statement  of  law  or  fact,  4.57. 


INDEX.  801 

[references  are  to  pages.] 
NEGOTIATION,  see  also  Indorsement;  Delivery;  Transfer — 
after   payment  by  party   secondarily   liable,   626. 
an  unreasonable  time  after  issue,  155,  498. 
bill  must  be  negotiated  within  reasonable  time,   payable  on   demand, 

566. 
back  to  prior  party,  127. 
by  assignment,  in  general,   109. 
by  delivery,  108,  128,  455. 
by  delivery,  liability   of,    128. 
by  delivery,  warranties  of,  552. 
by  holder  with  notice,   153-157. 
by  holder  without  notice.   153-157. 
by  indorsement,    109,   455. 
by  operation  of  law,   109,   130. 
by  prior  party,   127,  479. 
by  whom  may  be,   109. 

discharge  of  bill  by  failure  to  present  for  acceptance  or  negotiate,  658. 
how  made,  455.  462. 
in  breach  of  faith.  150,  174,  175,  501. 
meaning  of  term,  17,  108. 
methotls  of,  by  assignment,  109. 

by  delivery,  108,  552. 

by  indorsement,  108,  552. 

by  operation  of  law,  109,  130. 
of  parts  of  bill  in  set,  67i,  674. 

of  demand  note,  an  unreasonable  time  after  issue.  66,  155,  498. 
prohibition  of  further,  119,  463. 
restrain  for  fraud,  81. 
title  when  by  fraud,  142. 
to  and  by  prior  party,  479. 
what  constitutes,  108,  455-457. 
when  prior  party  may  negotiate,  479. 
when  provision  for  reimbursing  payee,  370. 
when  instrument  negotiated,    17.  / 

when  overdue,  155. 
when  drawer  and  indorsers  released  by  delay  in  negotiating  hill,  658. 

NON-ACCEPTANCE— 
dishonored  by,  186,  661. 
duty  of  hoMer  on,  660. 
efifect  of.  186. 
omission  to  give  notice  of.  does  not  affect  rights  of  subsequent  holder 

in  due  course,  203,  613. 
what  amounts  to,  186,  661. 

NON-COMPOS  MENTIS,  see  also  Lunatics,  etc.— 
capacity,  30,  31. 

NON-EXISTING  BILL— 
acceptance  of,  93,  96. 
oral  acceptance  of,  93,  95,  96. 

NON-EXISTING  PERSON— 
as  payee,  395. 


802  INDEX. 

[references  are  to  pages.] 
NON-NEGOTIABLE  INSTRUMENT— 

assignment  of,  how  accomplished,  131  et  seq. 

authority  of  agent  to  execute,  416. 

distinguished   from  negotiable,   19. 

illustration  of,  25. 

in  general,   imports  consideration,   78,  79,  427. 

indorsement  of,  556. 

indorsed  in  blank,  not  negotiable,  396. 

payable  to  cashier  if  paj^able  to  bank,  471. 

presumption  of  consideration,  428. 

rights  of  parties  to,  134. 

transferred  by  assignment,  131. 

valid  between  parties,  23. 

when  subject  to  terms  of  mortgage,  372. 

whether  affected  by  act,  471. 

NON-PAYMENT  OF  BILLS  OF  EXCHANGE— 
damages  for,  675. 

dishonor  b}',  notice  of  when  unnecessary,  203. 
"not  transferable,"   renders   note   non-negotiable,   Z12. 
notice  of,   where  acceptance   refused,   203,  613. 
result  of  dishonor  by,  207,  579. 
statement  of,  not  sufificient.  194. 
when  dishonored  by,  194,  578. 
when   instrument   is    dishonored  by,    194,    578. 

NOTARY— 

acceptance  for  honor  made  before,  102. 

as  to  proof  of  signature  and  seal.  204. 

attests  payment  for  honor,  219,  220. 

certificate  is  evidence,  208. 

demand  in  person,  205. 

may  act  as   agent  to  give,   196. 

may  make  protest,  664. 

minutes  of,  equivalent  to  protest,  212. 

must  make  demand,  211. 

must  make  presentment,  212. 

notice  of  dishonor  may  be  made  by,  207. 

protest  by,  210. 

protest,  how  made,  204,  205. 

recognition   given   official,   210. 

signature  may  be  printed,  204. 

NOTARY  PUBLIC,  see  Notary;  Protest. 

NOTARIAL  ACT  OF  HONOR— 

necessary  to  payment   for  honor,  220. 

NOTE,  see  also   Promissory  Note  and  Notes — 
defined,  695  et  seq. 

drawn   to   maker's  order,    not    complete   until    endorsed,   43,    676. 
negotiable,  promissory,  defined,  43,  676. 
not  affected  by  omission  of  date,  46  et  seq. 

NOTE  OR  BILU- 

doubt  as  to  whether   instrument   is,  338,  413.  '   ' 


INDEX.  803 

[references  are  to  pages.] 

NOTES— 

new,  not  payment,  218. 

promissory,  given  for  patent  rights,  705. 

promissory,  given  for  speculative  consideration,  705. 

NOTICE,  see  also  Notice  of  Non- Acceptance,  etc. — 
actual,  154. 

agent  giving,  195,  196. 

as  to  known  solvency  of  prior  parties,   154. 
before  full  amount  paid,  500. 
by  bank,  196. 
constructive,  154. 
defects  in,  195. 

from  apparent  alteration,  633. 
from  maker's  possession  of  indorsed  note,  509. 
from  writing  on   instrument,   488. 
holder  without,  153,  484. 
judicial,  of  seal,  351. 
memorandum  is  constructive,  64. 
must  be  in  writing,  593. 
negotiation  restrained  when,  175. 

of  defect  to  holder  before  full  amount  paid,  153,  500. 
of  executory  contract  or   of   sale   with   warranty   does   not  put  pur- 
chaser on  inquiry  as  to  breach,  487. 
of  infirmity  in  instrument  or  defect  in  title,  what  constitutes,  508. 
of  limited  authority  of  agent,  421. 
of  non-payment,  law  governing  contents  of,  232. 
preliminary,  when  takes  place  of  formal  presentment,  1,   14. 
proof  of,  350. 
to  agent,  197,  595. 

to  agent  as   affecting  principal,   corporation,   etc.,   489. 
to  indorser  for  collection,   197. 
to  indorser  of  overdue  paper,  197. 
unnecessary  to  person  secured  against  loss,  203. 
what  amounts   to,    154,   508. 
what  constitutes,  154,  508. 
when  only  part  paid  for,  153. 
whether  sufficient  by  telephone,  594,  596. 
with  private  secretary,  198. 
with  wife,  198. 
written  supplemented  and  validated  by  verbal,    195,  593. 

NOTICE  OF  DEFECT— 

what   constitutes,   508-512. 

NOTICE  OF  DISHONOR— see  also  Dishonor— 
as  between  joint  indorsers,  197. 
bank  as  agent  may  give,  196. 

by  non-acceptance  excuses   notice  of  non-payment,  203,  613. 
by  what  mail  to  be  sent,  199,  600. 
by  whom  given,   195,  589. 
contents  of,  194. 
defined,  184,  194. 
delay  in  giving  when  excused,  202,  609. 


804  INDEX. 

[references  are  to  pages.] 
NOTICE  OF  DISHONOR— continued- 
duty  as  to  collecting  bank,  209. 
effect  as  to  prior  parties,  203,  591. 
effect  as  to  subsequent  parties,  203,  591. 

effect  of  deposit   in  branch  post-office   or   letter  box,  200,  602. 
effect  of  miscarriage    in    mails,    200. 
effect  of  notary's  certificate,  208. 
effect  of  omission  to  give  notice  of  dishonor  by  non-acceptance,  203, 

613. 
effect  of,  when  given  by  or  on  behalf  of  party  entitled  to  give  notice, 

203,  591. 
enures  to  whose  benefit,  591. 
failure  to  give,  effect  on  original  debt,  546. 
form  of,  194,  594. 
given  by  agent,  195,  590,  592. 
in  case  of   death,    198,    596. 
may  be  given  by  mail,  200,  594,  599. 
may  be  waived,   201,   605. 
may  be  given  to  party  or  agent,  197,  595. 
may  be  written  or  oral;  terms  of,  194,  594. 
may  be  delivered  personally  or  by  mail,  194,  594. 
may  be  given  as  soon  as  instrument  dishonored,   198. 
miscarriage  in  mails  does  not  impair  validity  of  notice,  200,  601,  602. 
must  be  given,  196,  198,  586,  596. 
must  be  given  to  inVjorser,   197.  589. 
must  be  given  to  drawer,   197,  589. 

need  not  be  signed ;  written  may  be  supplemented  by  oral,  195,  593. 
need  not  be  given  surety,  if  maker,  587. 
notary  acts  as  agent  of  holder,  196. 
notice  by  stranger  not  sufficient,   196. 
notice  by  agent,    196,   592. 
notice  need  not  be  signed,  593. 

of  non-payment  after  notice  of  non-acceptance,  613. 
omission  of  notice  of  non-acceptance  and  eft'ect,  613. 
pleading,   587. 

presumption  as   to   delivery,  602. 
proof  of  deposit  in  postoffice,  602. 
received  by  purchaser  of  instrument,  484. 
sufticiency  of  description,  194. 

time  in  which  indorser  to  give  notice  to  prior  parties,  598,  603. 
to  anomalous  or  irregular  intiorser,  544. 
to  antecedent  parties,  time  to  give,  603. 
to  assignors  for  creditors,  198,  598. 
to  bankrupt.  198,  598. 
to  joint  parties,  not  partners.  197,  597. 
to  partners,  198,  597. 
to  whom  may  be  given,  595. 
to  whom  must  be  given,   196,  586.  596,  661. 
to  whose  benefit  notice  enures,  20.^. 
waiver,  201,  605. 

waiver  embodied   in   instrument,  607. 
waiver  of  after  dishonor,  201.  605. 


INDEX. 


805 


[references  are  to  pages.] 
NOTICE  OF  DISHONOR— continued- 
waiver  of  before  dishonor,  201,  605. 
waiver  of  and  of  presentment,  570. 
waiver  of  protest,  what  it  includes,  211,  608. 
waiver  written  over  signature,  607. 
what  will  constitute  reasonable  diligence,  202. 
when  cannot  be  given  after  reasonable  diligence,  201,  576,  609. 
when  delay  excused,  202,  609. 
when  dispensed  with,  608,  610,  611. 
when  given,  198,  598. 

when  misdescription  does  not  vitiate,  195,  593. 
when  need  not  be  given  to  drawer,    200,    610. 
when  need  not  be  given  to  indorser,    200,    611. 
when  notice  sufficient,    194,    593,   601. 
when  notice  dispensed  with,  20O,  609. 
when  notice  deemed  deposited  in  postofficc,  200,  601,  602. 
when  part}'  adds  address  to  signature,  199,  604. 
where  he  is  sojourning  in  another  place,  199.  604. 
where  he  lives  in  one  place  and  has  office  in  another,  199,  604. 
where  notice  to  be  sent,  199,  604. 
where  not  sent  by  mail,  600. 

where  must  be  sent;  receipt  of  within  time  although  mis-sent,  199,  604. 
where  party  dead,  196,  198.  596. 
where  parties  reside  in  same  place,  199,  598. 
where  parties  reside  in  different  places,    199.   599. 
where  party  has  not  given  address.  199,  604. 
where  principal    obligor   is   dead,   198. 

where  party  bankrupt  or  an  insolvent  or  assigns  for  creditors,  198,  598. 
who  deemed  agent  to  receive,  198. 

NOTICE  OF  EQUITIES— 

as  bar  to  recovery,  484.  / 

before  full  payment  of  agreed  amount,  500. 
by  special   indorsement  is   not,  469. 
qualified  indorsement  is  not,  467. 
what  constitutes,  527. 

NOTICE  OF  NON-ACCEPTANCE,   see  also   Notice,   etc.— 

omission   to  give,   does   not   prejudice   rights  of   subsequent   holder   in 
due  course,  203,  613. 

NOTICE  OF  NON-PAYMENT— 
place  of  sending,   199,  604. 
time  allowed   to   one   receiving,    199,  603. 
time  when  given,  198,  199,  203. 
timely  receipt  of  irregular!}^  sent.  199,  604. 
to  bankrupt  or  solvent,  198,  598. 

to  be    given    person    liable   on    investment    when    acquired   by    assign- 
ment.   132. 
to  joint  parties  not  partners,   198,   597. 
to  partners,  198,  597. 
to  whom  given.  196,  197,  586,  595. 
unnecessary  after  notice  of  non-acceptance,  203. 
waived  by  waiver  of  protest,  211,  666. 


806  INDEX. 

[references  are  to  pages.] 
NOTICE   OF   NON-PAYMENT— continued- 
waiver  of,  201,  605. 

waiver  of,  on  whom  binding,  211,  607,  608. 
when  dispensed  with,  202,  609. 
when  failure  to  give  excused,  201. 
when  may  be  given  by  agent,  197,  595. 
when  must  be  given,  198,  199,  578,  603. 
when  need  not  be  given  to  drawer,  201,  611. 
when  need  not  be  given  to  indorser,  201,  611. 
when  sufficient   in    form,    196. 
when  unnecessary,  200,  203. 
where  acceptance   refused,  203,  613. 
where  addressed,  200,  601. 

where  parties  reside  in  different  places,   199,  604. 
where  parties  reside  in  same  place,  199,  604. 

NOTICE  OF  PROTEST  see  also  Notice,  etc.— 
effect  of,  208. 

manner  of  sending,  4,  5,  208. 
to  whom  sent,  208. 
when  drawer  countermanded  pa3rment,  205. 

NOTING  FOR  PROTEST,  664,  665. 

NOVATION— 

effect  of,  222. 


OBLIGATION— 

of  contract   determined  by  lex  loci   contractus,   128,   129. 

OBLIGEES— 

joint  presentment  to,  when  not  partners,  193,  574. 

OCCUPATION  OF  COUNTRY  BY  ENEMY— 
as  an  excuse  for  non-presentment,  etc.,  202. 

OFFICE— 

holder  of,  as  payee,  42,  394. 

OFFICER— 

fiscal  or   cashier,  instrument  drawn  or   indorsed  to,   112,   471. 

OFFICERS  OF  CORPORATIONS— 

implied  power  to  issue  negotiable  paper,  41. 

OLD  PERSONS— 

instruments  executed  by  those  incapitated,  163. 

OMISSIONS— 

construction  in  case  of,  413. 

not   affecting  validity   or   negotiability,   45-56,   391. 
of  date  does  not  affect  negotiability,  46,  391. 
of  date,  presumption  as  to,  47,  338,  401,  413. 
of  date,  same  may  be  inserted,  47,  338,  401  413. 
of  date,  when  interest  runs,  47,  402. 

of  place,   where   drawn   or  payable  tioes   not  affect   negotiability,   56, 
58,  391. 


INDEX.  807 

[references  are  to  pages.] 
OMISSIONS— continued— 
of  time  of  payment,  392. 

of  value   recital   does   not  affect  negotiability,  56,   58,  391. 
rules  of  construction  as  to,  338,  339,  413. 

to  give   notice  of  non-acceptance   does   not   prejudice   rights   of   sub- 
sequent holder  in  due  course,  203,  613. 

ON  OR  BEFORE  CERTAIN  DATE— 
time  of  payment  specified  as,  55,  385. 

"ON  PRESENTATION"— 

means  payable  on  demand,  52,  392. 

OPENING  STATEMENT,  348. 

OPERATION  OF  LAW— 
transfer  by,   109. 

OPTION— 

of  holder  to  require  something  in  lieu  of  payment  in  money,  388. 

to  pay  in  money  or  goods,  56. 

to  pay  "on  or  before"  maturity,  385. 

to  treat  instrument  as  bill  or  note,  413,  644. 

ORAL  ACCEPTANCE— 
good  at  common  law,  86. 
in  general,  86. 

ORAL  AGREEMENTS— 

as  to  mode  of  payment,  336. 

ORAL  ASSIGNMENTS,  133. 

ORDER— 

a  bill  must  contain  an,  49.  640. 

conditional,  examples  of,  49. 

illustrations  and   instances,   49,   50. 

instrument  must  be  payable  to  or  bearer,  369. 

instruments  payable  to,  50,  369,  394. 

instrument  payable  to  order  of  drawer,    51,    394. 

instrument  payable  to  order  of  maker,    51,    394. 

instrument  payable  to  order  of  drawee,  51,  394. 

instrument  payable  to  order  of  two   or  more   payees,    51,    394. 

instrument  payable  to  order  of  one   of   several   payees,    51,   394. 

instrument  payable  to  order  of  holder   of  office,   51,  391. 

in  which  indorsers  are  liable,  143,  559. 

of  civility,  as  "please  pay",  etc.,  50. 

out  of  a  particular  fund,  conditional,  55,  381. 

payee  must  be  named  or  indicated,  51. 

request,  not  sufficient,  49. 

statement  of  transaction,  57,  381. 

to  do  an  act  in  atidition  to  pay,  57. 

unconditional,   is   essential,   49. 

when  is  instrument  payable  to,  50. 

when  unconditional,  57,  381. 

word  order  unnecessary,  49. 

words  "by  paying",  50. 

words  sufficient  to  express,  49,  50. 


808  INDEX. 

[references  are  to  pages.] 
ORDER  OR  BEARER— 

instrument  payable  to,  50,  51. 

words  essential  to  constitute,  51,  395. 

ORDER  TO  PAY— see  also  Order— 
bill  of  exchange  must  contain,  49. 

ORIGINAL  DEFENSES— 

when  instrument  subject  to,  149,  523. 

ORIGINAL  PARTIES— 

parol  evidence  between,  45. 

OTHER  PARTIES— 

than  immediate  parties,  25. 

OTHER  KINDS— 

of  commercial  paper,  258. 

OVERDUE — see  also  Overdue  Paper,  Etc. — 
indorsed  when,  52,  392. 
indorsement   presumed   to   be  before,   125. 
in  general,  504. 

rule  where  installment  of  principal  or  interest  overdue,  156. 
when  instrument   payable    on    sight   or   demand    deemed   overdue,    52, 

392. 
when  payable  on  demand,   52.  392. 

OVERDUE  BILL  OF  EXCHANGE— 

acceptance  of,  91,  156,  653,  654. 
OVERDUE  INSTRUMENT— 

acceptance  of,  392,  653,  654. 

accommodation  as  defense,  449,  524. 

alteration,  632. 

equities  let  in,  489. 

holder  of,  not  in  due  course  but  subject  to  defense,  404. 

indorsement  of,  392. 

issued,  accepted  or  indorsed,  when,  becomes  payable  on   demand,  52, 
392.  ' 

not  overdue  on  day  of  maturit.v,  486. 

payment  of  part  of  purchase  price  before  and  part  after  maturity,  500. 

payment  to  assignor  with   or  without  notice  of  assignment,  617. 

rights  of  prior    owners    against    bona   fide   purchaser    after   maturity, 
489. 

when  demand  instrument  is,  498. 

when  payable  on  demand,  392. 

whether  made  so  by  default  of  interest,  488. 
OVERDUE   PAPER— 

installment,  overdue  efYcct  of,  156. 

interest  past  due  docs  not  render  whole  due,  156. 

may  be  transferred,  156. 

rights  of  transferee,  157. 

set-ofif  good  against  transferor,  not  good  against  transferee,  157. 

transferee  of,  takes  subject  to  what  equities,  157. 

OWNERSHIP— 

of  instrument  by   princijjal   debtor,  effect  of,  215,  223,   224.  615. 
presumption  as  to,   when  possession,  266. 


INDEX.  809 

[references  are  to  pages.] 


"PAID"— 

effect  of  stamping  an  instrument  with,  583,  617,  647. 

PAID  CHECK,  244. 

PAPER  MONEY— 

defined,  265. 

how  treasury  note  differs  from  others,  265. 

most  common   form,  265. 
PAROL  EVIDENCE— 

admissibilit\    of.  to  show  intention  in  cases  of  irregular  indorsement, 
125. 

admissible  to  show   suretyship  or  accommodation,  450. 

admissible  to  explain  memoranda  on  instrument,  400. 

as  to  acceptance,  339. 

as  to  accommodation  party,  450. 

as  to  ambiguity,  45,  338. 

as  to  amount,  334. 

as  to  capacity,  419. 

as  to  concealed  sureties,  272. 

as  to  conditions,  341,  410. 

as  to  consideration,  336. 

as  to  date,  333. 

as  to  demand,  343. 

as  to  execution  and  delivery,  339. 

as  to  fraud  and  duress,  45,  341. 

as  to  intention,  414. 

as  to  interest,  336. 

as  to  mistakes,  45,  341. 

as  to  mode  of  payment,  335. 

as  to  note  itself,  344. 

as  to  partial   failure  of   consideration,  446. 

as  to  parties,  331. 

as  to  place  of  payment,  335. 

as  to  protest  and  notice,  344. 

as  to  reasonable  attorney  fee,  334. 

as  to  transfer,  340. 

as  to  usury,  343. 

generally  inadmissible  to   vary  or  contradict   written  instrument  334. 

in  general,  556,  560. 

not  admissible   to   show  principal  is   payee  of   instrument  payable  to 
agent,  471. 

to  establish    agreement   as   to    extension    of    time.   332. 

to  show  order  of  indorser's  liability,  559. 

to  show  accident,  45. 

to  show  failure  of  consideration,  45. 

to  show  fraud  between  the  original  parties,  45. 

to  show  intention  as  to  date,  46,  47,  334. 

to  show  intention  as  to  time,  332. 

to  show  mistake,  45. 

to  show  mistake  in  date,  45. 


810  INDEX. 

[references  are  to  pages.] 
PAROL  EVIDENCE— continued— 
to  show   signer   an   agent,   419. 

to  vary  liability  of  agent  who  negotiates  by  delivery,  562. 
to  vary  effect  of  blank  indorsement,  462,  545. 
to  vary  status  of  person    signing    instrument,    419. 
to  vary  liability  of  indorser,  549. 
when  admissible,  332-345. 

when  admissible  to    supply    omissions    in    certificate    of    protest,    344. 
when  not  admitted  as  to  time,  332,  333. 
when  true  time  by  fraud  not  stated,  332,  333. 

PART  PAYMENT— 
in  good   faith,   181. 

ordinarily  only  payment  pro  tanto,  219. 
when  operates  as  satisfaction,  219. 

PARTIAL— 

failure  of  consideration.  444-446. 

failure  of  consideration,   parol   evidence  as  to,  45. 

indorsement  not  permitted,  114,  417. 

PARTICULAR  FUND— 

in  general,  55,  381. 

instrument  not   negotiable  when  payable  out  of,  55. 
order  on  or  promise  to  pay  out  of,  not  negotiable,  381. 
payment  out  of,  55,  381. 

PARTIES — see  also  Acceptor;  Agent;  Capacity,  Etc. — 

change    in    personality,    number    or    relation    of,    constitutes    material 
alteration,  176. 

competency  of,  as  witnesses,  330. 

defenses   admissible  between   immediate  parties,    159,    173,   175. 

immediate,  who  are,  173. 

immediate    and    remote,   who  are,    173. 

immediate,  necessity  for  consideration  between,  77. 

liabilities  of,   in  general,   139. 

mental  capacity  lacking,  30. 

those  not  incapacitated,  33. 

warranty  of  capacity  of,  140,  540. 
PARTIES,    PLAINTIFF    OR    DEFENDANT— see    Action    on    Nego- 
tiable Instruments. 

PARTIES  TO  BILL  OF  EXCHANGE— 
drawee,  11,  60. 
drawer,  11,  60. 
payee,  11,  60. 

PARTIES  TO  CHECK— 

drawee,  11. 

drawer,  11. 

payee,   11. 
PARTIES  AND  THEIR  CAPACITY— see  also,  Capacity;  Parties,  Etc. 

in  general,  27. 
PARTIES  PARTIALLY  OR  WHOLLY  INCAPACITATED— 

in  general,  28. 


INDEX.  811 

[references  are  to  pages.] 
PARTIES  TO  NEGOTIABLE  INSTRUMENT— see  also,  Parties,  Etc. 
PARTIES   TO  ACTION — see  Action   On  Negotiable   Instrument. 

PARTNERS— 

acceptance  by,  98. 

accommodation  paper  executed  by  one  partner  not  binding  on  firm,  39. 

check  of,   effect   of   withdrawal  of    funds  by   partner,   683. 

dissolution  of  partnership,  39. 

dormant,  38-40. 

doing  business  in  violation  of  law.  instrument  payable  to,  539. 

firm  not  liable  on  paper  issued  in  firm  name  for  private  debt  of  one 
partner,  38-40. 

general  authority  of  one  partner  to  bind   firm,  38. 

implied   power  to  make   negotiable  paper,  38-40. 

indorsing   firm   note,  545. 

liability  of  retired  partner,  39. 

liability  on  accommodation    paper,  38-40. 

liability  when  credit  given  to  one  member,  38-40. 

notice  of  dishonor  to,  198,  597. 

one    member    of    non-trading   partnership    cannot    execute    negotiable 

instrument  without  consent  of  all,  38-40. 
one  or  more  may  bind  firm  when,  39. 
payment  to  joint  obligors  when   not,   193,   574. 
presentment  for  payment  by  and  to,  193. 
presentment  to,  193,  573. 

presentment  to,  for  acceptance   of  bill  of  exchange,   193,  573. 
secret,  39. 
silent,  39. 

signature  by  agent;  419. 

trading  partnerships,   negotiable   instruments   negotiated  by  one  part- 
ner bind  firm,  38. 
transfer  by  one  partner  of  paper  held  by  firm,  510,  511. 
when  notice  of  dissolution  necessary,  39. 

PARTNERSHIP— see  also  Partners— 
check  drawn  by,  249. 

PARTS  OF  FOREIGN  BILL— see  Bills  In  a  Set. 

PARTY  TO  FRAUD  OR  ILLEGALITY— 
meaning  of,  524. 

PASS-BOOK,  646. 

PATENT  RIGHT— see  Rights  ;  Patent. 
instrument  given  for,  58,  705. 
negotiable  instruments  given  for,  58,  705. 
note  for  purchase  price  of  patented  article,  58,  705. 
note  for  use  of  patented  article,  58,  705. 
note  given  for,  when  void,  80. 
notes,  58. 
words  "given   for  a  patent   right",   58,  705. 

PATENT— 

worthless,  80. 

PAY  TO  ANY  BANK  OR  BANKER,  464. 


812  INDEX. 

[refekences  are  to  pages.] 
PAYABLE  AT  BANK-^ 

equivalent  to  an  order,  583. 

presentment,  192,  572. 

when  instrument  is  made,  66. 

PAYABLE  IN  AIONEY— 

confession  of  judgment  clause  effect,  58. 

efifcct  of  adding  something  else,  56,  57. 

effect  of  an  alternative,  56. 

effect  of  making  payable  in  paper  or  currency  of  a  particular  bank, 
59,  391. 

effect  on  making  payable  in  work,  56. 

money  and  wheat.  390. 

necessity  of,  56. 

option  to  receive  money  or  stock,  389. 

of   a  foreign   country,   59. 

what  is,  59. 
PAYABLE  ON  DEMAND— 

when,  392. 

PAYABLE  TO  BEARER— 
negotiated  by  delivery,  51. 
no  indorsement  necessary,  110. 
special  indorsement  on  instrument  made,  128,  462. 
when,  51,  395. 

PAYABLE  TO  ORDER— 

negotiated  by  indorsement.  17,  455. 
pa\ee  named,  50.  394. 
to  whom,  51,  394. 
when.   50,  394. 

PAYABLE  TO  ORDER  OR  BEARER— 
effect  of  wortls  "to  order  of   A",   50. 
effect  of  words  "to  the  bearer",   50. 
effect  of  words  "this  is  and   shall  be  negotiable",  50. 
pleading  must  allege,  370. 

P.AYEE — see  also  Parties,  Etc. — 
acceptance  admits  existence,  541. 
alternative  payees,  394. 
alteration  of  name  before  indorsement,  purchaser  not  holder  in   due 

course,  632. 
as  holder   in  due  course.  511. 
blanks  for  name  of,  393. 

capacity  of,   to  indorse  admitted  by  acceptance,   140,   540. 
infants  as,  28. 
joint  payees,  394,  470,  559. 
must  be  designated,  60,  394. 

must  be  named  or  indicated  with  reasonable  certainty,  51,  394. 
maker,   drawer   or  acceptor   admits   existence  and   capacity  of   payee 

to  indorse,  538,  541. 
non-existing  person,  61,  395. 
one  of  several,  394. 

on   payment   should   surrender  instrument   to   payer,   218. 
rights  against  anomalous  indorser,  548, 


INDEX.  813 

[references  are  to  pages.] 
PAYEE — continued — 

rules  concerning  nomination  of,  60,  61. 

when  fictitious,  61,  395. 

who  must  be,  60,  394. 

whether  holder  in  due  course,  511. 

PAYER— 

not  primarily  liable,  rights  of,  217. 
presentment  of  paper  should  be  made  to,  207. 
supra  protest  rights  of,  220. 

PAYER  FOR  HONOR— 
rights  of,  220,  672. 
succeeds  to  rights  of  party  for  whom   he  pays,  220,  672. 

PAYMENT— see  also  Discharge— 

acceptance  of  instrument  statetl  to  be  in  full  payment,  686. 

after  notice  of  defective  title,  688. 

alteration  after,  632. 

applications  of  instrument  to  wrong  account,  617. 

as  satisfaction  of  forged  instruments,  424. 

authority  to  receive,  216. 

bill  protested  for  non-acceptance  mav  be  protested  for  non-payment, 

665. 
by  another  bill  or  note,  not  a  discharge,  218. 
.  by  bank,  altered  check,  241. 
by  check,  note,  etc.,  20,  21. 

by  fraudulent  payee   discharges   instrument,   627. 
by  guarantor  not  discharge.  627. 
by  negotiable  instrument,  20.  21. 

by  one  secondarily  liable  does  not  discharge,  182,  626. 
by  party  accommodated  discharges  instrument,  215,  615. 
by  partv  secondarily  liable   does   not    discharge   instrument,    182,   215, 

626. 
by  party  secondarily  liable,  effect  of.  182.  216,  626. 
by  primary  party,  discharge,  182,  481,  615. 
by  principal  debtor,  182,  215,  615. 
by  stranger  presumptively  a  purchase,  623. 
by  subsequent  indorser  no  defense  to  prior  indorser,  627. 
by  surety  maker  not  a  discharge,  618,  627. 
by     surety    on    appeal    bond    of    prior    parties,    whether    subrogation 

against  subsequent  party,  623. 
by  whom  made,  215. 
check  may  be  accepted  as,  235. 
conditional,  what  amounts  to,  218,  219. 
conditional,  negotiable  instrument  as,  623. 
debtor's  note  is  conditional,  20. 
defined.  215. 

delivery  of  instrument  on,  190.  571. 
discharge  of  instrument  by,  215,  481. 
distinguished  from  sale,  215. 
effect   of  payment   by  indorser,   626-628. 
effect  of  stamping  "paid"  216. 

extending  time  of,  effect  on  party  secondarily  liable,  621. 
fact  of,  must  be  certain,  54. 


814  INDEX. 

[references  are  to  pages.] 
PAYA'IENT— continued- 
indorsement  of  is  not  a  material  alteration,  631. 
in  due  course     defined,  182,  218,  584. 
in  due  course  discharges  instrument,  182,  215. 
instrument  bought  by  maker  when  amounts  to,  182. 
medium  of,  235,  636. 
must  be  made  in  money,  218. 
new  notes  do  not  act  as,  218. 

no  time  for  expressed,  means  payable  on  demand,  392. 
not  a  contract,  215. 
note  cannot  be  split  into  parts,  217. 
of  check  must  be  in  money,  235. 

of  bill  drawn  in  set  without  surrender  of  bill,  141,  674. 
of  forged   check,  241n. 
of  negotiable  instruments,  214,  615. 
of  one  part  of  bill  drawn  in  set,  71,  674. 
of  antecedent  debt  as  value,  432. 
of  bill  in  set,  674. 

of  check   after  countermand,   effect,   434. 
of  check  by  charging  drawer's  account,  652,  686. 
of  check  by  certification,  686. 
of  raised  check  by  bank,  240. 
presumption  that  not,  but  purchase,  217. 
of  stale  check,  243. 

ordered  in  check  subsequent  to  date,  236. 

option  to  require  som.ething  in  lieu  of  payment  in  money,  388. 
part  payment,  219. 

partial,  extinguishes  debt  pro  tanto,  219. 
partial,  when  discharges  debt,  219. 

payer  should  demand  surrender  of  instrument  and  take  receipt,  218. 
payer  should  see  that  holder's  title  is   genuine,  218. 
presentment  for,  188-194. 

delay  in  when  excused,  192. 

effect  of  failure  to  make,  193. 

necessary  to  charge  drawer  and  indorsers,  184,   188,  563. 

not  necessary  to  charge  principal  debtor,   188. 

place  where  made,  192. 

time  when  made,  191. 

to  person  not  legal   holder  of  instrument,  434. 

to  accommodation  indorscr,  189,  575. 

unnecessary   when   acceptance   refused,   187,   661. 

when  not  required  to   charge  drawer,  188,   574. 

when   dispensed  with,   189,  575. 
tender  of  made  bv  prior  party,  effect  on  party  secondarily  liable,  225, 

621. 
through  clearing  house,  616. 

time  of,  need  not  be  definitely  ascertained,  if  sure  to  come,  54. 
to  whom  made,  215. 
to  holder  discharges  instrument,  481. 

to  transferor   without  indorsement  before  notice  of  transfer,  617. 
M'ith  money  obtained  by  frau^l,  instrument  not  discharged,  617. 
what  bills  must  be  protested  for  non-payment,  662. 
what  law  governs,  231. 


INDEX.  815 

[references  are  to  pages.] 
PAYMENT-^ontinued— 

when  bill  or  note  of  third  person  payment,  20,  21. 

when  made  in  due  course,  218,  584. 

when  new  note  payment,  20. 

when  payment  may  be  made,  52,  392. 

when  stranger's  note  payment,  20,  21. 

PAYMENT  FOR  HONOR,  see  also  Payment,  Supra  Protest— 
applies  only  to  bills  of  exchange,  219. 
attested  by  notary,  220,  672. 
by  two  or  more  parties,  220,  672. 
by  whom,  219,  671. 
declaration  of,  220,  672. 
declaration  of  intention,  220,  672. 
discharge  of  parties  by,  219,  672. 
discharge  of  parties  subsequent,  220,  672. 
effect  of,  220,  672. 

effect  of  holder  refusing  to  receive,  220,  672. 
effect  of  refusal  to  receive,  220,  672. 
effect  on  subsequent  parties,  220,  672. 
for  whom,  220,  671. 
how  made,  220,  671. 

in  good   faith  to  holder  with  defective   title,  218,  584. 
in  installments  does  not  affect  negotiability,  54,  Zld. 
liability  of  prior  parties,  220,  672. 
motle  of  making,  220.  671. 
notarial  act  of  honor,  220,  671. 
payer  subrogated  to  rights  of  party  for  whose  honor  payment  made, 

220,    672. 
preference  among  persons  offering,  672. 
prior  dishonor  and  protest,  220,  671. 
rights  of  payer  for  honor.  220,  672. 
where  holder  refuses  to  receive  payment,  220,  672. 
when  made,  219,  671. 
when  may  be  made,  219,  671. 
when  proper,  219,  671. 

PAYMENT  IN  DUE  COURSE— 
against  prior  party,  217. 
by  accommodated  part}-,  216. 
by  maker  or  acceptor,  216,  217. 
discharge  of  instrument,  182,  214. 
effect  of,  215. 
how  to  be  made,  216,  217. 

made  by  person  secondarily  liable,  rights  on,  216. 
rights  to  negotiate,  216,  217. 
to  whom  made,  216,  217. 
what  constitutes,  214. 

PAYMENT  IN  DUE  COURSE— 
what  constitutes,  584. 

"PAYMENT  SUPRA  PROTEST"— see  also  Payment  for  Honor— 
in  general,  218. 
when  may  be  made,  219 


816  INDEX. 

[references  are  to  pages.] 

PEDDLER'S  NOTE— 

consideration  required  to  be  stated  in,  716. 

PENALTY  FOR  USURY— 

laws  tabulated  by  states,  708,  709. 

PENCIL— 

signature  in,  46. 

PER  PROC— 

signature,    Z1 . 
writing  may  be  in,  46. 

PERSON — see  also  Persons — 
defined,  376. 

fictitious  or  non-existing,  see  Fictitious  Person. 
in  general,  345. 
notice  as  to,  when  secured,  203. 

PERSONAL  DEFENSES— see  also  Defenses— 
admissible  between  whom,  173. 
defined,  158. 
evidence  as  to,  351. 

PERSON  PRIMARILY  LIABLE— 

meaning  of,  697. 
PERSON  SECONDARILY  LIABLE— 

discharged  when,  225. 

meaning  of,  697. 

PERSONAL    REPRESENTATIVES,     see     Executors    and    Adminis- 
trators— 

presentment  to,  193,  573. 
when  given  notice,   198,  596. 

PERSONS— 

alien  enemies.  2>2). 

bankrupt  or  insolvent  payer,  ZZ. 

drunkards,  31. 

married  women,  Z2. 

spendthrifts,  32. 

PETITION,   see   Complaint — 

PLACE>- 

alteration  as  to  is  material,  636. 

alteration  as  to  place,  636. 

acceptance  to  pay  at  particular,  654. 

for  presentment   for  acceptance,  657,  659. 

necessity  of  specifying,  391. 

of  acceptance,   185,   186. 

of  drawing  or  payment  need  not  be  specified,  56,  39L 

of   drawing   instrument,   necessity   of   specifying,   56,   391. 

of  indorsement,  presumption  as  to,  125,  329,  474. 

of  payment — blanks   for,  192. 

of  presentment — for  payment,  192,  569,  570. 

of  protest,  204,  205,  663,  664. 

of  serving  notice,  199,  604. 

of  signing  estoppel  by  misrepresentation,  474. 


INDEX.  817 

[references  are  to  pages.] 
PLACE — continued — 

of    pa>Tnent    of    bill,    may    necessitate    presentment     for     acceptance. 
657,  659. 

omission  to  specify,  immaterial,  56. 

presumption  as  to  place  of  indorsement,  474. 

where  drawn  or  payable,  omission  of,  does  not  affect  negotiability,  56. 
PLACE   OF   PRESENTMENT,   see   also   Presentment— 

alteration  in,   176. 

proper,  what  is,  see  Presentment  for  Payment,  570. 

to  acceptor  for  honor,  103,  669. 

PLAINTIFFS,  see   Acn-ioNs  on    Negotiablk  Instruments— 
PLEA— 

of  tender  must  be   profcrt.  351,  352. 

PLEADINGS,   sec   also  Complai.vt;    Decl.ar.ation  ;   Forms   of;   Common 
Law,  and  Code  Pleading — 
acceptance  in  writing,  87,  646. 
after  complaint  or  declaration,  304. 
bank  credit  as  want  of  value,  441. 
l>reach  of  warranty  on  chattel,  503. 
classes  of.  303. 
complaint,  304. 

complaint  against  indorser,  555. 
complaint  against  anomalous  indorser,  549,  550. 
confession   and   avoildance,   304. 
conditional   delivery,  409. 
consideration,  444. 

defenses  to  reduce  recovery  by  lien  holder.  443. 
defense  of  want  of  consideration,  444. 
delivery,  428. 
demurrer,  305. 

effect  of  failure  to  plead  written  acceptance,  87. 
extension  of  time,  622. 
equitable  defenses,  474. 
failure  of  consideration,  444. 
holding  in  due  course,  487. 
in  abatement,  304. 
methoti  of  transfer.  456. 
meaning  of  term,  303. 
must  allege  negotiability,  370. 
note  payable  to  maker's  order,  677. 

notice  of  dishonor  to  indorser  must  be  alleged,  587,  588. 
object  of,  303. 
order  of,  303. 

payable  to  order  or  bearer  must  be  alleged,  370. 
plea  in  bar,  304. 

presentment  for  payment,  notice  of  dishonor  and  waiver,  612. 
questions  presented  by,  303. 
to  the  jurisdiction,   303. 
traverse,  304. 

when  check  dishonored,  587. 
where  payment  countermanded,  587. 


818  INDEX. 

[references  are  to  pages.] 

PLEDGE— 

of  negotiable  instruments,  153,  442. 

PLEDGEE— 

a  holder  for  value,  441. 
POLITICAL   DISTURBANCES— 

as  excuse  for  non-presentment,  etc.,  202. 
POSSESSION—  . 

of  unindorsed  instruments,   whether      prima   facie   evidence   of   right 
to  sue  or  ownership,  477. 

presumption  from,  266,  329. 

whether  preferential  payment  by  maker  discharges,  617. 

POST-DATED,  401. 
POST-DATED  INSTRUMENTS— 

instrument  not  invalid  because  post-tlated,  401. 

is  negotiable,  401. 

negotiation  of,  401. 

provisions  as  to,  47,  401. 

POST-OFFICE,  see  Mail. 

money  order,  266. 

what  constitutes  deposit  in,  602. 
POST-DATING  INSTRUMENT,  47,  401. 

efifect  of,  393. 

mutual  agreement  as  to,  47. 

not  invalid  because  post-dated,  401. 

not  notice  of  equities,  401. 

when  title  passes,  401. 
POWER  OF  ATTORNEY— 

to  confess  judgment,  57. 
POWER  TO  NEGOTIATE— 

absence  of  words  implying,  119,  463. 

PRECLUDED,  meaning  of,  424. 

PRE-EXISTING  DEBT— 

as    a   consideration    for   negotiable    instruments,    72,   432. 
constitutes  value,  432;  see  also  Value, 
is  valuable  consideration,  72,  432. 

PREFERENCE— 

whether  preferential  payment  by  maker  discharges,  617. 

PRESENTATION— 

instrument  payable  on,  is  payable  on  demand,  392. 
PRESENTMENT,  see  also  Presentment  of  Check;  Presentment  for 
Acceptanck;    Presentment    for    Honor;    Presentment   for    Pay- 
ment Supra   Protest.    See  Failure  to  Present. 

at  dwelling,  100,  570. 

at  place  of  residence,  56,  570. 

benefit  derived  from,  185. 

by  agent,  189. 

by  notary  in  person,  205. 

by  whom  made,  189,  568. 

damages  for  failure  of,  by  bank,  237. 


INDEX.  819 

[references  are  to  pages.] 

PRESENTMENT— continued- 
defined,  183. 

delay  in  making  excuses,   576. 
demand  over  phone,   190. 
during  banking  hours,  572. 
excuses    for    want    of,    see    Excuses    for    Non-Presentment,    Protest 

and  Notice, 
exhibition  of  instrument  on,  190,  571. 
how  made,  212,  568. 

if  holder  is  bankrupt,  assignee  must  make,   198,  598. 
if  holder  is  dead,  representative  must  make,  198,  596. 
if  no  representative,   should  be  made  at   dwelling  of  deceased  or  at 

place  where  payable,  198,  596. 
informal  talk  not  sufficient,  190. 
instrument  must  be  exhibited,  571,  572. 
laws  of,  tabulated  by  states,  708,  709. 
may  be  waived,  184. 
mode  of,  189,  568. 
not  personal,   187. 

not  required  where  payment  stopped,  187. 
presentment   and   notice    explained,   3. 
personal  demand  not  necessary,  187 
place  of,  189,  570,  571. 
proof  of,  350. 
time  for,  189,  566. 
time  of,  190,  5(56,  580. 
time  when  made,  189,  566. 
to  acceptor  for  honor,  how  made,  101,  667. 
to  agent  of  drawee,  198. 
to  joint  debtors,  574. 
to  persons  liable  as  partners,  573. 
to  whom  made,  189,  569,  573. 
two  times,  212. 

waiver  of  protest  also  waives,  211. 
waiver  of  exhibition  of  the  instrument,   190. 
what  law  controls   formalities  of,  232. 
what  law  governs,  232. 
what  sufficient,  568,  569. 

when  at  place  of  business  and  when  at  residence,  570. 
when  dispensed  with,  576,  577. 
when    drawer   bound   without    presentment,   574. 
when  indorser  holds  security,  194. 
w^hen  necessary,  189. 
when  payable  at  bank,  192,  572. 
where  drawee  dead,  193,  573. 
where  drawees  joint,  193,  574. 
where  drawees  partners,  193,  573. 
where  made,  55,  56. 
where  make,  187,  189,  570,  572. 
where  making  of  check  fraudulent,   189. 
where  not  payable  on  demand,  566,  567. 
where  payable  at  bank,  572. 
where  payable  on  demand,  566,  567. 


g20  INDEX. 

[references  are  to  pages.] 
PRESENTMENT— continued— 

where  principal  debtor  tlead,  573. 

where  several  promisors  not  partners  should  be  made  to  each,  193,  574. 
PRESENTMENT  FOR  ACCEPTANCE,   see  also   Presentment— 

applies  only  to  bills  of  exchange,  86. 

before   bill   is    overdue,   658. 

effect  of  failure  to  make,  658. 

excused  where  drawee  dead,  100,  660. 

excused  Avhere  drawee  has  absconded,  100,  660. 

excused  where  drawee  is  fictitious  person,  100,  660. 

excused  where  drawee  hati  not  capacity  to  contract,  100,  660. 

excused  where  cannot  be  made  after  reasonable  diligence,  100,  660. 

duty  of  holder  upon  nonacceptancc,  see  Holder. 

how  presentment  made,  98,  658. 

must  be  by  or  on  behalf  of  holder,  98,  184,  658. 

must  be  at  reasonable  hour,  185,  658. 

must  be  on  business  day,  185,  658. 

must  be  to    drawee   or    some   person   authorized   to   act   for   him   on 
part  holidav.  99.  186,  658.  659. 

on  Saturday.  99,  186.  658,  659. 

on  what  days  may  be  matle,  186,  659. 

place  of.  100. 

result  of  failure  in,  98,  186,  658. 

time  when  made,  185. 

to  dead  drawee,  how  made,  98,  658. 

to  partners  of  bill  of  exchange,  98. 

to  whom  made,  98. 

what  bills  do  and  who  do  not  require  presentment  for  acceptance,  185. 

when  essential,  185. 

when  delay  excused,  186,  659. 

when  excused,  100,  660. 

when  failure  excused,  186,  650    . 

when  made.  185,  657,  658. 

when  may  be  made,  97,  185.  657. 

when  must  be  made.  97,  185,  657. 

when   necessary,   185,  657. 

when  time  is  insufficient.  186,  659. 

where  drawee  is  bankrupt  or   insolvent,  98.  658. 

where  drawee  is  dead.  98,  658. 

where  tlrawer  and  indorsers  released,  658. 

where  bill  payable  after  sight,  185,  657. 

where  bill  expressly  stipulates  for,  185,  657. 

where   bill   not   payable   at   drawee's    place   of   business   or   residence, 

185.  657. 
where  there  are  two  or  more  drawees  not  partners,  658. 
where  required  to  fix  maturity,  185,  657. 

PRESENTMENT   FOR  HONOR,    see    also    Presentment:     Present- 
ment Supra  Protest — 
on  referee  in  case  of  need,  delay  in,  when  excused,  187,  644. 

PRESENTMENT  FOR  PAYMENT,  see  also  Presentment— 
at  bank,  192.  572. 
burden  of  proof  and  pleading,  682. 


INDEX.  821 

[refei^nces  are  to  pages.] 
PRESENTMENT  EOR  PAYMENT— c.ntimud— 
certificate  of  deposit,  567. 
computation  of  time,  190,  582. 
tiate  of,  190,  580. 
delay  in  when  excused,  191,  576. 
demand  over  telephone,  190. 

dispensed  with  by  dishonor,  by  non-acceptance,  661. 
drawer   and   indorsers    discharged    unless    duly    made   and    notice    of, 

188,  574. 
efltect  of  delay,   192,  576. 
effect  of  failure  to  make,  193. 

effect  of  failure  where  instrument  payable  at  a  particular  place,  187. 
effect  on  parties,  563,  564. 

excuse   for  does  not  excuse  notice  of  tlishonor,  572. 
holder  has  entire  day  in  which  to  make,   190. 
how  made,  189,  568. 

instrument  dishonored  for  nonpayment  when,  578. 
instrument   falling   due  on   Sunday,   191,   580. 
instrument  falling  due  on  holiday,  191,  580. 
instrument    falling  due  on    Saturday.    191,   580. 
instrument  should  be  actually  exhibited  and  delivered,   190,  571. 
instrument  must  be  cxiiibited.  190.  571. 
legal  holiday,  not  to  he  made  on,  191,  580. 
may  be  waived,  189.  576. 
must  be  made  on  day  of  maturity,  191,  580. 
necessary  in  order  to  charge  drawer  or  indorsers,  184,  188,  563. 
not  necessary  to  bind  acceptor  or  maker.  193. 
not  necessary  to  charge  principal  debtor,   188,  574. 
not  necessary   to   charge   party   primarily   liable,    188,   563. 
not  necessary  when  bill  has  been  dishonored  by  non-acceptance, 
not  presentment  for  acceptance,  653. 
not  dispensed   with  by  insolvency  of  maker,   567. 
of  instrument  payable  at  bank,  192,  572,  583. 
of  instrument  payable  on  demand,  time   for  making,   191,   566. 
of  instrument  not  payable  on  demand,  191,  566. 
place  of  presentment,  187,  189,   192,  570. 
proof  of,  350. 
proper  place  for,  570. 
Sunday,  cannot  be  made  on.  191,  580. 
time  for,  how  computed.  190,  582. 
to  acceptor  for  honor,  669. 
to  accommodation  indorser,  189. 
to  joint  obligators  not  partners,  193,  574. 
to  joint  parties  who  are  not  partners,   193,  574. 
to  persons  liable  as  partners.  193,  573. 
to  partnership,  193,  573. 
to  whom  made,  189. 

unnecessary  when  acceptance  refused,   187,  661. 
want  of,  effect  on  original  debt,   193. 
waiver  of,  189,  576. 
waiver  of  notice  of  dishonor,  570. 
.    what  constitutes  sufficient  presentment,  189,  568. 


822  INDEX. 

[references  are  to  pages.] 

PRESENTMENT  FOR  PAYMENT— continued— 

what  will  amount  to  waiver,  189,  576. 

what  sufficient,  189,  568. 

what  essential,  188,  568. 

when  delay  excused,  191,  576. 

when  dispensed  with,   189,  576. 

when  made  to  personal   representative,    193,  573. 

when  must  be  made,  191. 

when  not  required  to  charge  tlrawer,  189,  574. 

when  not  required  to  charge  indorser,  575. 

when  payable  on  demand,  191. 

when  person  primarily  liable  is  dead,  193,  573. 

when  place  of  payment  specified,  187,  192,  570. 

when  presentment  made   in  person,   place  unimportant,    187. 

where  cannot  be  made,  576. 

where  drawee  is  fictitious  person,  189,  576. 

where  indorser  holds  security,  194. 

where  instrument  payable  on  demand,  191. 

where  instrument  payable  at  bank,  192,  572. 

where  maker  or  acceptor  has  abandoned  place  of  business,  187,  192, 

where  made,  187.  570. 

where  no  place  of  paj'ment  indicated,  192,  570. 

where  persons  primarily  liable  are  partners,  193,   573. 

where  person  to  make  payment  has  removed,  570. 

where  principal   debtor  dead,   193,  573. 

within  what  time  check  must  be  presented,  191,  566. 
PRESENTMENT   OF   CHECK,    see   also    Presentment;    Presentment 
FOR  Acceptance;  Presentment  for  Payment — 

must  be  in  reasonable  time,  191,  237. 

when  must  be  made,  191,  236. 
PRESENTMENT     SUPRA    PROTEST,     see    also     Presentment    for 
Honor — ■ 

when  and  how  made,  101,  667,  668. 

PRESUMPTIONS,  sec  Evidence  also— 
as  to  cash  at  bank,  344. 
as  to  conditions,  11,   102.  341,  342. 
as  to  consideration,  329,  427,  429. 
as  to  continuation  of  agency.  38. 
as  to  date,  ZZZ,  400. 
as  to  date  of  acceptance,  329,  400. 
as  to  date  of  drawing,  400. 
as  to  date  of  indorsement,  329,  400,  473. 
as  to  date  when  none  appears,  329,  473. 
as  to  debt,  330. 
as  to  delivery,  dZ,  408. 
as  to  execution  and  delivery,  339,  408,  427. 
as  to  filling  date  in  blank,  333. 
as  to  holding  in  due  course,  149,  527. 
as  to  indorsee's  authority  to  fill  in  date,  333. 
as  to  indorsement  without  date,  334. 
as  to  law  merchant,  350. 
as  to  liability  when  instrument  signed  by  several,  330. 


INDEX.  823 

[references  are  to  pages.] 

PRESUMPTIONS^:ontinued— 

as  to  ownership  when  in  possession,  266. 

as  to  parties,  2iZ7,  338. 

as  to  payment  of  debt,  330. 

as  to  payment  and  discharge,  343. 

as  to  payment  when   possessed  by  owner,  330. 

as  to  place,  329,  ZiZ,  474. 

as  to  place  of  indorsement,  125,  329,  474. 

as  to  place  of  payment,  335. 

as  to  presentment,  344. 

as  to  settlement  of  accounts,  330. 

as  to  second  indorser,  125. 

as  to  signature,  329,  427. 

as  to  time  of  indorsement,  125. 

as   to   title,  348. 

as  to  transfer,  340. 

as  to  undated  indorsement,  349,  473 

as  to  valuable  consideration,  329. 

changed  by  evidence,  329,  330. 

delivery,  63,  408. 

from  possession   of  unindorsed   instrument,   477. 

from  several  inks  and  handwritings,  404. 

importance  of,  330. 

in  general,  329. 

of  authority  to  fill  blanks,  403. 

of  capacity,  31,  32. 

of  capacity  of  married  woman,  31,  32. 

of  sanity,  31. 

order  of  liability  of  intiorsers,  559. 

some,  329. 

that  all  terms  stated  therein,  348. 

that  bill  is  an  inland  bill.  44. 

that  holder  is  owner,  329. 

that  holder  entitled   to   recover  full  amount,  329. 

that   issued    for  valuable    consideration,    329. 

that  payee  a  bona  fide  holder,  329. 

that  regularly  issued,  329. 

what  extension  of  time  indorsed  on  instrument,  329. 

when  instrument  is  introduced  in  evidence,  348. 

where  laws  in  conflict,  349,  350. 

when  notice  of  dishonor  is  mailed  as  to  arrival,  601. 
PRICE  OF  GOODS  AND  CHATTELS— 

notes  in  payment  of,  55. 

PRIMARILY  LIABLE,  meaning  of  term,  697. 
PRIMARY  PARTY,  see  also  Parties— 

chargeable  without  presentment  for  payment,  563. 

meaning  of,  697. 

who  liable  as,  139. 

PRINCIPAL,  see  also  Agent;  Principal  and  Agent — 

change  in  amount  of,  constitutes  material  alteration,  176. 

may  sign  by  agent,  416. 

not  liable   unless   signature   on   instrument,  415. 


324  INDEX. 

[references  are  to  pages.] 

PRINCIPAL— continued— 

liable   on  instrument  with  cashier  or  fiscal  officer  as  uidorser,  471, 
signature  by  procuration,  421. 

signature  on  behalf  of,  liability  of  agent  and  principal,  417. 
PRINCIPAL   AND   AGENT— 

knowledge  to  agent  is  knowledge  to  principal.  154. 
PRINCIPAL  DEBTOR— 

effect  of  ownership  of  instrument  by,  214,  615. 
effect  of  release  on  party  secondarily  liable,  225,  621. 
when  possession  by,  discharges  instrument,  223,  224,  615. 
who  is,  207. 
PRINCIPAL  AND  SURETY,  see   Surety— 
PRINT,  included  in  "writing,"  695. 
PRINTED  AND  WRITTEN— 

provisions,  conflict  between,  338,  413. 
signature  of  notary,  663. 
PRIOR  PARTY— 

negotiation  by,  127,  479. 
PRIVATE  CORPORATIONS— 
power  to  become  parties,  40. 
PRIVY  PARTIES,  see  also  Immediate  Party— 

when,  173,  174. 
PROCEDURE,  see  Trial  Procedure— 
PROCURATION— 

authority,  Zl,  48,  421. 
signature  by.  48,  421. 
PRODUCE  DRAFT,  383. 
PROFERT— 

when  must  be,  352. 
PROHIBITION— 

of   further  negotiation,  463. 
PROMISE- 

to  accept  bill  of  exchange,  94,  650. 
to  do  an  act  in  addition  to  pay,  57.  388. 
unconditional  not  affected  by  certain  provisions,  57,  381. 
words  of  promise  required,  49. 
word  promise  unnecessary,  49. 
wortls  "on  demand,"  51. 
PROMISE  TO  PAY,  see  also  Order— 

bare  acknowledgment  of  debt   insufficient,   51. 
conditional,  examples  of,   58,  381. 
illustrations   of   forms  of  words  indicating,  49. 
must  be  an  express  promise,  49,  51. 
must  be  contained  in  promissory  note,  49,  51. 
must  be  unconditional,  49,  381. 
out  of  particular  fund,  conditional,  58,  381. 
statement  of  consideration,  58. 
statement  of  transaction,  58.  381. 
PROMISSORY  NOTE,  see  also  Negotiable  Instruments— 
amount.  2,  676. 
amount  in  figures,  2. 

ambiguous  instrument  may  be  considered  bill  or  note,  413. 
another  form  of,  2. 


INDEX.  b'J5 

[references  are  to  paces.] 
PROMISSORY  NOTE— continued— 
"Bohemian  oats,"  181. 
certainty  of  promise  in,  676. 
date,  2,  676. 
defined,  43,  676. 

drawn  to  maker'.s  own  order,  394. 
effect  of  statute  of  Anne  on,  15. 
form  of,  1,  2. 

general  characteristics,  2,  3,  4,  676. 
given   for  patent  rights,  58. 
given    for   speculative   consideration,    164. 
introtluction  into  England,  15. 
may  be  payable  to  maker's  order,  394. 
meaning  of  term,  676. 
negotiable  defined,  43. 
negotiability  of,  15. 
new  notes,  when  payment,  219. 
note  means,  695. 
non-negotiable   notes,    43. 
order  of,  3. 
origin  and  history,  IS. 
origin  under  law  merchant,  15. 
parties  to,  2,  3. 
payee,  3. 
place,  2,  3. 
place  of  payment,  3. 
promise,  2. 

to  maker's  order,  not  complete  without  written  indorsement,  676. 
time,  2. 

use  among  Romans,  15. 
when  hill   may  be  treated  as,  413,  644. 
when  holder  may  treat  as  bill  or  note,  413,  644. 
whether  negotiable  at  common  law,   15. 

PROOF— 

by  protest,  207,  208. 

demand  and  dishonor  must  be  shown,  587. 

drawer's   refusal    when   protest,  204. 

of  foreign  law,  349,  350. 

of  authority  to  act  as  agent  of  corporation,  3S. 

of  presentment   for  payment,  etc.,  350. 

seal  and   signature  of  notary,  204. 

through   special   indorsement,   117,   139. 

PROOF,  BURDEN  OF.  see  also  Burden  of  Proof— 
of  agency,  37,  38,  49.  416. 
of  foreign  law,  349,  350. 
of  payment,  how  made,  350. 
of  presentment,  how  made.  350. 
of  signatures.  349,  350. 
personal  defenses,  351. 
where  defense  shows  fraud,  351. 
where  defense  shows  lack  of  consideration,  351. 
where  laws  in  conflict,  349,  350. 


S26  INDEX. 

[references  are  to  pages.] 
PROTECTOGRAPH,  see  Alteration— 
PROTEST— 

as  between  joint  indorsers,   197. 

before    maturity   where   acceptor   insolvent,   665. 

both  for  non-acceptance  and  non-payment,  210,  613,  665. 

by  whom  made,  205,  664. 

cause  for  protesting  the  bill,  663. 

certificate  of,  as  evidence,  208. 

certificate  of,  not  conclusive,  614. 

certificate  of,  evidence  of   dishonor  of  foreign  bills,  208. 

collateral  facts  in,  208. 

conflict  of  laws  as  to,  212. 

contents  of,  663. 

defined,  207. 

delay  in  making  when  excused,  205- 

■demand  made  and  answer  given,  664. 

effect  of  when  not  required,  210. 

evidence  of  what,  208. 

excuses  for  want  of,  see  Excuse  for  Non-Presentment  .Protest  and 
Notice. 

extending  protest,  664. 

for  better  security,  when  made,  666. 

for  non-payment,  when  necessary,  211,  666. 

form  of,  205. 

form  for  notice  of,  209. 

how  must  be  made,  204. 

inland  bills  may  be,  210. 

manner  of,  204. 

may  be  made  in  case  of  dishonor  of  any  instrument,  210,  613. 

may  be  made  for  both  non-acceptance  and  non-payment,  210,  613. 

may  be  made  by  notary  public,  205,  664. 

may  be  made  by  resident,  205,  664. 

meaning  of,  183,  204. 

minutes  of  notary  equivalent  to,  212. 

miscellaneous  matters,  211. 

must  be  annexed  to  bill,  204,  663. 

must  be  made  for  non-acceptance  and  non-payment,  210,  662. 

must  be  made  under  hand  of  notary.  204.  663. 

must  be  made  under  seal  of  notarj-,  204,  663. 

must  specify  time  and  place  of  presentment,  204,  663. 

must  specify  fact  that  presentment  was  made.  204,  663. 

must  specify  cause  or  reason  for,  663. 

necessary  in  case  of  foreign  bills,  210,  613,  662. 

necessary  only  on  foreign  bill  of  exchange,  210,  613,  662. 

necessity  for,  207. 

notary  must   have    personal   knowledge   of   presentment    and    demand 
of  payment,  204. 

notice,  effect  of,  208. 

notice  of,  208. 

notice  of,  to  whom  sent,  208. 

not  required  except  in  case  of  foreign  bills,  210,  613. 

noting  and  extending  time  of,  665. 

of  bill  accepted  for  honor,  103,  670. 


INDEX.  827 

[references  are  to  pages.] 
PROTEST— continued— 

of  bill  dishonored  b^^  acceptor  for  honor,  103,  670, 

of  destroyed  bill,  d^. 

of  foreign  note  when  indorsed,  210. 

of  inland  bill  or  note,  210.  

of  lost  bill,  now  protested,  212,  666. 

on  copy,  204,  663. 

on  written  particulars,  210,  212. 

place  of,  205,  665. 

presentment  must  be  by  notary  himself,  204. 

proof  by,  208. 

proof  of  at  trial,  207. 

purpose  of,  207. 

seal  necessary.  204. 

time  within  which  certificate  of  must  be  prepared,  205. 

unnecessary  unless  bill  appears  on  its  face  to  be  a  foreign  bill,  210. 

use  of,  at  trial,  208. 

validity  of,  determined  by  law  of  place  where  made,  212. 

waiver  of,  211,  608. 

waiver  of,  effect  on  negotiability,  623. 

waiver  of,  upon  whom  binding,  211. 

waiver  of,  waives  also  presentment  and  notice  of  dishonor,  211,  608. 

what  certificate  of,  must  contain,  204. 

what  instruments  must  or  may  be  protested,  210,  662. 

what  law  governs,  210. 

what  waiver  of  includes,  211. 

when  bill  is  lost,  destroyed  or  wrongly  detained,  212,  666. 

when  delay  is  excused,  211. 

when  dispensed  with,  211,  666. 

when  drawer  countermanded  payment,  205. 

when  made,  205. 

when  must  be  made,  205,  664. 

when  may  be  dispensed  with,  211,  666. 

when  necessary,  210,  662. 

when  required,  210. 

where  bill  is  lost,  212,  662. 

where  made,  205,  665. 

where  to  be  made,  205,  665. 

within  what  time  to  be  made,  205,  664. 

PROVISIONS— 

additional  not  affecting  negotiability,  57,  388. 

as  to  confession  of  judgment,  388. 

as  to  sale  of  collateral  securities,  388. 

giving  holder  an  election  as  to  requirements,  388. 

waiving  benefit  of  certain  laws,  388. 

PUBLIC  CORPORATIONS— 

power  to  execute  negotiable  paper,  41. 
power  to  issue,  41. 
presumption  as   to  authority,   42. 
when  personally  liable,  42. 


828  INDEX. 

[references  are  to  pages.] 

PUBLIC  OFFICERS— 

holder  of  an  office  for  time   being,  42. 
individual   liability,   42. 
negotiable  in.struments  by,  42. 
power  to  execute  negotiable  paper,  42. 

PUBLIC  POLICY— 

consideration  against,    illegal,  81. 
considerations  which    contravene,    181. 
examples  of  considerations   opposed  to,  81,   181. 

PURCHASE— 

when  presumption  that   purchase  and  not  payment,  217. 

PURCHASE  FOR  VALUE  WITHOUT  NOTICE— see  Holder  in  Due 
Course. 

PURCHASE  OF  INSTRUMENT— see  Discharge;  Transfer. 

PURCHASER,    BONA    FIDE— see    Bona    Fide    Holder;    Holder    for 
Value,  Etc. 

PURCHASER  FOR  VALUE— see  also  Bona  Fide  Holder;  Holder  for 
Value,  Etc. 

Q 
QUALIFIED  ACCEPTANCE— 
efifect  of,  654. 
in    general,   654. 
right  of  holder  to  refuse,  655. 
what    constitutes.   654. 

QUALIFIED    ENDORSEMENT,    see    also    Indorsement;    Conditional 
and  Re.strictive  Indorsement — 
in  general.  467. 
liability  of,  467,  553. 

QUANTUM  MERUIT,  28. 

QUANTUM  VALEBAT,  28. 

QUASI-NEGOTIABLE  INSTRUMENTS,  sec   Other  Kinds  of  Com- 
merctal  Paper. 

R 
R.MSED  CHECK,  see  Altfjiation. 
RATE  OF  INTEREST,  see  also  Interest. 

RATIFICATION— 
by  drunkard,  32. 
married  women,  33. 
of  alteration,  223. 

of  contracts    made   while   an    infant.   28. 
of  contracts    matie    while    insane    or   drunk,    32. 
of  forged    or   unauthorized    signature,   459. 
of  forgery,   422. 
verbal  or  written,  29. 

REAL  DEFENSES,  see  Defenses. 

REACQUISITION— 

from  holder  in  due  course,  can   not  better  title,  523. 

from  holder  in  due  course    by    prior    party,    subject    to    equities    fol- 


INDEX,  829 

[references  are  to  pages.] 
REACQUISITION— continued- 
lowed  by  negotiation  to  one  not  holder  in  due  course,  524. 
holder  suing  in  own  name  for  benefit  of  owner,  482. 
striking   out    indorsements.    475,   626. 
title  by,  479. 

REASONABLE  DILIGENCE,  see  Due  Diligence. 

REASONABLE  HOUR— 

circumstances  to  control,   185. 

for  presentment,   569. 

in  general,  99. 

what  constitutes,  185. 

REASONABLE  TIME— 

allowed  bank  to  make  credit,  250. 

for  filling  blanks,  403. 

for  presentment  of  check,  682. 

how  determined,  699. 

in  general.  699.  700. 

in  case  of  instrument  payable   on   demand,  498. 

instrument  payable  on  demand   must  be  presented  within,  498,  566. 

what   is,  498,  499,  699. 

when  question  of  law,   700. 

when  question  of  fact,  700. 

when  check  must   be   presented,   682. 

when  instrument  payable  on  demand  becomes    overdue,    498. 

when  instrument  payable  on  demand  must  be   presented,   566. 

where  check  in  negotiated,  567. 

RECEIPT— 

on  draft  or  check.  640,  680. 
payer  should  take,  218. 

RECEIVER^ 

paper   in   hands   of,    136. 

RECOURSE.   INDORSEMENT   WITHOUT,   see   Indorsement   With- 
out Recourse. 

RECOURSE,  INDORER    WITHOUT,    see     Indorser    Without    Re- 
course. 

RE-EXCHANGE,  675. 

REFEREE  IN  CASE  OF  NEED— 

defined,    177.   178.   187,   188,  644. 

delay   in   presentment  to,   when   excused,   669. 

excuse  for  delay  in  presentment  to,  669. 

insertion   of,  644. 

liability  to  hoWer,  644. 

meaning  of  term,  644. 

protest  before  presentment,  669. 

protest  of  bill  having,  669. 

REFERENCE  IN  CASE  OF  NEED— 

protest  of  bill  before  presentment  for  payment.  669. 

REFORMATION— 

of  negotiable  instrument,  404. 


830  INDEX. 

[references  are  to  pages.] 
REFUSAL— 

to  return  bill,  effect,  652,  666. 

to  accept  payment  for  honor,  effect  of,  672. 

REIMBURSEMENT— 
in  general,  618. 
of  maker  by  payee,  446. 

RE-ISSUE   OF  PAPER— 
when    may   be,    479. 

RE-ISSUE  OF  INSTRUMENT,  479,  626— 
by  drawee  after  payment  of  check,  456. 
by  drawer,  626. 

by  endorser,  whether  fresh  indorsement  necessary,  524. 
of  accommodation   instrument,   451. 

RELEASE— 

effect  of,  225. 

effect  of  assent  or  request  of  secondary  party,  623. 

of   accommotiating   primary   party,   effect    on    secondary    parties,    621, 

622. 
of  one  maker  as  discharge  of  others,  621,  622. 
of  principal  debtor,  effect  of,  on  party  secondarily  liable,  225. 
reservation  of  right  of  recourse  against  other  parties,   621. 
to  principal  debtor,  whether  guarantor  discharged,  623. 

REMEDY— 

governed   by   lex   fori,   227. 

REMEDIES  OF  GUARANTORS,  273. 

REMOTE  PARTIES— 
who  are,  173. 

REMOVAL— 

effect  upon  notice,  192. 

effect  upon  presentment,  192. 

of  maker  or  acceptor  as  excuse  for  non-presentment,  etc.,  192. 

RE-NEGOTIATION,  see  Re-Issue  of  Instrument. 

RENEWAL— 

of  instrument  without    consideration,    428. 
of  instrument  subject  to  known  equities,  432. 
of  instrument  not  taken  up,  433. 
of  usurious  instrument,  449. 
promise  for,  as  waiver,  605. 

RENEWAL  OF  BILL  OR  NOTE— 
agreement  in  writing,  65. 
collateral  agreement,  65. 
consideration  for,  65. 
proof  of  extension  of  time,  332. 
whether  payment  of   former   note,  218. 

RENEWAL  NOTES,  see  Renewal  of  Bill  or  Note. 

RENEWAL  INSTRUMENT— 
as  value,  428. 
alteration    of,    effect    on    original,  616. 


INDEX.  831 

[references  are  to  pages.] 
RENEWAL  INSTRUMENT— continued^ 
extension   of   time   by,   as   discharge,   622. 
governed  by  act  though  original  instrument  before  act,  549. 
if  invalid,  not  a  discharge  of  original,  616. 

RENUNCIATION— 

by  holder  must  be  in  writing,  628. 

discharge  of  instrument  by,  225,  628. 

effect  of,  225,  628. 

how  made,  616,  629. 

holders    in    due    course   not   affected,   628. 

must   be  in  writing,  215,  628. 

of  rights  by  holder,  225,  628. 

requirement  of  writing  may  be  waived  by  holder,  629. 

whether  relinquishment  upon  consideration  included,  629. 

REPEAL  OF  STATUTES— 

making  certain   illegal   transactions  real  defenses,   502,  503,  504. 
making  wortis   of  negotiability  unnecessary,   2)7Z. 

REPRESENTATIVE  CAPACITY— 
indorsement  in,   472. 

person  indorsing  in,  may  negative  personal  liability,  472. 
signature  in,  417,  472. 

REQUISITES  OF  NEGOTIABILITY,  43,  676. 

RESERVATION,  621. 

RESIDENCE— 

notice  of  dishonor  to,  604. 

presentment  at,  sufficient  when  maker  or  acceptor  dead,  and  no  per- 
sonal representative  appointed,  604. 

presentment  for  acceptance,  at,  186. 

presentment  for  payment  at,  190. 

presentment  may  be  made  to  person  found  at,  190. 

RESTORE— 

altered    instrument,   by   court   of   equity,    177. 

RESTRAIN— 

negotiation  for  fraud,  175. 
when  notice,  175. 

RESTRICTIVE  INDORSEMENT— 
defined,  119,  463. 
effect  on  negotiability,  17,  119. 
examples  of,  91. 

holder  takes   subject  to  equities,   121. 
in  general,  119,  463,  464. 
rights  conferred  by,  119,  463,  464. 
rights  of   indorsee   under,   119,   464. 

RESULT  OF  DISHONOR,  208. 

RETENTION  OF  BILL— 
by  drawee,  96. 

REVENUE  STAMP,  see  also  Stamps— 
addition  of,  not  material  alteration,  637. 
failure  to  put  on   a,   130. 


832  INDEX. 

[references  are  to  pages.] 

REVOCATION— 
of  acceptance,  97. 
of  agency,  38. 
when  permitted,  62. 

RIGHT  OF  ACTION,  see  also  Action;  Suit,  Etc.— 

in  general,  119,  465. 
RIGHT  OF  RECOURSE— 

reserving  of,  225. 

RIGHTS  OF  HOLDER,  see  Holder— 
in  due  course,  481,  518.  519. 

in  due  course,   descend   to   subsequent    liolder,   523. 
of  bills  drawn  in  set,  70. 
of  forged   check,   241n. 

RIGHTS  OF  PAYOR  FOR  HONOR,  672. 

RIGHTS,  PATENT— 

instrument  given   for,  58,   705. 

RUBBER  STAMP— 

indorsement  by,  424,  459. 

in  general,  458. 

S 
SALOON  LICENSE— 

instrument   given   for  assignment,    503. 

SALE— 

at  discount   not  usury,   167. 
payment  distinguished  from,  216. 

SANITY— 

presumption,  30. 

SANS    RECOURSE,    see    Indorsement;    Indorsement    Without    Re- 
course ;  Qualified  Indorsement. 

SATISFACTION,  see  also  Accord  and  Satisfaction;  P.wment — 
accord  and,  221. 

SATURDAY— 

instrument   falling  due  on.  when  payable,   580. 
presentment  of  bill  of  exchange,  for  acceptance  un,  659. 
when  day  of  maturity  falls  on,  580. 

SAVINGS  BANK— 

liability  on  forged  check,  242. 

when    order   on   payable   out   of   particular    fund.    55. 

SEAL— 

corporate  dispensed  with,  41. 

does  not  affect  negotiability,  69,  391. 

effect  of,  69. 

effect  of,  on  negotiability,  69,  391. 

imports  a  consideration,  22. 

instrument  not  affected  by,  69,  391. 

judicial  notice  of,  351. 

of  notary,  unnecessary    to   prove,    204. 

of  notary,  when  may  be  printed,  204. 


INDEX.  833 

[references  are  to  pages,] 
SECONDARY  PARTY,  see  Parties;  Discharge  of  Surety— 
meaning  of,  697. 

right  of  recourse  against,  579,  661. 
whether  guarantor    is,    623. 

SECRETARY— 

notice  with,  198. 

of  corporation,   power   to  issue  bills   and   notes,  40. 

or  treasurer  of  corporation,  power  to  issue  negotiable  paper,  40. 
SECURITIES— 

negotiation   of  public  or   corporation,   552. 

public  or  corporate,   144,  552. 

SECURITY,  see  also  Collateral  Security — 
indorse   as   collateral,    341. 
in   general,   222. 
when   protest  made   for  better,   212,   665. 

SELLER  OF  NEGOTIABLE  INSTRUMENT— 

agent's  liability  as,  144,  561. 

payment  distinguished   from   sale,  215,  216. 
SERIES  OF  NOTES— 

all   due   upon    default    of   one,    373. 
SERVICES— 

as    a   consideration,    74. 
SEPARATE  PAPER— 

indorsement    on,    132. 

SET,  see  also  Bills  in  a  Set — 
acceptor   of,    70. 
bills  drawn  in,  70. 
bills  drawn  in,  acceptance  of,  70. 
bills  drawn  in,  constitute    one    bill,    70. 
form  of  parts,  69. 

SET-OFF— 

between  parties   to   action   may   be    relied    on,    519. 

defined,   18. 

in  general,  18,  20. 

included   in   "action,"  695. 

not  an  equity  which  passes   with  overdue  paper,   157. 

on  certified  check,  685. 

to  what  actions  applicable,  19,  20. 
SEVERAL  INSTRUMENTS— 

simultaneous  execution   of,   413. 
SEVERAL   NOTE,   61. 

SEVERAL  PARTS  OF  A  FOREIGN  BILL,  see  Bills  in  a  Set;  Set. 
SHORT  TITLE— 

of  negotiable   instruments,  692. 
SICKNESS— 

as   excuse    for    non-presentment,    etc.,   202. 
SIGHT— 

bill  payable    after,    acceptance    after,    653,    654. 

bills  payable  at,  do  not  require  presentment  for  acceptance,  97,  98. 


834  INDEX. 

[references  are  to  pages.] 
SIGHT — continued — 

instrument  payable  after,  negotiable,  385. 

instrument  payable  after,  blanks  in  date  of  acceptance,  402. 

instrument  payable  at,  payable    on    demand,    392. 

instruments   payable   at,   whether   grace   allowed,   580. 

laws  as  to  days  of  grace  tabulated  by  states,  708,  709. 

presentment   for  acceptance,  97,  98. 

time  of  presentment  for  payment  where  bill  payable  at  or  after,  190, 

580. 
whether  instrument  payable  at,  entitled  to  grace,  190,  580. 

SIGNATURE— 

acceptor  admits  genuineness  of  drawers,  541. 

affixed  without  authority,  49. 

binding  on  intlividual,  419. 

bank  presumed  to  know  signature  of  depositors,  241,   242. 

by  agent,  48,  416. 

by  another,  48. 

by  assumed  name,  49,  415. 

by  mark,  47,  48,  370. 

by  one    not   cognizant    of   nature    of    instrument,    501. 

by  procuration,    48,    421. 

by  rubber   stamp,  48. 

by  trade    name,    49,    415. 

by  two   or   more,   construction   of,   413. 

doubt  as  to  whether  that  of  maker,  or  indorser,  413. 

effect  of  "per  proc,"  Zl. 

engraved,  48. 

forgery  of,  49,  422. 

how  bind  corporation,  36. 

how  made,  47. 

how  written,  47. 

in  place  of  maker,  414. 

in  Roman   letters,   48. 

in  script,  48. 

initials    sufficient,    48. 

in  what  part,  47. 

lithographed,    48. 

made  without  authority,  49,  422. 

necessary  to  liability,  49,  415. 

of  drawer  admitted  by  acceptance,   140. 

of  person   secondarily  liable,   cancellation  of,  225.   508. 

photographed,  48. 

place   of,  47. 

proof  of,  48. 

printed,   47,    48. 

rubber  stamp,  47,  48. 

typewritten,  47. 

uncertain  in  effect,   deemed  indorsement,  413. 

what  will  suffice  for,  47. 

whether  witnesses  necessary  if  by  mark.  48. 

with  qualifying  or  descriptive  words,  417. 

with   several    inks.  404. 


INDEX.  835 

[references  are  to  pages.] 
SIGNER-^ 

when  deemed  indorser.  544. 

SIGNING— 

■by  agent,  Zl,  416. 

in  blank  before  delivery  by  one  not  otherwise  party  to  instrument, 

548. 
trade   or  assumed  name,   49,   415. 

SILVER  CERTIFICATES,  265. 

SIMULTANEOUS  EXECUTION— 
of  several  instruments,  413. 

SITUS— 

as  to  taxation,  227. 

SOJOURNER— 

in  general,   199,  604. 

SPECIAL   INDORS'EMENT— 
definition  and  effect,  116,  462. 
how  blank  indorsement  made,   117,  463. 
in   general,    116,   462. 
on  instrument  payable  to  bearer,  469. 
proof  through,  117. 

SPECIE— 

note  payable  in,  391. 

SPECIFIC  FUNDS,  370. 

SPECULATIVE  CONSIDERATION— 
in  general,  164. 
instruments  given   for,    164. 
wortis  "given  for  a  speculative  consideration,"  164. 

SPENDTHRIFT— 

guardian  for,  22,  163. 

under  guardian,  not  indorse,  32,  163. 

SPLITTING  INTO  PARTS— 
court  can  not,   17. 

SPOLIATION— 

of    instrument,   effect   on,    177. 

"STALE  CHECK"— 
in  general,  243. 
status   of,  243. 
when,  243. 

STAMPS— 

act  of  1862,  67. 

act  of  1898,  67. 

cancellation  of  by  wrong  party,  172. 

excluding   from   evidence,   172. 

failure  to  put  on  a,  67,  171. 

Federal  acts,  67. 

history  of,  67. 

origin,  67. 

repeal  of  act  of  1898,  67. 


836  INDEX. 

[references  are  to  pages.] 

STAMPS— continued— 

whether  failure   to  use.  real  defense,   171,   172. 
where  omitted  fraudulently,  171. 

STATEMENT— 

as  to  deposit  of  collateral,  57. 
STATEMENT  OF  TRANSACTION— 

does  not  render  bill  or  note  conditional,  57. 

effect  of,  57. 

set  out,  57. 

STATES— 

of  Union,   foreign  to  each   other.  44,  643. 

where  uniform  negotiable  instruments  law  has  been  adopted,  708. 
709. 

STATUTE— 

act    in    violation,    illegal    as    consideration.    81. 

begins  to  run  when,  235. 

bill  void  by,  effect  of,  81. 

consideration  void  by.   168. 

instrument  void  by.  181. 

introduction    of    special    in    evidence.    227. 

wagers   and  gaming  contracts,   164-169. 

STATUTE  OF  ANNE— 

established    negotiability   of    promissory    notes.    18. 

in   general,   15. 

passed  in,  18. 

principles    of,    followed,    18. 

STATUTE  OF  FRAUDS— 

guaranty  on   note   need   not    allege   consideration,   428. 
not  applicable  to  oral    guaranty   securetl   by    note,    416. 
not  applicable  to  agreement   for  conditional   delivery.   408. 
whether  guaranty  within.  270. 

written   or  parol   evidence  admissible  as  between   accommodation   in- 
dorsers,  560. 
STATUTE  OF  LIMITATIONS— 
as  a  defense,  171. 
in  general,  2. 

on  demand   instrument,   373. 
on  negotiable  instruments.  663. 

period  on  judgments  in  courts  of  record  tabulated  by  states.  708.  709. 
period  on  notes    tabulated  by    states,    708.    709. 
when   begins   to  run  against   check.  235. 

STEPS  IN  JURY  TRIAL,  347. 

STIPULATION— 

limiting   liability   of  tlrawer,    540. 

STOCK— 

option  of  holder  to   receive,  389. 

STOCK   EXCHANGE   NOTES,   164. 

STOLEN  CHECK— 
effect  of.  245. 


INDEX.  837 

[references  are  to  pages.] 
STOLEN  INSTRUMENT— 
bank  notes,  265. 
certificate  of   stock,  261. 
check,  409. 
in  general,   176. 
liability  on,  245. 
note  from  maker,  410. 
paper,  63n. 

rights  of  bona  fide  holder  where  undelivered  instruments  stolen  and 
put  in  circulation.   176. 

STOPPAGE   IN  TRANSITU— 

effect  of  transfer  of  bill  of  lading  on,  259. 

STOPPING  PAYMENT— 

drawer  not  entitled  to  notice  of  dishonor,  610. 
STRANGER— 

acceptance  by,  101. 

payment  by,  101,  216. 

to  paper,  when  may  make  payment,  101,  216. 
STREET  IMPROVEMENT  BONDS,  371. 
STRICT  COMPLIANCE— 

with  precise  terms  of   act  unnecessary,   399. 
STRIKING  OUT— 

indorsement,   effect,   126,  475,  626. 

indorsement  not  necessary   on   reacquisition,   475. 

when  may  be  tione,   126,  475. 

SUBROGATION— 

of  payer  supra  protest   to  rights  of  party  for  whose  honor  he  pavs, 

220.  440. 
of  payee  for  honor,  672. 
of  surety   maker   to    rights    of    holder,    618. 

of  surety   on    appeal    bond    of   prior   parties    to    ohh'gation    of   subse- 
quent parties,   623. 
payer  for  honor  right.  220,  440. 

SUBSTITUTION— 

of  another  obligation  acts    as    a    discharge,    222. 

of  another  obligation,  effect  of,  222. 

of  instruments    for   other   pledged    collateral    as    value,    4.33. 
SUCCESSIVE  INDORSEMENT,  116. 
SUFFICIENCY— 

in   form  of  notice   of  dishonor,   195. 
SUIT,  see  Action  ox  Negotiable  Instruments. 
SUM^ 

certainty  of,  not  affected  by  certain  provisions.   52. 

to  be  paid,  must  be  fixed  and  certain,  52. 
SUM  CERTAIN,  see  Certainty— 

what  is,  276. 

SUNDAY— 

day  falling  on,  701. 
instrument  due  on,  580. 


838  INDEX. 

[references  are  to  pages.] 

SUNDAY— continued—  ' 

instrument  made  on,  168. 

presentment  for  payment  when  instrument  falls  due  on,  580. 
when  day  of  maturity   falls   on,   580. 
when  day  for  acts  falls  on,  701. 
when  last  day  falls  on  Sunday,  333,  701. 

SUNDAY  CONTRACT— 

as  a  defense,   168. 
SUPRA    PROTEST,    see   also    Acceptance    Supra    Protest;    Acceptor 
Supra  Protest;  Payment  Supra  Protest — 

acceptance,  101,   667. 

acceptance  for,  how  made,  101,  667. 

acceptance  for,  when  may  be   made,    101,   667. 

acceptor,  liability  of,   101,  667. 

acceptor,  nature   of  his   agreement,    101,   668. 

acceptor,  presentment    to,    how    made,    101,    668. 

delay  in  presentment  when  excused,  101,  668. 

effect  of  payment  on  subsequent  parties,  220,  672. 

of  bill,  101,  668. 

of  bill  accepted,   101,  668. 

payment  by  two  or  more   parties,  220,   672. 

payment  declaration  of  intention,  220,  672. 

payment  how  made,  220,  672. 

payment  when  may  be  made,  220,  672. 

refusing  to  receive  payment,  effect  of,  220,  672. 

rights  of  payer,  220,  672. 

when  deemed  to  be  for   drawer,   101,667. 

SURETIES— 

contribution  between,  276. 
concealed,  272. 

SURETY— 

concealed,  272. 

contract  of.  111. 

difference  between  and  guarantor,  268. 

difference  between    liability   of,    and   of   guarantor,   268. 

discharge  by   alteration,   274. 

discharge  of,  618,  619,  624. 

discharged   by   agreement   to   give   time,   275. 

extension  of  time,  275. 

how  discharged,  274. 

how  differs  from  guarantor,  268. 

if  primary  party  on  instrument  not  a  "secondary"  party,  622. 

if  maker  not  entitled  to  notice  of  dishonor,  587. 

liability  of,  273. 

limit  of  recovery,  273. 

married  woman  as,  32,  162. 

may  be   joined    with   principal    in    one    suit.    111. 

misrepresentation,  duress,  diversion,  alteration,  tender,  etc.,  274. 

on  appeal  bond  of  prior  parties,  whether  subrogated  to  obligation  of 

subsequent  party,  623. 
parol  evidence  to  show  party  signed,  272. 
parting  with  security,  275. 


INDEX.  839 

[references  are  to  pages.] 

SURETY— continued- 
plea  of  fraud    as    discharge,   274. 
plea  of  misrepresentation   as   discharge,   274. 
released  by  covenant  not  to  sue,  275. 
suits  by  and  against,  268. 
what  will  discharge,  274. 

whatever  discharges  principal  debtor  will  discharge  surety,  274. 
who  are,  269. 

SURETYSHIP,  see  also  Surety,  Etc.— 
defined,   267. 

distinguished    from  guaranty,  267,  268. 
law  of,  whether  recognized  by  act,  615,  621. 
may  surety  and  principal  be  sued  jointly,  268. 
surety    bound    with    principal,    268. 
trial  of,  273. 

SURRENDER— 

consideration  unnecessarj^,  220. 

compel  for  fraud,  80. 

discharge  of  instrument  by  must  not  be  induced  by  fraud,  220. 

of  instrument,  to  primary  party  as  discharge,  615,  628. 

payment   of   bill,    drawn   in    set   without,   70. 

thinking  paid,  221. 

when    notice,    175. 

T 

TABULATED  LAWS,  708,  709. 

TAXATION— 

situs    for,    227n. 

TAXES— 

provisions,  2>72. 

TELEGRAM— 

acceptance  by,  89. 

TELEGRAPH— 

acceptance  by,  89. 

TELEGRAPH  DRAFT— 
negotiable,  641. 

TELEPHONE— 

demand  of  payment  over,   572. 
notice  of  dishonor,  594. 
presentment   by,    572. 

TENDER— 

ability    and   willingness    to    pay   at   place    of    maturity    equivalent    to, 

188,  563. 
plea  of,  351,  352. 
what  is  a  sufficient,  188,  563. 

TENDER  OF  PAYMENT— 

by  maker,   refusal   of   is   not   renunciation,   629. 

by  prior  party,  effect  on  party  secondarily  liable,  225,  621. 

what  amounts  to,  188,  563. 

when  having  funds  special  place  is,  563. 


g40  INDEX. 

[references  are  to  pages.] 

TENOR— 

indorsement  according  to,  113,  114. 

TERMS  OF  INSTRUMENT— 
when  sufficient,  399. 

THEFT— 

negligence  in  facilitating,  632. 

of  completed  instrument,  409. 

of  certified  check,  488. 

of  incomplete  instrument,  407. 
THIEF,  see  also  Stolen  Instrument— 

in  general,  156,  176,  218. 

TIME— 

certainty  of,  369,  376.  385. 

computation  of.  66.  190.  582.  701. 

determinable  future,  what  constitutes,  54,  55,  385,  699. 

extended,  370. 

extension  of,   effect  of,  on    surety's  liability,   274. 

of  indorsement,   presumption   as   to,   125,  473. 

of  negotiation,  473. 

of  maturity,   580,   582,   701. 

of  payment,  blanks  for.  393.  404. 

of  payment,  alteration    of,    636. 

of  payment,  failure    to    express.    392. 

reasonable,  99,  658. 

when  act   takes   effect,   702. 

when  statute  to  take  effect,  702. 

TIME  OF  MATURITY— 

fixed  by  statute,   186.   190,  580.  659. 

general  rule,  where  instrument  falls  due  on  Sunday  or  holiday,  701. 

how    computed,    186,    190,    580,   659. 
TIME  OF  PAYMENT,  see  also  Payment;  Etc.— 

after  the  death  of  a  person,  54. 

contingency  as  to.  54,  385. 

determinable   future,  what  constitutes.   54,   55,   385. 

event  to  be  one  which  must  happen,  55,  385. 

fixed  period  after  date   or   sight,   55,   385,   582. 

fixed  period  after  specified  event,  55,  385,  582. 

in  installments,  does  not  affect  negotiability.  54,  Z76. 

instrument  expressing  no,  47. 

negotiable  instrument  to  be  paid  on  demand  or  at  fixed  hiturc  time, 
191,  566. 

on  day  certain,  or  on  happening  of  event,  54.  55,  385. 

on  demand,  when  payable.  191.  566. 

on  or  before  a  certain  date,   55. 
TIME  OF  PRESENTMENT,  see  also  Presentment— 

in  general.  190.  580.  582. 

TIME  PAPER— 

laws  as  to  days  of  grace  tabulated  by  states,  406. 


INDEX.  841 

[references  are  to  pages.] 
TITLE— 

burden  of  proof,  527. 

burden  of  proof    where   title    of    prior    party    defective    conveyed    by 

operation  of  law,  130.  . 
defect  of,  501,  527. 
defect  of  after  defendant  became  bound,   meaning  of   section,   notice 

of  defect,  500,  508. 
of  act,  692. 

of  holder  in  due  course,  518. 
of  person  negotiating,  501. 
presumed  to  be  in  holder,   149,  527. 
passes  with  transfer  without  indorsement,  476. 
through  forged  indorsement.  217,  218. 
transferred  by  blank  indorsement,  129,  463. 
through  holder  in  due  course,  523. 
warranty  of  where  negotiation  by  delivery,  552. 
warranty  of  where  negotiation  by  qualified   indorsement   when  tlefec- 

tive,  150,  175,  501. 
when  negotiated  by  fraud,  142,  501. 
whether  passed  by   restrictive  indorsement,   466. 

TORN  INSTRUMENT— 

whether  torn   with  intent,  617. 

TOWNS— 

power  to  execute  negotiable  paper,  41. 

TOWNSHIP  BONDS,  383. 

TRADE  ACCEPTANCES— 

by  whom  presented  for  discount,  105. 

clause,    "the    obligation    of    the    acceptor    hereof    arises    out    of    the 
purchase  of  goods   from  the  drawer"   necessary,   106. 

confined  to  credit  obligations,  104. 

defined,  104. 

distinguished  from  bill  of  exchange,  104. 

distinguished  from  promissory  note,  105. 

drawee,  104. 

drawer,  104. 

effect  of  Federal  Reserve  Act,  Sec.  13,  104. 

effect  on  other  negotiable  instruments,  106. 

extent  of  use,  107. 

Federal  Reserve  Banks,  as  purchasers.    106. 

how  accepted.  105. 

how  made,  105. 

law  applicable,   107. 

meaning  of  term,  104. 

nature  of   transaction    in  which   used,    105. 

necessary  clause,  106. 

negotiable  two  name  paper,   105. 

ninety  day  maturity  time,   106. 

origin,  106. 

payee,   104. 

purpose  of,  107. 

when  bargain  is  consummated,  105. 

where  payable,   105. 

whether  payable  on  tlemand,  393. 


842  INDEX. 

[references  are  to  pages.] 

TRADE  NAME— 

liability  where  person  signs,  49,  415. 

liability  under,  49,  415. 

signature  of,  49,  415. 

to  designate  party  to  instrument,  49,  415. 

TRADING  PARTNERSHIPS,   see  also   Partners;   Etc.— 

negotiable  instrument  executed  by  one  partner  binding  on  firm,  39. 

TRANSACTIONS— 

statement  of  set  out,  57,  381. 

TRANSFER,  see  also  Delivery;  Indorsement — 
by  assignment,  109,  131. 
by  attachment,  135,  136. 
by  delivery,   128. 
by  execution,  135,  136. 
by  garnishment,  135,  136. 
by  indorsement,  109. 
by  legal  process,  109,   135. 
by  operation  of  law,  109,  130. 
negotiation  by,  108. 

without  indorsement,  109,   115,  130.  476. 
without  indorsement — effect  of,    109,    126,  476. 
without  indorsement,  failure  of  consideration  as  defense,  477. 
without  indorsement,  payment    to   transferor   as   defense,   477. 
without  indorsement  or  after  maturity,  effect  of  defenses  subsequent 

to  transfer,    126. 
without  indorsement,  whether  transferee  is  holder,  126. 

TRANSFEROR  BY  DELIVERY— 

of  bearer  instrument,  liability  of,  552,  561. 

TRAVELER'S  CHECKS: 

advantages  of,  252. 

amount  of  in  foreign  countries  specified,  251. 

countersigned,  251. 

forged  counter-signature,  252,  423. 

forged  indorsement,  252,  423. 

holder's  signature  must  correspond,  251. 

issued  by  agent,  252. 

lost,  251. 

meaning,  251. 

object,  251. 

provisions,  251. 

right  of  issuing  party  to  refuse  payment,  252. 

unused,  252. 

when  not  efifective  as   draft,  check,  etc.,  252. 
TREASURER— 

of  corporation,  power  to  issue  bills  and  notes,  40. 

TREASURY  NOTE— 

how  differs  from  bank  note,  265,  266. 

TRIAL— 

how  prove  personal  defenses,  351. 
protest,  207,  208. 
statement  of  notary,  4. 


INDEX.  843 

[references  are  to  pages.] 
TRIAL  PROCEDURE— 
code  procedure,  347. 
common  law  procedure,  346. 
essentials  of  procedure,  346. 
evidence  of  defendant,  351. 
evidence  of  plaintiff,  348. 
impaneling  the  jury,  347. 
opening  statements,  348. 
steps  in  a  jury  trial,  347. 
the  argument,  352. 
the  charge,  verdict  and  judgment,  352. 

TRUST— 

created  by  restrictive  indorsement,  463. 

created  in  indorsee,  119,  463. 

indorsements  in,  effect,  etc.,  119,  463. 

mention  of  on  instrument,  notice  of  trust  fund,  511. 

substituted   instruments  subject   to,   456. 

TRUSTEES— 

as  parties  to  negotiable  instrument,  35. 

check  by,  249. 

in  general.  35,  419. 

signature  by,  417,  419,  472. 

TYPEWRITING— 

considered  as  printing  or  not,  414. 

TYPEWRITTEN— 
in  general,  47. 

ULTRA  VIRES— 

accommodation  indorsement  by  corporation  is,  147. 
defense,  corporation  not  to  set  up,   162. 
in  general,   162. 

UNCERTAIN— 

when  agreement  to  look  to  mortgage  security,  370. 

UNCERTAINTY— see  Certainty. 

UNCONDITIONAL  PROMISE  OR  ORDER— 

necessary  to  negotiability,  54. 

not  affected  by  certain  provisions,  54,  55. 

order  to  pay  out  of  particular  fund  is  not  what  is,  381,  640. 

when  order  or  promise  is  unconditional,  54,  56. 

UNDATED   INSTRUMENT— 
date  may  be  inserted  in,  47. 

UNDISCLOSED  PRINCIPAL,  see  also  Agent;  Principal;  Etc.— 
agent  of,  148. 

doctrine  not  applicable  to  negotiable  instruments,  415,  419. 
except  to  cashier  or  fiscal  officer,  471. 
liability  of  bank  to  agent,  250. 

UNIFORMITY— in  construction  of  Act,  692,  693,  694. 
statute  construed  so  as  to  produce,  692,  693,  694. 

UNDUE  INFLUENCE— 

instrument  or  signature  obtained  by,  427. 


844  INDEX. 

[references  are  to  pages.] 
UNIFORM  NEGOTIABLE  INSTRUMENTS  LAW— 

where  adopted,  708,  709. 
UNINCORPORATED  ASSOCIATION— 

as  party  to  instrument,  396. 
UNINTENTIONAL  CANCELLATION— 

effect  of,  221. 

UNITED  STATES— 

as  party  to  negotiable  instrument,  397,  543. 

treasury  notes,  265. 

UNITED  STATES  REVENUE  STAMP,  see  Stamp. 

UNLAWFUL  MEANS— 
obtaining  by,  150. 

UNQUALIFIED  INDORSER— 

liability  of,  143. 
UNREASONABLE  TIME— 

as  notice,  155. 

bow  determined,  333. 

USAGE— 

bank  custom  in  determining  reasonable  or  unreasonable  time.  699. 

USUAL  COURSE  OF  BUSINESS,  see  Business— 
statutes  as  to,  167. 

USURY— 

as  a  defense,  166,  167,  168. 

compensation  for  trouble  and  expense  not,  167. 

defined,  167. 

discount  of  paper  not,  167. 

interest,  167. 

in  accommodation  instrument,  449. 

in  general,  503. 

no  implied  warranty,  553. 

note  given  for  usurious  loan,  503. 

penalty  for,  708,  709. 

V 
VALIDITY— 

governed  by  lex  loci  contractus,  228. 

VALUABLE  CONSIDERATION,  see  also  Consideration;  Value— 
presumption  as  to,  78. 
what  is,  72. 

VALUATION  L.AWS,  3. 

VALUE— 

accommodation  party  receives  no,  448. 

antecedent  debt,  72,  432. 

bank  credit  as,  433. 

collateral  security,  152. 

credit,  152. 

defined,  72.  152,  432,  695. 

discount,    152. 

discharge  of  riel)t  as,  428. 

for   renewal   note,   428. 


INDEX.  S45 

[references  are  to  pages.] 
VALUE— continued- 
holder  after  a   holder   for,    155. 

holder  for,  lienor  is,  153,  442. 

holder  for,  because  of  lien,  442. 

holder  for,  under  certain  circumstances,   152. 

holder  for,  what  constitutes,  83,  440. 

Hen  on   instrument  constitutes  lienor,  442. 

must  instrument  specifj-,  58. 

necessity  of  words  "given  for  a  patent  right,"  5S. 

negotiable  instrument  as,  435. 

need  not  be  specified  in  instrument,  391. 

of  consideration  not  considered,  72. 

payment  of,  prima  facie  evidence  of  good  faith,  489. 

pre-existing  debt,  72,  152,  432. 

promise  to  lend  money  as,  434. 

promise  to  re-pay  money  not,  434. 

recital  for  value,  omission  of  does  not  affect  negotiability,  79. 

substitution  for  other  pledged  collateral,  433. 

surrender  of  forged  note  not,  631. 

who  holder  for,  440. 

what  constitutes,  antecedent  or  pre-existing  debt,  12. 
VALUE  RECEIVED— 

effect  of  use  of  words,  64,  79,  81,  427,  445. 

expression  not  necessary,  64. 

important  on  non-negotiable  instrument,  79. 

in  general,  64,  391. 

omission  of  words  not  material,  64,  79. 

treated  as  surplusage,  79. 

what  indicate,  79. 

whether  or  not  necessary,  64. 
VERBAL— 

acceptances,  95. 

notices  of  dishonor,  194. 
VERDICT,  352. 

VIRTUAL  ACCEPTANCE,  649.  650. 
VOID— 

by  statute,  18L 

where  instrument   declared  void  by  law,   good   defense   against  bona 
fide  holder,  168. 

l^OID  AND  VOIDABLE  INSTRUMENTS,  161. 
i^OUCHER— 

printed  on  draft  or  check,  640. 
VIOLATION— 

of  statutes,  act  illegal  as  consideration,  80,  81. 

w 

WAGERS,  sec  Gambling  and  Speculation. 
WAIVER— 

of  protest,  what  it  includes,  608. 

of  presentment  and    of    notice    of    dishonor     whether     mutually     in- 
clusive, 570. 


846  INDEX. 

[references  are  to  pages.] 

WAIVER— continued— 

of  presentment  for  payment,  576. 

of  protest,  presentment  and  notice,  effect  on  negotiability,  4. 

pleading,  577. 

when  embodied  in  instrument,  607. 

when  written  above  signature,  607. 

WAIVER  OF  APPRAISEMENT  LAWS— 
effect  of,  3. 

WAIVER  OF  BENEFIT  OF  CERTAIN  LAWS— 

does  not  impair  negotiability,  effect  of  provision,  57. 

WAIVER  OF  PRESENTMENT  FOR  PAYMENT,  see  also  Present- 
ment IN  General,  3,  607. 

WAIVER  OF  PROTEST,  see  also  Protest— 
effect  of,  4,  608. 
how  made,  211. 
in  general,  3,  608. 
who  bound  by,  211. 
waives  also  presentment  and  notice  of  dishonor,  211,  608. 

WAIVER  OF  NOTICE,  see  also  Notice— 
of  dishonor,  201,  605,  607. 
of  dishonor,  on  whom  binding,  211,  607. 
of  non-payment,  3. 
of  protest,  3,  4,  608. 

WAIVER  OF  VALUATION  LAWS— 
effect  of,  3. 

WAR,  see  also  Alien  Enemies — 

as  excuse  for  non-presentment,  202. 
effect  of,  on  intercourse,  33. 

WAREHOUSE  RECEIPTS— 

attached  to  bill  of  exchange,  failure  to  surrender,  542. 

contents  of,  266. 

defined,  266. 

description  and  nature  of,  266. 

how  transferred,  266. 

whether  negotiable,  266. 

WARRANTY,  see  also  Warranties — 

general  indorser  warrants,  that  instrument  is  genuine,  555. 
general    indorser    warrants,   that    instrument   is    what    it    purports    to 
be,  555. 

that  he  has  a  good  title,  555. 

that  prior  parties  had  capacity  to  contract,  555. 

that  instrument  is  valid  and  subsisting,  555. 
in  case  of  instrument  indorsed  "for  collection,"  553. 
in  case  of  public  or  corporate  securities,  552. 
of  genuineness.  553. 
of  validity,  553. 
to  whom  warranty  runs,  553. 
v/here  negotiation  by  delivery,  552,  553. 
where  negotiation  by  qualified  indorsement,  552,  553. 


INDEX.  847 

[references  are  to  pages.] 

WARRANTIES— 
by  acceptance,  89. 
by  acceptance  for  honor,  101. 
by  agent  who  signs  for  principal,  148. 
by  agent  who  transfers,  148. 
by  assignor,  133. 
by  broker  or  other  agent, 
by  indorsement,  113,  553. 
by  indorsement  "without  warranty,"  467. 
by  indorser  for  collection,  553. 
by  unqualified  indorsement,  555. 
upon  negotiation  by  delivery  or  qualified  indorsement,  552. 

WARRANTY  OF  SELLER— 

where  transfer  by  delivery,  128. 
where  transfers  by  indorsement,  142. 

WHO  MAY  SUE,  481. 

WIFE,  see  also  Coverture;  Married  Women;  Etc. 
notice  with,  198. 

WITH  INTEREST— 

effect  of  words,  3. 
"WITHOUT  DEFALCATION"— 

effect,  389. 
WITHOUT   RECOURSE,   see  also   Indorsement  Without   Recourse; 
Indorser  Without  Recourse;  Sans  Recourse — 

in  general,  121. 

indorsement,  467.  ^ 

indorser,  warranties  of,  143,   144. 

liability  of,  143,  144. 

re-issue  by  maker,  616. 

WITHOUT  RELIEF— 
what  show,  3. 

WITNESS— 

adding  name  of,   is  material  alteration,  when,   177. 
addition  of,  alteration,  638. 

WITNESSES— 

competency  of  parties  as,  330. 
to  signature  by  mark,  48. 

WORDS— 

effect  of  "I  promise  to  pay,"  338. 

effect  of  "This  is  and  shall  be  negotiable,"  50. 

WORDS  AND  FIGURES— 
discrepancy  between,  338. 

WRITING— 

acceptance  must  be  in,  646. 

addition  to  printed  provisions  as  alteration,  414. 

collateral  agreements,  45,  65. 

conflict  with  figures,  2. 

contemporaneously,  45,  118. 

discrepancy  between  figures  and  words,  45. 


848  INDEX, 

[references  are  to  pages.] 
WRITING— continued- 
figures  for  convenience,  45. 

includes  print,  4S. 

manner  of,  not  material,  46. 

may  be  in  pencil,  46. 

meaning  of,  45. 

more  accurate  tlian  figures,  3. 

necessary  for  renunciation,  unless  surrender,  628. 

negotiable  instrument  must  be  in,  45. 

parol  evidence  to  explain  latent  ambiguity,  45. 

renunciation  must  be  in,  215. 

whether  required  for  release,  628. 
WRITINGS,  CONTEMPORANEOUS— 

construed  as  one  instrument,  45. 
WRITTEN  AND  PRINTED  PROVISIONS— 

conflict  between,  338. 

defined,  695. 

in  conflict,  338. 

"WRITTEN"— 

incluties  printed  and  "'writing"  includes  print,  45. 

WRITTEN  NOTICE— 

supplemented  and  validated  by  verbal,  195. 

WRITTEN  PARTICULARS— 
protest  on,  204. 

WRITTEN  PROVISIONS— 

prevail  over  printed,  if  conflict,  413. 

WRONG  DESIGNATION— 

of  name  of  payee  or  indorsee,  472. 


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